10.STOCK-BASED COMPENSATION

At the 2005 annual meeting of stockholders, stockholders of the Company approved an equity incentive plan (as amended, the “2005 Plan”). The 2005 Plan expired in June 2015. There are options issued under the 2005 Plan that remain outstanding. The 2005 Plan provided for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, all as defined in the 2005 Plan. The 2005 Plan provided for the issuance of up to 2,000,000 shares of common stock to eligible individuals, including directors, through the various forms of permitted awards. The Company was not permitted to issue stock options at an exercise price lower than fair market value at the date of grant. All stock options were required to have an exercise period not to exceed ten years. The Company had granted awards of incentive stock options and non-qualified stock options under the 2005 Plan, all of which had exercise prices that were not less than the fair market value at the date of grant. Options granted had six-month, one-year, three-year or four-year vesting periods. All outstanding options were issued at market value as of the date of the grant.

Stockholders of the Company approved the 2016 Equity Incentive Plan (the “2016 Plan”) at the 2016 annual meeting of stockholders. The 2016 Plan will expire in June 2026. The 2016 Plan provides for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, all as defined in the 2016 Plan. The 2016 Plan provides for the issuance of up to 3,500,000 shares of common stock to eligible individuals, including directors, through the various forms of permitted awards. The Company is not permitted to issue stock options at an exercise price lower than fair market value at the date of grant. All stock options are required to have an exercise period not to exceed ten years. As of December 31, 2017, the Company has granted 167,968 target performance stock units (“PSUs”) under the 2016 Plan. Any committee as delegated by the board of directors has the power and discretion to, among other things, prescribe the terms and conditions for the exercise of, or modification of, any outstanding awards in the event of merger, acquisition or any other form of acquisition other than a reorganization of the Company under the United States Bankruptcy Code or liquidation of the Company. The 2016 Plan also allows limited transferability of any stock options to legal entities that are 100% owned or controlled by the optionee or to the optionee’s family trust.

PSUs

The PSUs vest subject to market and performance conditions. The conditions are weighted 25% based on market conditions and 75% based on performance conditions. Market conditions are based on the Company’s total shareholder return (“TSR”) relative to a select group of peer companies at the end of a three year performance period. Performance conditions are based on the Company’s actual Adjusted EBITDA over the three year performance period compared to forecasted Adjusted EBITDA over the same period. Depending on the TSR and Adjusted EBITDA at the end of the performance period, anywhere from 0% to 200% of the target grant may vest. Expense is recognized on a straight-line basis over the performance period beginning on the date of grant. Probability is assessed quarterly on the performance conditions and compensation expense is adjusted accordingly. Actual forfeitures are recognized as they occur.

Activity in the Company’s stock-based compensation plan for the PSUs was as follows:


	Target PSUs		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2017	0	$	0.00
Granted	167,968		8.03
Vested	0		0.00
Forfeited	0		0.00
Nonvested at December 31, 2017	167,968	$	8.03

At December 31, 2017, there was a total of $0.9 million of total unrecognized compensation expense related to the PSUs. The cost is expected to be recognized over a weighted-average period of 2.0 years.

The weighted-average fair value of the PSUs granted is estimated on the date of grant using the Monte Carlo model with the following assumptions:



Assumptions for PSU Awards
Weighted-average risk-free interest rate	1.59%
Weighted-average expected life	3 yrs
Weighted-average expected volatility	36.5%
Weighted-average expect dividends	$0
Forfeiture rate	0%

Stock Options

Activity related to options in the Company’s stock-based compensation plans for employee stock options was as follows:


	Option Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Options Exercisable		Weighted-Average Exercise Price
Outstanding at January 1, 2017	1,314,435	$	4.98	7.77	979,435	$	4.95
Granted	0		0.00
Exercised	(24,274)		3.19
Cancelled or forfeited	(3,750)		5.05
Expired	(10,000)		9.00
Outstanding at December 31, 2017	1,276,411	$	4.98	6.88	1,276,411	$	4.98

As of December 31, 2017, there were 72,950 options outstanding to independent directors of the Company with a weighted-average exercise price of $5.09. At December 31, 2017, there was no unrecognized compensation expense.

The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2017:


Dollar amounts in thousands	Options Outstanding	Options Exercisable		Intrinsic Value of Options Outstanding		Intrinsic Value of Options Exercisable	Weighted-Average Life of Options Outstanding (1)	Weighted-Average Life of Options Exercisable (1)
Exercise Price:
$0.93	5,161	5,161	$	42	$	42	0.9	0.9
$2.30	25,000	25,000		171		171	2.4	2.4
$5.05	1,246,250	1,246,250		5,085		5,085	7.0	7.0
	1,276,411	1,276,411	$	5,298	$	5,298	6.9	6.9
(1) In years

The aggregate intrinsic value represents the difference between the Company’s closing stock price of $9.13 per share as of December 31, 2017 and the exercise price multiplied by the number of options outstanding or exercisable as of that date.

Activity in the Company’s stock-based compensation plan for nonvested employee stock options was as follows:


	Options		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2015	1,023,750	$	2.62
Granted	0		0.00
Vested	(341,250)		2.55
Forfeited	0		0.00
Nonvested at December 31, 2015	682,500	$	2.55
Granted	0		0.00
Vested	(335,000)		2.55
Forfeited	(12,500)		2.55
Nonvested at December 31, 2016	335,000	$	2.55
Granted	0		0.00
Vested	(331,250)		2.55
Forfeited	(3,750)		2.55
Nonvested at December 31, 2017	0	$	0.00

In addition, 18,750 options granted to the Company’s independent directors vested during the year ended December 31, 2017. The total fair value of options vested was $0.9 million, $1.1 million and $0.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The following table includes additional information related to cash exercises of stock options:


	For the Year Ended December 31,
Amounts in thousands	2017		2016		2015
Intrinsic value of share-based awards exercised	$	16	$	28	$	36

The intrinsic value of options exercised through net share settlement was $0.1 million for the year ended December 31, 2017. The tax benefit from option exercises was less than $0.1 million for the year ended December 31, 2017.

Stock-based compensation expense was recognized in general and administrative expenses on the Company’s consolidated statement of earnings as follows:


	For the Year Ended December 31,
Amounts in thousands	2017		2016		2015
Compensation cost:
2005 Plan	$	277	$	759	$	1,641
2016 Plan		392		0		0
Total compensation cost	$	669	$	759	$	1,641