The Career Education Corporation 2016 Incentive Compensation Plan (the “2016 Plan”) authorizes awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. Any shares of our common stock that are subject to awards of stock options or stock appreciation rights payable in shares will be counted as 1.0 share for each share issued for purposes of the aggregate share limit and any shares of our common stock that are subject to any other form of award payable in shares will be counted as 1.35 shares for each share issued for purposes of the aggregate share limit. As of September 30, 2019, there were approximately 1.8 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) 0.8 million shares issuable upon exercise of outstanding options and (ii) 2.5 million shares underlying restricted stock units, which will be settled in shares of our common stock if the vesting conditions are met and thus reduce the common stock available for future share-based awards under the 2016 Plan by the amount vested. These shares have been multiplied by the applicable factor under the 2016 Plan to determine the remaining shares available as of September 30, 2019. Additionally, as of September 30, 2019 under the previous Career Education Corporation 2008 Incentive Compensation Plan, there were approximately 1.7 million shares issuable upon exercise of outstanding options and 0.2 million shares underlying outstanding restricted and deferred stock units, which will be settled in shares of our common stock if the vesting conditions are met. This plan was replaced by the 2016 Plan effective May 24, 2016. The vesting of all types of equity awards (stock options, stock appreciation rights, restricted stock awards, restricted stock units and deferred stock units) is subject to possible acceleration in certain circumstances. Generally, if a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested equity awards is forfeited.

As of September 30, 2019, we estimate that compensation expense of approximately $16.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants, including stock options and restricted stock units to be settled in shares of stock but excluding restricted stock units to be settled in cash and cash-based performance unit awards and excludes any estimates of forfeitures. This amount generally does not include expense associated with performance-based restricted stock unit awards granted in the fourth quarter of 2018 as the Company does not currently believe it is probable that it will meet the performance goals.

Stock Options. The exercise price of stock options granted under each of the plans is equal to the fair market value of our common stock on the date of grant. Employee stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become 100% exercisable after the first anniversary of the grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the year to date ended September 30, 2019 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2018		2,818		$	9.59
Granted		42			21.29
Exercised		(194	)		5.73
Cancelled		(164	)		22.62
Outstanding as of September 30, 2019		2,502		$	9.23
Exercisable as of September 30, 2019		1,947		$	9.01

Restricted Stock Units to be Settled in Stock. Restricted stock units to be settled in shares of stock which are not “performance-based” generally vest 25% per year over a four-year service period. Restricted stock units which are “performance-based” are subject to performance or market conditions that, even if the requisite service period is met, may reduce the number of units of restricted stock that vest at the end of the requisite service period or result in all units being forfeited. The performance-based restricted stock units generally vest three years after the grant date.

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the year to date ended September 30, 2019 (units in thousands):

	Restricted Stock Units to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2018 ⁽¹⁾		2,017		$	12.70
Granted		428			21.31
Vested		(493	)		6.11
Forfeited		(23	)		11.42
Outstanding as of September 30, 2019		1,929		$	16.31

Deferred Stock Units to be Settled in Stock. We granted deferred stock units to our non-employee directors. The deferred stock units are to be settled in shares of stock. Settlement of the deferred stock units and delivery of the underlying shares of stock to the plan participants does not occur until he or she ceases to provide services to the Company in the capacity of a director, employee or consultant.

The following table summarizes information with respect to all deferred stock units during the year to date ended September 30, 2019 (units in thousands):

	Deferred Stock Units to be Settled in Shares			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2018 ⁽¹⁾		76		$	4.44
Granted		-			-
Vested ⁽²⁾		(3	)		5.56
Forfeited		-			-
Outstanding as of September 30, 2019 ⁽¹⁾		73		$	4.39

Restricted Stock Units to be Settled in Cash. Restricted stock units to be settled in cash generally vest 25% per year over a four-year service period beginning on the date of grant. Cash-settled restricted stock units are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income and comprehensive income in the current period. Cash-settled restricted stock units are settled with a cash payment for each unit vested equal to the closing price on the vesting date. Cash-settled restricted stock units are not included in common shares reserved for issuance or available for issuance under the 2016 Plan.

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended September 30, 2019 (units in thousands):

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2018		213
Granted		-
Vested		(125	)
Forfeited		(2	)
Outstanding as of September 30, 2019		86

Upon vesting, based on the conditions set forth in the award agreements, these units will be settled in cash. We valued these units in accordance with the guidance set forth by FASB ASC Topic 718 – Compensation-Stock Compensation and recognized $1.8 million and $2.0 million of expense for the years to date ended September 30, 2019 and September 30, 2018, respectively, for all cash-settled restricted stock units, of which $0.3 million and $0.4 million was recorded during the quarters to date ended September 30, 2019 and September 30, 2018, respectively.

Stock-Based Compensation Expense. Total stock-based compensation expense for the quarters and years to date ended September 30, 2019 and 2018 for all types of awards was as follows (dollars in thousands):

	For the Quarter Ended September 30,				For the Year to Date Ended September 30,
Award Type	2019		2018		2019		2018
Stock options	$	400	$	516	$	1,260	$	1,423
Restricted stock units settled in stock		1,113		924		2,651		2,707
Restricted stock units settled in cash		340		435		1,777		1,997
Total stock-based compensation expense	$	1,853	$	1,875	$	5,688	$	6,127

Performance Unit Awards. Performance unit awards granted during 2017 are long-term incentive, cash-based awards. Payment of these awards is based upon a calculation of Total Shareholder Return (“TSR”) of CEC as compared to TSR across a specified peer group of our competitors over a three-year performance period ending on December 31, 2019. These awards are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income and comprehensive income in the current period. We recorded $2.9 million and $2.5 million of expense related to these awards for the years to date September 30, 2019 and September 30, 2018, respectively, with $0.8 million and $0.9 million of expense for the quarters ended September 30, 2019 and September 30, 2018, respectively.