(8) Stock-based Compensation Plans

Effective May 19, 2004, the Company adopted its 2004 Incentive Stock Plan, as further amended and restated on February 3, 2015 (the “2004 Stock Plan”), and its 2004 Restricted Stock Plan for Non-Employee Directors, as further amended and restated on April 1, 2013 (the “Director Plan”). On May 19, 2015, the Company’s stockholders approved the 2015 Incentive Plan of 3D Systems Corporation (the “2015 Plan” and, together with the 2004 Stock Plan, the “Incentive Plans”).

The 2004 Stock Plan authorizes shares of restricted stock, restricted stock units, stock appreciation rights and the grant of options to purchase shares of the Company’s common stock. The 2004 Stock Plan also designates measures that may be used for performance awards.

The Director Plan authorizes shares of restricted stock for non-employee directors of the Company.

The 2015 Plan authorizes shares of restricted stock, restricted stock units, stock appreciation rights, cash incentive awards and the grant of options to purchase shares of the Company’s common stock. The 2015 Plan also designates measures that may be used for performance awards.

Generally, awards granted prior to November 13, 2015 become fully-vested on the three-year anniversary of the grant date and awards granted on or after November 13, 2015 will vest one third each year over three years.

The Company records stock-based compensation expense in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). Stock-based compensation expense for the quarters and nine months ended September 30, 2016 and 2015 was as follows:


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2016		2015		2016		2015
Stock-based compensation expense	$	9,512	$	8,800	$	28,405	$	28,850

Restricted Stock

Stock award activity for the nine months ended September 30, 2016 and 2015 was as follows:


	Nine Months Ended September 30,
	2016			2015
(in thousands, except per share amounts)	Number of Shares/Units	Weighted Average Grant Date Fair Value		Number of Shares/Units	Weighted Average Grant Date Fair Value
Outstanding at beginning of period — unvested	2,942			2,806
Granted	1,482	$	13.69	729	$	23.29
Cancelled	(446)	$	54.61	(162)	$	48.44
Vested	(562)	$	35.37	(300)	$	18.64
Outstanding at end of period — unvested	3,416			3,073

During the nine months ended September 30, 2016, the Company awarded certain employees restricted stock under the 2015 Plan, included in the activity above, that vests under specified market conditions. Each employee was generally awarded two equal tranches of market condition restricted stock that immediately vests when the Company’s common stock trades at either $30 or $40 per share for ninety consecutive calendar days.

At September 30, 2016, there was $5,624 of unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards with market conditions, which the Company expects to recognize over the remaining weighted-average vesting period of four years.

At September 30, 2016, there was $34,859 of unrecognized pre-tax stock-based compensation expense related to all other non-vested restricted stock award shares and units, which the Company expects to recognize over the remaining weighted-average vesting period of 1.5 years.

Stock Options

The Company estimates the fair value of stock options with market conditions using a binomial lattice Monte Carlo simulation model. The weighted-average fair value and the assumptions used to measure fair value were as follows:


	Quarter Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock option assumptions:
Weighted-average fair value	$	7.94	$	—	$	7.81	$	—
Expected volatility		60.0%		—		60.0%		—
Risk-free interest rate		1.46%		—		0.76%-1.46		—
Expected dividend yield		0%		—		0%		—
Derived term in years		3-4		—		3-4		—

Stock option activity for the nine months ended September 30, 2016 was as follows:


	Nine Months Ended September 30, 2016
(in thousands, except per share amounts)	Number of Shares	Weighted Average Exercise		Weighted Average Remaining Term (in years)
Stock option activity:
Outstanding at beginning of period	—	$	—
Granted	2,160		13.95
Exercised	—		—
Forfeited and expired	—		—
Outstanding at end of period	2,160	$	13.95	9.8
Exercisable at end of period	—	$	—	—

During the nine months ended September 30, 2016, the Company awarded certain employees market condition stock options under the 2015 Plan, included in the activity above, that vest under specified market conditions. Each employee was generally awarded two equal tranches of market condition stock options that immediately vest when the Company’s common stock trades at either $30 or $40 per share for ninety consecutive calendar days. At September 30, 2016, there was $15,213 of unrecognized pre-tax stock-based compensation expense related to non-vested stock options with market conditions, which the Company expects to recognize over the remaining weighted-average vesting period of four years.