SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Share Repurchase Program

On May 18, 2016, our shareholders approved a share repurchase program, which replaced the previous share repurchase program. Under the program, we are authorized to purchase up to 4.6 million shares of our common stock, based on a limit of 25% of the outstanding shares of common stock on the date of approval at a minimum price of $1.00 per share and a maximum price of $500.00 per share. This is in addition to amounts previously purchased under prior programs. Under the existing and prior programs, we purchased 0.4 million shares of common stock at an average price of $25.10 per share during the three months ended March 31, 2017 and 0.5 million shares at an average price of $25.17 per share during the three months ended March 31, 2016. As of March 31, 2017, approximately 3.5 million shares of common stock remain available for repurchase under the program. Our senior secured term loan limits the amount we can spend on share repurchases and may prevent repurchases in certain circumstances. As of March 31, 2017, approximately $394 million was available to repurchase shares of our common stock under our senior secured term loan.

Share-Based Compensation

We issue share-based awards in the form of stock options and restricted shares for certain employees, officers and directors. We recorded share-based compensation expense of $0.7 million and $1.9 million for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, estimated unrecognized compensation costs related to share-based awards amounted to $5.3 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.08 years.

In connection with the January 1, 2017 adoption of FASB ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (see Note 1), the Company made an accounting policy election to account for forfeitures in compensation expense as they occur, rather than continuing to apply the Company’s previous policy of estimating forfeitures. Prior to this accounting change, share-based compensation expense for stock options and restricted shares was recorded net of estimated forfeiture rates ranging from 0% to 40%.

Stock Options

Stock option grants are composed of a combination of service-based, market-based and performance-based options.

Service-Based Options. These options generally vest over three or four years with equal annual cliff-vesting and expire on the earlier of ten years after the date of grant or following termination of service. A total of 0.8 million service-based awards were outstanding as of March 31, 2017.

Market-Based Options. These option grants generally have two components, each of which vests only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. Market-based awards vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in annual installments. Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement. A total of 1.0 million market-based awards were outstanding at March 31, 2017.

Performance-Based Options. These option grants begin to vest upon the achievement of certain specific financial measures. Generally, 25% of the awards vest upon the achievement of the performance criteria and the remaining 75% vest thereafter in three equal annual installments. The award of performance-based options is adjusted based on the level of achievement specified in the award agreements. If the performance criteria achieved is below a certain threshold, the award is canceled. The options expire on the earlier of ten years after the date of grant or following termination of service. There were no performance-based awards outstanding at March 31, 2017.

The Company granted 0.1 million stock options (at a weighted average exercise price of $27.48 per share) during the three months ended March 31, 2016 (no comparative amounts in 2017).

The fair values of the service-based options and performance-based options were determined using the Black-Scholes option pricing model and the fair values of the market-based options were determined using a lattice (binomial) model. The following assumptions were used to determine the fair values as of the grant date:



	Three months ended March 31, 2016
	Black-Scholes	Binomial

Risk-free interest rate (%)	1.25 - 1.89	0.23 - 1.97
Expected stock price volatility (%)	59.75 - 62.14	59.76 - 62.14
Expected dividend yield	—	—
Expected option life (in years)	6.25	4.55 - 4.88
Fair value	$11.15 - $16.30	$11.06 - $15.73

We determined the expected option life of all service-based stock option grants using the simplified method. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.

The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the period presented:



	Three months ended March 31,
(in thousands, except per share amounts)	2017		2016

Weighted average grant date fair value of stock options granted per share	$	—	$	15.77
Intrinsic value of options exercised	868		601
Grant date fair value of stock options that vested	89		187

The following table summarizes the activity related to our stock options:



	Number of options		Weighted average exercise price		Weighted average contractual term (in years)	Aggregate intrinsic value (in thousands)

Outstanding at December 31, 2016	1,996,509		$	25.98	5.32	$	15,942
Granted	—		—
Exercised	(61,280	)	12.27
Forfeited	(159,576	)	29.68

Outstanding at March 31, 2017	1,775,653		26.12		4.87	28,646

Exercisable at March 31, 2017	1,164,835		21.38		3.25	20,695

Other Share-Based Awards

The Company’s other share-based and similar types of awards are composed of restricted shares and, through August 29, 2016, Equity Appreciation Rights (“EAR”). Effective August 29, 2016, the EAR plans were terminated.

The restricted shares are service-based awards that vest over one to four years with either annual cliff-vesting, vesting of all of the restricted shares at the end of the vesting period or vesting beginning after two years of service. The Company granted 3 thousand restricted shares (at a weighted average price of $27.50 per share) during the three months ended March 31, 2017.

The following table summarizes the activity related to our restricted shares:



	Number of restricted shares

Outstanding at December 31, 2016	231,730
Granted	3,338
Forfeited	(13,100	)

Outstanding at March 31, 2017	221,968