Stock-Based Compensation

The Company may issue restricted stock units and restricted stock awards (collectively "restricted stock units") and stock options which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares to participating employees pursuant to an employee stock purchase plan and unrestricted stock awards to its directors in accordance with its director compensation program.

The following table reflects stock-based compensation expense recorded during the three and six months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,				Six Months Ended March 31,
	2017		2016		2017		2016
Restricted stock units	$	4,225	$	1,723	$	6,590	$	6,299
Employee stock purchase plan	161		132		294		269
Total stock-based compensation	$	4,386	$	1,855	$	6,884	$	6,568

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of the Company's common stock quoted on NASDAQ on the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis, net of estimated forfeitures, over the requisite service period. Additionally, the Company assesses the likelihood of achieving the performance goals against previously established performance targets in accordance with the Company's long-term equity incentive plan for stock-based awards that vest upon or after the satisfaction of these goals.

The Company grants restricted stock units that vest over a required service period and/or achievement of certain operating performance goals. Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the goals. The following table reflects restricted stock units granted during the six months ended March 31, 2017 and 2016:



	Total Units	Time-Based Units	Stock Grants	Performance-Based Units
Six months ended March 31, 2017	1,008,111	377,213	42,560	588,338
Six months ended March 31, 2016	1,361,998	441,750	83,998	836,250

Time-Based Grants

Restricted stock units granted with a required service period typically have three year vesting schedules in which one-third of awards vest at the first anniversary of the grant date, one-third vest at the second anniversary of the grant date and one-third vest at the third anniversary of the grant date, subject to the award holders meeting service requirements.

Stock Grants

During the six months ended March 31, 2017 and 2016, the Company granted 42,560 and 83,998 units to the members of the Company's Board of Directors, including compensation-related units of 28,065 and 55,380, respectively. Compensation-related units granted during the six months ended March 31, 2017 are subject to a one-year vesting period starting from the grant date. The units will vest on the date which is one day before the Company's 2018 Annual Meeting of Stockholders. Compensation-related units granted during the six months ended March 31, 2016 vested on the grant date upon their issuance. Certain members of the Board of Directors previously elected to defer receiving their annual awards of restricted shares of the Company stock and quarterly dividends until a future date. During the six months ended March 31, 2017 and 2016, the Company granted 13,065 and 25,560 units, respectively, related to such deferred annual restricted share awards, as well as 1,430 and 3,058 units, respectively, related to deferred quarterly dividends. Annual restricted share awards granted during the six months ended March 31, 2017 are subject to a one-year vesting period starting from the grant date. The units will vest on the date which is one day before the Company's 2018 Annual Meeting of Stockholders, but certain holders have elected to defer the receipt of the Company shares until they attain a certain age or cease to provide services to the Company in their capacity as Board members. Annual restricted share awards granted during the six months ended March 31, 2016 vested on the grant date upon their issuance, but the settlement was deferred by certain holders, for the same conditions as described above for grants in fiscal year 2017. The amount of deferred dividends granted during the six months ended March 31, 2017 and 2016 was equal to the value of cash dividends that would be paid on the number of total deferred shares based on the closing price of the Company’s stock on the dividend record date. Such units vested upon their issuance, but the settlement was deferred by certain holders for the same conditions, as described above.

Performance-Based Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee of the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target and maximum performance goals.

Performance-based awards granted in fiscal year 2017 allow participants to earn 100% of a targeted number of restricted stock units if the Company’s performance meets its target for each applicable financial metric, and up to a maximum of 200% of the restricted stock units if the Company’s performance for such metrics meets the maximum threshold. Performance below the minimum threshold for each financial metric results in award forfeitures. Performance goals will be measured over a three year period at the end of fiscal year 2019 to determine the number of units earned by recipients who continue to meet a service requirement. Units held by recipients who fail to meet the continued service requirement are forfeited. Earned units for recipients who continue to meet the service requirements vest on the date the Company’s Board of Directors determines the number of units earned, which will be approximately the third anniversary of the grant date.

Performance-based awards granted in fiscal year 2016 also include provisions that allow participants to earn threshold, target and maximum awards ranging from 0% of the award for performance below the minimum threshold, 100% of the award for performance at target, and up to a maximum of 200% of the award if the Company achieves the maximum performance goals.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the six months ended March 31, 2017:



	Shares		Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2016	2,489,076		$	10.79
Granted	1,008,111		14.32
Vested	(801,054	)	10.63
Forfeited	(71,369	)	11.66
Outstanding at March 31, 2017	2,624,764		$	12.17

The weighted average grant date fair value of restricted stock units granted during the three months ended March 31, 2017 and 2016 was $20.76 and $9.37, respectively. The weighted average grant date fair value of restricted stock units granted during the six months ended March 31, 2017 and 2016 was $14.32 and $11.14, respectively. The fair value of restricted stock units vested during each of the three months ended March 31, 2017 and 2016 was $0.6 million. The fair value of restricted stock units vested during the six months ended March 31, 2017 and 2016 was $11.9 million and $14.0 million, respectively. During the six months ended March 31, 2017 and 2016, the Company remitted $3.8 million and $4.4 million, respectively, for withholding taxes on vested restricted stock units, of which $0.1 million and $4.2 million, respectively, was paid by the Company. During the six months ended March 31, 2017 and 2016, the Company received $3.7 million and $0.1 million, respectively, in cash proceeds from employees to satisfy their tax obligations as a result of share issuances.

As of March 31, 2017, the unrecognized compensation cost related to restricted stock units that are expected to vest is $23.7 million and will be recognized over an estimated weighted average service period of approximately 1.8 years.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan that allows its employees to purchase shares of common stock at a price equal to 85% of the fair market value of the Company's stock at the beginning or the end of the semi-annual period, whichever is lower. During the three and six months ended March 31, 2017, the Company issued 90,681 shares under the employee stock purchase plan for $1.0 million. The Company issued 118,548 shares under the employee stock purchase plan for $0.9 million during the corresponding periods of the prior fiscal year.