11. Equity

Amended and Restated 2004 Stock Incentive Plan

In 2004, the Board of Directors adopted, and the Company’s shareholders approved the 2004 Stock Incentive Plan. In October 2011, the Board of Directors adopted, and the Company’s shareholders approved, the Amended and Restated 2004 Stock Incentive Plan (the “Amended and Restated Plan”) to update the 2004 Stock Incentive Plan with respect to certain provisions and changes in the tax code since its original adoption.

2016 Stock Incentive Plan

On October 5, 2016, the Board of Directors adopted the 2016 Stock Incentive Compensation Plan (the “2016 Stock Incentive Plan”) which was approved by the Company’s shareholders on November 7, 2016. Under the 2016 Stock Incentive Plan, 3,529,109 shares of common stock were originally reserved for issuance in connection with grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance-based compensation awards, other stock-based awards, dividend equivalents and cash-based awards. Effective October 29, 2018, the 2016 Stock Incentive Plan was amended to increase the reservation of the total shares available for issuance to 12,725,963 shares of common stock. The maximum number of shares with respect to which awards may be granted to any participant in any calendar year under the 2016 Stock Incentive Plan may not exceed 500,000 shares.

The Company has granted and continues to grant RSUs, performance stock units (“PSUs”) and stock options to its officers, non-employee directors, employees, and consultants pursuant to the 2016 Stock Incentive Plan or as “inducement grants,” as permitted under NASDAQ rules. The RSUs, PSUs and stock options represent the right to receive one share of common stock for each unit on the vesting date provided that the individual meets the applicable vesting criteria. The exercise price of stock options granted under the 2016 Stock Incentive Plan are determined by the Compensation and Stock Option Committee (the “Compensation Committee”) of the Board of Directors or by any other committee designated by the Board of Directors, but may not be less than the fair market value of the Company’s shares of common stock on the date the option is granted. In general, unvested stock options are forfeited when a participant terminates employment or service with the Company or its affiliates.

Shares underlying awards that are forfeited, cancelled, terminated or expire unexercised, or settled in cash in lieu of issuance of shares, are available for issuance pursuant to future awards to the extent that such shares are forfeited, repurchased or not issued under any such award. Any shares tendered to pay the exercise price of an option or other purchase price of an award, or withholding tax obligations with respect to an award, are available for issuance pursuant to future awards. In addition, if any shares subject to an award are not delivered to a participant because (i) such shares are withheld to pay the exercise price or other purchase price of such award, or withholding tax obligations with respect to such award (or other award), or (ii) a payment upon exercise of an award is made in shares, the number of shares subject to the exercised or purchased portion of any such award that are not delivered to the participant are available for issuance pursuant to future awards.

As of September 30, 2019, shares reserved for future issuance under the incentive plans include: (i) 444 shares of common stock issuable upon exercise of stock options granted under the Amended and Restated Plan; (ii) 7,964,156 shares of common stock issuable upon vesting of RSUs, PSUs and exercise of stock options granted under the 2016 Stock Incentive Plan; and (iii) 3,007,747 shares of common stock are available for future grant under the 2016 Stock Incentive Plan. As of December 31, 2018, the Company no longer granted shares under the Amended and Restated Plan. Also, as of September 30, 2019, there were 5,200,000 shares of common stock issuable upon vesting of RSUs and PSUs granted pursuant to “inducement grants” to certain of our officers.

Stock Options

As of January 1, 2019, the Company had 320,721 shares of stock options outstanding, comprised of 444 and 320,277 stock options outstanding under the Amended and Restated Plan and 2016 Stock Incentive Plan, respectively. There was no activity related to stock options for the nine months ended September 30, 2019.

There were no options exercised during the nine months ended September 30, 2019. The following table summarizes exercise prices for options exercisable as of September 30, 2019 (in actual amounts):


		Options Exercisable
			Weighted-Average
			Remaining Contractual
	Exercise Price	Number of Shares	Life (Years)
$	4.02	70,277	4.7
$	11.40	444	5.3
		70,721

For all stock compensation awards that contain graded vesting with time‑based service conditions, the Company has elected to apply a straight‑line recognition method to account for these awards. Stock-based compensation expense related to stock options was immaterial during the three and nine months ended September 30, 2019. As of September 30, 2019, there was $0.5 million of unrecognized compensation cost related to unvested stock options to be expensed through the year ended December 31, 2022.

Stock option awards are measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility over the option’s expected term, the risk-free interest rate over the option’s expected term and the expected annual dividend yield, if any. The Company accounts for forfeitures as they occur. Shares of common stock will be issued when the options are exercised.

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2019 (in actual amounts):


	Restricted Stock Units
	Number Of	Weighted Average Grant
	Units	Date Fair Value
Outstanding at January 1, 2019	5,820,560	$	4.06
Granted	4,682,672		3.26
Vested	(504,320)		3.02
Forfeited	(98,533)		2.48
Outstanding at September 30, 2019	9,900,379	$	3.75

A total of $2.4 million and $0.6 million of stock-based compensation expense was recognized related to RSUs during the three months ended September 30, 2019 and 2018, respectively. A total of $7.2 million and $2.1 million of stock-based compensation expense was recognized related to RSUs during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there was $29.4 million of total unrecognized compensation cost related to unvested RSUs. The unrecognized compensation cost is expected to be recognized over a weighted‑average of 2.2 years.

Performance Share Units

In the third quarter of 2019, the Company granted 1,593,500 shares of performance share units. No performance share units were forfeited during the three months ended September 30, 2019 and 2,943,500 unvested performance shares are outstanding as of September 30, 2019. Stock compensation expense in the amount of $0.5 million and $0 million was recognized for the three months ended September 30, 2019 and 2018, respectively. Stock compensation expense in the amount of $1.3 million and $0 million was recognized for the nine months ended September 30, 2019 and 2018, respectively.

Management Incentive Plan

On October 29, 2018, the Company entered into a letter agreement with GSO (the “MIP Letter”). Under the MIP Letter, the Company agreed to create a new stock incentive compensation plan for the amount of 1,776,500 shares (the “MIP Shares”) of common stock (the “MIP Plan”), which will be allocated by the Board in accordance with the Stockholder Agreement. On October 3, 2019, the Company entered into an amendment (the “MIP Amendment”) to the MIP Letter. Pursuant to the MIP Amendment, Company agreed to reserve the MIP Shares under the 2016 Stock Incentive Plan, which were allocated by a Special Committee of the Board in accordance with the Stockholder Agreement, dated October 29, 2018, by and between the Company and the stockholders party thereto. All of the MIP Shares were awarded or allocated as of October 29, 2019. If any awards of the MIP Shares are forfeited, cancelled, terminated or expired at any time, the equivalent amount of shares of Common Stock shall be delivered to the stockholders party to the MIP Letter for no additional consideration.