15.	SHARE-BASED COMPENSATION

The Company has granted nonvested restricted stock, stock options, and stock appreciation rights to key employees and directors under its 2011 Equity Incentive Plan. The Company granted stock awards with an aggregate fair value of approximately zero and $17.2 million during the three months and nine months ended February 29, 2016 and $0.1 million and $0.7 million during the three months and nine months ended February 28, 2015, respectively. During fiscal 2016,

the Compensation Committee approved an increase in the shares eligible for grant under the Company’s 2011 Equity Incentive Plan from 514,631 shares to 808,444 shares, and as of February 29, 2016, a total of 66,166 shares were available for future grants.

Restricted stock units typically vest over a two-year period (50% per year) and do not expire. Upon vesting, restricted stock units are settled in shares of IVD Holdings Inc.’s common stock. Stock option awards are granted with service-based vesting conditions (“service-based options”), and performance-based or market-based vesting conditions (“performance-based options”). The service-based options contain tiered vesting terms over the service period.

The performance-based options vest in tranches upon the achievement of certain performance or market objectives, which are measured over a three or four year period.

On September 24, 2015, the Company’s Compensation Committee approved a modification to the Company’s 2011 Equity Incentive Plan (“Plan”) effective November 1, 2015. This modification added an alternative service-based vesting opportunity to all previously granted but unvested performance-based options. On October 16, 2015, the Company’s Compensation Committee approved an additional modification to its Plan that converted all stock appreciation rights granted prior to November 1, 2015 to service-based option awards and performance-based option awards. These awards will vest from the original grant through May 31, 2021. This modification resulted in a total increase in stock-based compensation expense of $4.6 million.

Stock options with service-based vesting conditions

The Company has granted awards that contain service-based vesting conditions. These awards contain tiered vesting terms over the service period. The compensation cost for these options is recognized on a straight-line basis over the vesting periods.

Activity for the service-based vesting options was as follows for the nine months ended February 29, 2016:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (1)

Service-based options outstanding at May 31, 2015		158,329		$	100.00
Granted		531,072			100.00
Exercised		-			-
Forfeited		(21,186	)		100.00
Expired or cancelled		(1,910	)		100.00
Service-based options outstanding at February 29, 2016		666,305			100.00		8.0	$	-

Exercisable at February 29, 2016		146,393		$	100.00		6.2	$	-

(1)

The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal year. Options with a market value less than its exercise value are not included in the intrinsic value amount.

The weighted-average grant-date fair value of share options granted

during the first nine months of fiscal year 2016 was $25.25.

As of February 29, 2016, there was $11.0 million of total unrecognized compensation cost related to nonvested service-based stock option awards. This compensation cost is expected to be recognized over a weighted average period of approximately 3.2 years.

Stock options with

erformance-based or market-based vesting conditions

The Company has granted awards that contain either performance-based or market-based conditions. Compensation cost for the performance-based or market-based stock options is recognized based on either the achievement of the performance conditions, if they are considered probable, or if they are not considered probable, on the achievement of the market-based condition. Awards granted which vest upon either the satisfaction of the performance or market conditions were measured based upon the achievement of the market condition during fiscal 2016 since the Company believes that the achievement of the performance conditions are not probable. Activity for the performance-based or market-based options was as follows

for the nine months ended February 29, 2016:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (1)

Performance or market-based options outstanding at May 31, 2015		149,329		$	100.00
Granted		6,538			100.00
Exercised		-			-
Forfeited		(20,183	)		100.00
Expired or cancelled		(101,177	)		100.00
Performance or market-based options outstanding at February 29, 2016		34,507			100.00		5.9	$	-

Exercisable at February 29, 2016		34,507		$	100.00		5.9	$	-

(1) The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal year. Options with a market value less than its exercise value are not included in the intrinsic value amount.

The weighted-average grant-date fair value of share options granted during the first nine months of fiscal year 2016 was $23.82.

As of February 29, 2016, there was $0.1 million of total unrecognized compensation cost related to nonvested performance-based or market-based vesting conditions awards. This compensation cost is expected to be recognized over a weighted average period of approximately 0.5 years.

Restricted stock units

The fair value of restricted stock is estimated using the Monte Carlo simulation approach described above and is then discounted due to non-marketability. The following is a summary of the changes in non-vested restricted stock units for the first nine months of fiscal year 2016:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Nonvested restricted stock units outstanding at May 31, 2015		2,400		$	84.55
Granted		34,566			104.24
Vested		(800	)		90.72
Forfeited		-			-
Nonvested restricted stock units outstanding at February 29, 2016		36,166		$	103.25

As of February 29, 2016, there was $3.1 million of total unrecognized compensation cost related to nonvested restricted stock awards. This compensation cost is expected to be recognized over the weighted average period of approximately 3.3 years.

Stock appreciation rights

As of November 1, 2015, the Company canceled all its existing stock appreciation rights and converted them to

service-based and performance-based

option awards.

	Number of Shares			Weighted-Average Grant-Date Fair Value
Stock appreciation rights outstanding at May 31, 2015		167,000		$	1.98
Granted		3,000			1.98
Vested		-			-
Forfeited		(2,600	)		1.98
Cancelled/Expired		(167,400	)		1.98
Stock appreciation rights outstanding at February 29, 2016		-		$	-

The Company recognized expense of $1.3 million and $4.0 million in the three months and nine months ended February 29, 2016 and $0.3 million and $1.8 million in the three months and nine months ended February 28, 2015, respectively, before income tax benefits, for all the Company’s stock awards.