Stock-Based Compensation

Stock-based compensation consisted of the following:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2015		2014		2015		2014
Stock-based compensation expense	$	0.5	$	1.4	$	1.4	$	3.0

We have stock-based compensation awards consisting of stock options, restricted stock and stock appreciation rights under four plans (collectively, the Stock Plans) which are described in detail in our 2014 Annual Report on Form 10-K. As of June 30, 2015, there were 1,988,854 shares available for grant under the 2011 Incentive Plan. No further shares were available for grant under any other stock incentive plan.

Stock Options

The following table summarizes our stock option activity:



	Stock Options		Weighted Average Exercise Price
Outstanding December 31, 2014	3,897,986		$	13.07
Granted	24,547		3.94
Exercised	(12,381	)	3.84
Canceled	(321,880	)	25.35
Forfeited	(43,497	)	7.36
Outstanding June 30, 2015	3,544,775		$	11.99
Exercisable as of June 30, 2015	3,348,131		$	12.48

The outstanding options are non-qualified and generally have a term of ten years. The following table summarizes our weighted average assumptions used in the valuation of stock options:



	Six Months Ended
	June 30,
	2015		2014
Volatility	46.0	%	46.2	%
Risk-free interest rate	1.9	%	1.9	%
Expected life (months)	73		73
Dividend yield	—		—

As of June 30, 2015, there was $0.2 million of total unrecognized compensation expense related to non-vested stock options granted under our Stock Plans. That expense is expected to be recognized over a weighted average period of 1.3 years.

Restricted Stock

The following table summarizes our restricted stock activity:



	Restricted Stock		Weighted Average Grant Date Fair Value Per Share
Nonvested as of December 31, 2014	1,348,917		$	3.81
Granted	862,706		3.97
Grant adjustments	—		—
Vested	(807,239	)	4.19
Forfeited	(867,445	)	3.76
Nonvested as of June 30, 2015	536,939		$	3.57

The cost of the awards is determined using the fair value of the Company’s common stock on the date of the grant, and compensation is recognized on a straight-line basis over the requisite vesting period.

Effective May 22, 2015, a “Change of Control” occurred under the terms of the Company’s Amended and Restated Severance and Change in Control Agreements and certain incentive award agreements with its executives as a result of the election of three new directors to the Company’s Board of Directors by shareholders at the shareholder meeting on May 20, 2015 (the "May 2015 Change of Control Event"). Upon a change of control, under the terms of the agreements with these executives, certain performance-based restricted shares would immediately vest and be paid out in cash. As a result, 225,347 restricted shares were vested immediately, and a cash payment of $1.0 million was made to settle such awards. The only situation in which such shares would have been settled in cash was pursuant to a change of control. Additionally, 866,820 restricted shares that were subject to vesting in the future were forfeited.

As of June 30, 2015, there was $1.5 million of total unrecognized compensation expense related to non-vested restricted stock granted under our Stock Plans. That expense is expected to be recognized over a weighted average period of 1.4 years.

Stock Appreciation Rights

During the six months ended June 30, 2015, we granted 2.7 million Stock Appreciation Rights (SARs) to certain employees associated with our Storage Solutions and Mobile Security operations. These awards were issued to incentivize employees to grow revenues. These awards expire on December 31, 2017 and only vest when both stock price and revenue performance conditions specified by the terms of the SARs are met. Additionally, under the terms of the 2015 SARs, any cash payments to an individual under a 2015 vested SAR would reduce any cash payment received under any earlier SAR grant pertaining to that individual, if and when such earlier SAR vests. For the stock price condition, based on the terms of the awards, 50 percent of the SARs could vest if the 30-day average Imation stock price reaches $8 per share or more by December 31, 2017 and the remaining 50 percent of the SARs could vest if the 30-day average Imation stock price reaches $12 per share or more by December 31, 2017. Additionally, for the revenue performance condition, as a condition necessary for vesting, the net revenue of Storage Solutions or Mobile Security (depending on the award) must reach certain specified stretch targets by December 31, 2017. If exercised, the SARs require a cash payment to the holder in an amount based on the Imation stock price at the date of exercise as compared to the stock price at the date of grant. As of June 30, 2015, we had 5.1 million SARs outstanding for which we have not recorded any related compensation expense based on the applicable accounting rules. We will continue to assess these SARs each quarter to determine if any expense should be recorded.