CAPITAL STOCK AND SHARE-BASED COMPENSATION

We are authorized by our Certificate of Incorporation to issue 60,000,000 shares of common stock, $0.001 par value and 5,000,000 shares of preferred stock, $0.001 par value. As of December 31, 2017, there were 35,747,134 and 33,964,767 shares of common stock issued and outstanding, respectively, and no shares of preferred stock issued or outstanding. Our Board of Directors is authorized to fix the dividend rights and terms, conversion and voting rights, redemption rights and other privileges and restrictions applicable to our preferred stock.

Share-Based Awards

Our 2008 Omnibus Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity-based awards, such as stock awards, restricted stock units, stock appreciation rights and stock options to eligible participants, which include all of our employees and all employees of our 50% or more owned subsidiaries, our non-employee directors and certain consultants. The vesting terms of the awards may be tied to continued employment (or, for our non-employee directors, continued service on the Board of Directors) and/or achievement of certain pre-determined performance goals. We refer to stock awards subject to service-based vesting conditions as “non-vested stock” and restricted stock units subject to service-based or a combination of service-based and performance-based vesting conditions as “non-vested stock units.” The Plan is administered by the Compensation Committee of our Board of Directors, which determines, within the provisions of the Plan, those eligible employees to whom, and the times at which, awards shall be granted. The Compensation Committee, in its discretion, may delegate its authority and duties under the Plan to specified officers; however, only the Compensation Committee may approve the terms of awards to our executive officers.

Equity-based awards may be granted for a number of shares not to exceed, in the aggregate, approximately 5.5 million shares of common stock, and we had approximately 1.2 million shares available at December 31, 2017. The price per share for stock options shall be of no less than the greater of (a) 100% of the fair value of a share of common stock on the date the option is granted or (b) the aggregate par value of the shares of our common stock on the date the option is granted. If a stock option is granted to any owner of 10% or more of our total combined voting power of us and our subsidiaries, the price is to be at least 110% of the fair value of a share of our common stock on the date the award is granted. Each equity-based award vests ratably over a 12 month to six year period, with the exception of those issued under contractual arrangements that specify otherwise, that may be exercised during a period as determined by our Compensation Committee or as otherwise approved by our Compensation Committee. The contractual terms of stock options exercised shall not exceed ten years from the date such option is granted.

Employee Stock Purchase Plan (“ESPP”)

We have a plan whereby our eligible employees may purchase our common stock at 85% of the market price at the time of purchase. On June 7, 2012, our stockholders ratified an amendment adopted by our Board of Directors to increase the total number of shares of our common stock authorized for the issuance under our ESPP from 2,500,000 shares to 4,500,000 shares, and as of December 31, 2017, there were 1,410,511 shares available for future issuance. The following is a detail of the purchases that were made or pending Board of Director approval under the plan:



Employee Stock Purchase Plan Period	Shares Issued	Price
2015 and Prior	2,977,712	$	14.20
January 1, 2016 to March 31, 2016	13,850	41.09
April 1, 2016 to June 30, 2016	14,236	42.91
July 1, 2016 to September 30, 2016	16,520	40.32
October 1, 2016 to December 31, 2016	16,882	36.24
January 1, 2017 to March 31, 2017	13,244	43.43
April 1, 2017 to June 30, 2017	11,446	53.39
July 1, 2017 to September 30, 2017	12,276	47.57
October 1, 2017 to December 31, 2017	13,323	44.80
	3,089,489

ESPP expense included in general and administrative expense in our accompanying consolidated statements of operations was 0.4 million for each of 2017, 2016 and 2015, respectively.

Stock Options

We use the Black-Scholes option pricing model to estimate the fair value of our stock options. There were 308,292, 268,538 and 590,647 options granted during 2017, 2016 and 2015, respectively. Stock option compensation expense included in general and administrative expense in our accompanying consolidated statements of operations was $5.6 million, $6.3 million and $3.8 million for 2017, 2016 and 2015, respectively.

The fair value of the 2017 awards were estimated using the following assumptions:




Risk Free Rate	1.99% - 2.16%
Expected Volatility	50.18% - 51.81%
Expected Term	5.78 - 6.25 years
Weighted Average Fair Value	$28.02

We used the simplified method to estimate the expected term for the stock options granted during 2017.

The following table presents our stock option activity for 2017:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Life (Years)
Outstanding options at January 1, 2017	1,008,157		$	31.54	8.42
Granted	308,292		43.13
Exercised	(144,206	)	31.58
Canceled, forfeited or expired	(262,513	)	39.18
Outstanding options at December 31, 2017	909,730		$	33.25	7.62
Exercisable options at December 31, 2017	381,932		$	28.73	7.20

The aggregate intrinsic value of our outstanding options and exercisable options at December 31, 2017 was $18.1 million and $9.2 million, respectively. Total intrinsic value of options exercised was $3.9 million and $0.2 million for 2017 and 2015, respectively; there were no options exercised during 2016.

The following table presents our non-vested stock option award activity for 2017:



	Number of Shares		Weighted Average Exercise Price
Non-vested stock options at January 1, 2017	726,699		$	32.58
Granted	308,292		43.13
Vested	(260,814	)	30.54
Forfeited	(246,379	)	39.48
Non-vested stock options at December 31, 2017	527,798		$	36.52

At December 31, 2017, there was $5.8 million of unrecognized compensation cost related to stock options that we expect to be recognized over a weighted-average period of 1.9 years.

Non-Vested Stock

We issue shares of non-vested stock with vesting terms ranging from one to six years. The compensation expense is determined based on the market price of our common stock at the date of grant applied to the total number of shares that are anticipated to fully vest. Non-vested stock compensation expense included in general and administrative expenses in our accompanying consolidated statements of operations was $1.7 million, $2.3 million and $5.0 million for 2017, 2016 and 2015, respectively.

The following table presents our non-vested stock award activity for 2017:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested stock at January 1, 2017	209,378		$	22.20
Granted	19,152		62.67
Vested	(170,292	)	21.61
Canceled, forfeited or expired	(11,240	)	19.51
Non-vested stock at December 31, 2017	46,998		$	41.48

The weighted average grant date fair value of non-vested stock granted was $62.67, $50.55 and $28.48 in 2017, 2016 and 2015, respectively.

At December 31, 2017, there was $0.7 million of unrecognized compensation cost related to non-vested stock award payments that we expect to be recognized over a weighted average period of 0.5 years.

Non-Vested Stock Units

We issue non-vested stock unit awards that are service-based, performance-based or a combination of both with vesting terms ranging from one to six years. Based on the terms and conditions of these awards, we determine if the awards should be recorded as either equity or liability instruments. The compensation expense is determined based on the market price of our common stock at the date of grant, applied to the total number of units that are anticipated to vest, unless the award specifies differently. We account for such awards similar to our non-vested stock awards; however, no shares of stock are issued to the recipient until the stock unit awards have vested and after the pre-determined delivery date has occurred.

Non-Vested Stock Units – Service-Based

Service-based non-vested stock unit compensation expense included in general and administrative expenses in our accompanying consolidated statements of operations was $3.6 million, $3.6 million and $1.0 million for 2017, 2016 and 2015, respectively.

The following table presents our service-based non-vested stock units activity for 2017:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested stock units at January 1, 2017	249,429		$	42.05
Granted	126,447		53.79
Vested	(57,106	)	42.41
Canceled, forfeited or expired	(83,928	)	44.00
Non-vested stock units at December 31, 2017	234,842		$	47.58

The weighted average grant date fair value of service-based non-vested stock units granted was $53.79, $45.60 and $37.98 in 2017, 2016 and 2015, respectively.

At December 31, 2017, there was $6.7 million of unrecognized compensation cost related to our service-based non-vested stock units that we expect to be recognized over a weighted average period of 2.1 years.

Non-Vested Stock Units – Service-Based and Performance-Based Awards

During 2017, we awarded performance-based awards to certain employees. The target level established by the award, which is based on the Company’s 2017 adjusted earnings before interest, taxes and depreciation (“EBITDA”), provided for the recipients to receive 194,109 non-vested stock units if the target was achieved. The target number of shares to be potentially awarded has been reduced by forfeitures as indicated in the table below. Performance-based non-vested stock units compensation expense included in general and administrative expenses in our consolidated statements of operations was $5.0 million, $3.7 million and $1.3 million for 2017, 2016 and 2015, respectively.

The following table presents our performance-based non-vested stock units activity for 2017:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested stock units at January 1, 2017	224,857		$	45.08
Granted	194,109		52.99
Vested	(73,998	)	45.23
Canceled, forfeited or expired	(92,020	)	47.50
Non-vested stock units at December 31, 2017	252,948		$	51.15

The weighted average grant date fair value of performance-based non-vested stock units granted was $52.99, $46.29 and $39.54 in 2017, 2016 and 2015, respectively.

At December 31, 2017, there were $7.7 million in unrecognized compensation costs related to our performance-based non-vested stock units that we expect to be recognized over a weighted average period of 2.0 years.