SHARE‑BASED COMPENSATION

Equity Incentive Awards

Our 2014 Equity Incentive Plan (as amended and restated effective May 23, 2017, the “Amended and Restated 2014 Plan”) and our 2012 Equity Incentive Plan (as amended, the “2012 Plan”) are used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business. Our equity incentive plans are administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive equity incentive awards and to specify the terms and conditions of grants of such awards, including, but not limited to the vesting provisions and exercise prices.

Generally, we grant the following award types: (a) time-based options; (b) market-based options; (c) time-based restricted stock; and (d) restricted stock units (“RSUs”) with either time- or performance-based criteria.

A summary of award activity is as follows (in thousands):



	Stock Options Granted		Restricted Stock Awards Granted		Restricted Stock Units Granted
Outstanding, December 31, 2017	19,131		74		—
Granted	20		—		1,877
Exercised options or vested shares	(1,980	)	(66	)	—
Cancelled or forfeited	(1,497	)	—		(80	)
Outstanding, December 31, 2018	15,674		8		1,797

There were approximately 3.6 million awards of our common stock available for future equity grants, both under the Amended and Restated 2014 Plan and the 2012 Plan as of December 31, 2018.

Stock Options

Our time-based stock options granted under our equity plans generally vest at a rate of 25% per year on each of the first four anniversaries of the option grant dates and the options expire after a ten-year period. We estimate forfeiture amounts based on historical patterns.

Our market-based options granted in 2017 and 2016 under our 2014 Plan and 2012 Plan vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of the Company’s shares on the New York Stock Exchange is at least a specified price hurdle, defined as a 25% and 50% premium for 2017 and 2016, respectively, to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then the vested tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. These options expire after a ten-year period.

There were no market-based option awards granted during the year ended December 31, 2018.

The fair values of our standard time-based options were determined as of the date of grant using the Black-Scholes option pricing model with the following assumptions:



	Year Ended December 31,
	2018		2017		2016
Risk-free interest rate	3	%	2	%	1	%
Expected life of options (in years)	6		6		5
Expected volatility	53	%	54	%	51	%
Expected dividend yield	—		—		—

The fair values of our market-based options were determined as of the date of grant using a lattice-based option valuation model with the following assumptions:



	Year Ended December 31,
	2017		2016
Risk-free interest rate	3	%	2	%
Measurement period (in years)	10		10
Expected volatility	70	%	68	%
Expected dividend yield	—		—

The following table presents the options activity:



	Number of Options (in thousands)		Weighted Average Exercise Price (per Share)		Weighted Average Life Remaining (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2017	19,131		$	5.34	6.4	$	45,887
Granted	20		7.88
Exercised	(1,980	)	4.84
Canceled or forfeited	(1,497	)	5.51
Outstanding, December 31, 2018	15,674		$	5.39	6.0	$	17,733
Vested and expected to vest, December 31, 2018	14,947		$	5.44	5.9	$	16,559
Exercisable, December 31, 2018	9,728		$	6.15	5.3	$	7,284

The following table presents the options outstanding and exercisable by price range:



				Options Outstanding				Options Exercisable
				Number Outstanding	Weighted Average Remaining Contract	Weighted Average Exercise		Number Exercisable	Weighted Average Exercise
Range of Exercise Prices				(in thousands)	Life (Years)	Prices		(in thousands)	Price
$	1.46	$	2.40	2,630	7.3	$	1.54	1,110	$	1.55
2.70		2.78		565	7.1	2.77		515	2.77
3.29		3.29		3,326	8.2	3.29		741	3.29
3.41		7.05		2,611	4.1	5.81		2,545	5.79
7.09		7.61		929	5.5	7.34		810	7.32
7.74		9.74		5,613	4.9	8.19		4,007	8.36
				15,674				9,728

There were 20,000, 4.3 million, and 4.4 million options granted for the years ended December 31, 2018, 2017, and 2016, respectively. The weighted average grant date fair value per share of the options granted was $4.15, $1.98, and $0.83 for the years ended December 31, 2018, 2017, and 2016, respectively. The total intrinsic value of options exercised was $6.5 million and $5.3 million for the years ended December 31, 2018 and 2017. There were no options exercised in 2016.

There was approximately $3.4 million in unrecognized compensation expense related to options expected to vest as of December 31, 2018. This cost was expected to be recognized on a straight‑line basis over a weighted average period of 2.8 years. We recorded approximately $5.1 million in non‑cash compensation expense related to options granted that were expected to vest as of December 31, 2018. We received approximately $9.6 million in cash proceeds from the exercise of options during 2018.

There was approximately $7.9 million and $11.7 million in unrecognized compensation expense related to options expected to vest as of December 31, 2017 and 2016, respectively. This cost was expected to be recognized on a straight-line basis over a weighted average period of 3.5 years and 2.1 years for the years ended December 31, 2017 and 2016, respectively. We recorded approximately $6.0 million and $6.3 million in non‑cash compensation expense related to options granted that were expected to vest as of December 31, 2017 and 2016, respectively. We received approximately $10.9 million in cash proceeds from the exercise of options during 2017 and there was no exercise of options during 2016, as no exercises occurred during the period.

Restricted Stock Awards

The following is a summary of non‑vested share awards for our time‑based restricted shares:



	Shares Outstanding (in thousands)		Weighted Average Grant Date Fair Value (per Share)
Outstanding, December 31, 2017	74		$	7.00
Granted	—		—
Vested	(66	)	7.04
Forfeited	—		—
Outstanding, December 31, 2018	8		$	6.66

There were no shares of restricted stock granted for the year ended December 31, 2018. The total fair value of restricted stock vested was approximately $0.5 million for the year ended December 31, 2018. There was $31,952 in unrecognized compensation expense related to shares of restricted stock expected to vest as of December 31, 2018, which was expected to be recognized on a straight‑line basis over a weighted average period of 0.3 years. There were 65,501 shares of restricted stock that vested during 2018, and we recorded approximately $0.4 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during 2018.

There were 50,000 shares of restricted stock granted for the year ended December 31, 2017 and no shares of restricted stock granted for the year ended December 31, 2016. The total fair value of restricted stock vested was approximately $0.4 million and approximately $0.2 million for the years ended December 31, 2017 and 2016, respectively. There was approximately $0.5 million and approximately $1.0 million in unrecognized compensation expense related to shares of time‑based restricted awards expected to vest as of December 31, 2017 and 2016, respectively, and is expected to be recognized on a straight‑line basis over a weighted average period of 1.1 years and 1.7 years, respectively. There were 56,578 shares and 74,919 shares of restricted stock that vested during 2017 and 2016, respectively, and we recorded approximately $0.4 million and approximately $0.5 million in non‑cash compensation expense related to the restricted stock granted that was expected to vest during 2017 and 2016, respectively.

Restricted Stock Units

The following is a summary of non-vested RSU awards:



	Shares Outstanding (in thousands)		Weighted Average Grant Date Fair Value (per Share)		Weighted Average Life Remaining (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2017	—		$	—
Granted	1,877		7.49
Exercised	—		—
Canceled or forfeited	(80	)	7.46
Outstanding, December 31, 2018	1,797		$	7.49	2.0	$	9,254
Vested and expected to vest, December 31, 2018	1,219		$	7.49	1.8	$	6,278

The time-based RSUs granted during 2018 vest at a rate of 25% per year on each of the first four anniversaries of the grant dates.

The performance-based RSUs granted during 2018 will be evaluated by our Compensation Committee of our Board of Directors after a performance period, beginning on the date of grant through December 31, 2020, based on certain revenue and Adjusted EBITDA growth rate metrics, with achievement of each measure to be determined independently of one another. If the performance criteria of the metrics are approved, the eligible awards will become vested on the third anniversary of the grant dates.

The time-based RSUs granted during the first quarter of 2018 to independent members of our Board of Directors vest in equal installments on each of the first three anniversary dates of the grant date and settle on the earliest of the following events: (i) March 7, 2028; (ii) death; (iii) the occurrence of a Change in Control (as defined in the Amended and Restated 2014 Plan), subject to qualifying conditions; or (iv) the date that is six months following the separation from service, subject to qualifying conditions.

There were approximately 1.9 million shares of RSU awards granted for the year ended December 31, 2018 and no RSUs granted for the years ended December 31, 2017 and 2016. There were zero RSUs that vested during the years ended December 31, 2018, 2017 and 2016.

There was approximately $6.7 million in unrecognized compensation expense related to RSU awards expected to vest as of December 31, 2018. This cost is expected to be recognized on a straight-line basis over a weighted average period of 3.0 years. We recorded approximately $1.8 million in non-cash compensation expense related to RSU awards for the year ended December 31, 2018.