11. Stock-Based Compensation

The Company may issue to eligible employees 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 restricted stock units subject to one-year cliff vesting 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, 2018 and 2017 (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2018		2017		2018		2017
Restricted stock	$	5,097	$	4,225	$	9,699	$	6,590
Employee stock purchase plan		223		161		430		294
Total stock-based compensation expense	$	5,320	$	4,386	$	10,129	$	6,884

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 the Nasdaq Stock Market 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.

During the first quarter of fiscal year 2018, the Company adopted the Accounting Standard Update (“ASU”) 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Upon adoption of ASU 2016-09, the Company made an accounting policy election to continue accounting for forfeitures by applying an estimated forfeiture rate. The adoption of ASU 2016-09 did not have an impact on the stock compensation expense amount recognized during the three and six months ended March 31, 2018 and accumulated deficit at March 31, 2018.

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, 2018 and 2017:


		Time-Based		Performance-
	Total Units	Units	Stock Grants	Based Units
Six months ended March 31, 2018	507,556	192,291	34,926	280,339
Six months ended March 31, 2017	1,008,111	377,213	42,560	588,338

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, 2018 and 2017, the Company granted 34,926 and 42,560 units, respectively, to the members of the Company's Board of Directors, including 26,539 and 28,065 units, respectively, that were compensation-related. Compensation-related units granted during the six months ended March 31, 2018 and 2017 are subject to a one-year vesting period starting from the grant date. The units granted during the six months ended March 31, 2018 will vest on the date which is one day before the Company's 2019 Annual Meeting of Stockholders. The units granted during the six months ended March 31, 2017 vested on January 30, 2018, which was one day before the Company's 2018 Annual Meeting of Stockholders. 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, 2018 and 2017, the Company granted 7,130 and 13,065 units, respectively, related to such deferred annual restricted share awards, as well as 1,257 and 1,430 units, respectively, related to deferred quarterly dividends. Annual restricted share awards granted during the six months ended March 31, 2018 and 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 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. The amount of units granted during the six months ended March 31, 2018 and 2017 related to deferred quarterly dividends 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 target 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 2020 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, 2018:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2017	2,474,011	$	12.34
Granted	507,556		33.61
Vested	(629,840)		13.16
Forfeited	(38,520)		16.25
Outstanding at March 31, 2018	2,313,207	$	16.89

The weighted average grant date fair value of restricted stock units granted during the three months ended March 31, 2018 and 2017 was $25.41 and $20.76, respectively. The weighted average grant date fair value of restricted stock units granted during the six months ended March 31, 2018 and 2017 was $33.61 and $14.32, respectively. The fair value of restricted stock units vested during the three months ended March 31, 2018 and 2017 was $0.1 million and $0.6 million, respectively. The fair value of restricted stock units vested during the six months ended March 31, 2018 and 2017 was $19.1 million and $11.9 million, respectively. During the six months ended March 31, 2018 and 2017, the Company remitted $6.3 million and $3.8 million, respectively, for withholding taxes on vested restricted stock units, of which $0.1 million was paid by the Company during the six months ended March 31, 2017. There were no taxes on vested restricted stock units paid by the Company during the six months ended March 31, 2018. During the six months ended March 31, 2018 and 2017, the Company received $6.3 million and $3.7 million, respectively, in cash proceeds from employees to satisfy their tax obligations as a result of share issuances.

As of March 31, 2018, the unrecognized compensation cost related to restricted stock units that are expected to vest is $30.1 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. There were 66,785 and 90,681 shares, respectively, purchased by employees under the employee stock purchase plan during the six months ended March 31, 2018 and 2017.