Stock-Based Compensation

The Company has one stock-based compensation plan under which awards were outstanding in the relevant periods: The 2008 Equity Incentive Plan (“2008 EIP”). We describe the 2008 EIP in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2016. For all periods presented herein, awards outside the 2008 EIP are referred to as inducement awards.

2008 EIP Awards and Inducement Awards

Stock options granted under the 2008 EIP generally have a term of seven years and vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes stock option activity for the three months ended March 31, 2017.



Options	Shares		Weighted- Average Exercise Price (Per Share)		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($ 000’s)
Outstanding at January 1, 2017	3,420,385		$	6.26	4.3 years	$	1,204
Granted ⁽¹⁾	143,750		5.94
Exercised	(84,467	)	4.52			$	382
Forfeited	(283,500	)	6.20
Expired	(2,500	)	5.98
Outstanding at March 31, 2017	3,193,668		$	6.30	4.2 years	$	1,633
Exercisable at March 31, 2017	2,158,893		$	6.38	3.5 years	$	837

(1) During the three months ended March 31, 2017, 100,000 shares were granted to employees as inducements for employment and 43,750 shares were granted to a new member of the Board of Directors. The weighted-average grant date fair value of options granted was $3.31 per share for the three months ended March 31, 2017.

Nonvested stock awards, including both restricted stock and restricted stock units, granted under the 2008 EIP generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards with time-based vesting criteria vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. Nonvested stock awards with performance based vesting criteria vest in accordance with specific performance criteria associated with the awards. The following table summarizes nonvested stock activity during the three months ended March 31, 2017.



Nonvested Stock	Shares		Weighted Average Grant Date Fair Value (Per Share)
Nonvested at January 1, 2017	3,893,050		$	4.37
Granted ⁽¹⁾	458,000		6.30
Vested	—		—
Forfeited	(2,358,060	)	4.02
Nonvested at March 31, 2017	1,992,990		$	4.73

(1) The weighted-average grant date fair value of nonvested stock awards (restricted stock and restricted stock units) granted during the three months ended March 31, 2017 was $6.30.

On March 30, 2017, six executive officers and six other senior leaders of the Company were granted 274,800 performance-based restricted stock units ("PBUs") under the 2008 EIP. Upon vesting, the PBUs will be settled by the issuance of Company common stock equal to 100% of the number of PBUs being settled. The PBUs vest and become payable based on revenue and the cumulative adjusted EBITDA that the Company (excluding the Healthcare Claims Recovery Audit business) achieves for the two-year performance period ending December 31, 2018. At the threshold performance level, 35%of the PBUs will become vested and payable and at the target performance level, 100% of the PBUs will become vested and payable. If performance falls between the stated performance levels, the percentage of PBUs that will become vested and payable will be based on straight line interpolation between such stated performance levels (although the PBUs may not become vested and payable for more than 100% of the PBUs and no PBUs shall become vested and payable if performance does not equal or exceed the threshold performance level).

During the three months ended March 31, 2017, the PBUs granted in 2016 and 2017 were expensed at the target performance level based on management's estimates. During the three months ended March 31, 2016, the PBUs that were granted on March 31, 2016 were expensed at the target performance level based on management's estimates.

Selling, general and administrative expenses for the three months ended March 31, 2017 and 2016 include $1.6 million and $0.8 million, respectively, related to stock-based compensation charges. At March 31, 2017, there was $6.7 million of unrecognized stock-based compensation expense related to stock options, restricted stock awards and restricted stock unit awards which we expect to recognize over a weighted-average period of 1.4 years. The unrecognized stock-based compensation expense related to restricted stock unit awards with performance vesting criteria is based on our estimate of both the number of shares of the Company's common stock that will ultimately be issued and cash payments that will be made when the restricted stock units are settled.