Stock-Based Compensation

In March 2012, we adopted the 2012 Omnibus Long-Term Incentive Plan (the “2012 Plan”) providing for common stock-based awards to employees and to non-employee directors. The 2012 plan was subsequently amended in August 2014 and June 2016. The 2012 Plan, as amended, permits the granting of various types of awards, including stock options, restricted stock and restricted stock unit awards, and up to 4,754,000 shares were authorized for issuance. Restricted stock and restricted stock units may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than the market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. We have the right to satisfy option exercises from treasury shares and from authorized but unissued shares. As of December 31, 2017, approximately 1,740,917 shares were available for future awards.

In the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The FASB issued this accounting standard in an effort to simplify the accounting for employee share-based payments and improve the usefulness of the information provided to users of financial statements. Our policy is to account for forfeitures of share-based compensation awards as they occur.

A summary of compensation cost recognized for stock-based payment arrangements is as follows:



	Year Ended December 31,
(in thousands)	2017		2016		2015
Compensation cost recognized:
Stock options	$	—	$	81	$	430
Restricted stock and restricted stock units	3,565		4,101		3,766
Total stock-based compensation	$	3,565	$	4,182	$	4,196

There was no stock-based compensation capitalized in connection with rig construction activity during the years ended December 31, 2017 and 2016, and approximately $0.7 million in stock-based compensation was capitalized in connection with rig construction activity during the year ended December 31, 2015.

Stock Options

Certain options were granted on March 2, 2012 and began vesting on their date of grant, with 25% of such options vesting on the grant date, and 25% of such options vesting on each anniversary thereafter until fully vested on March 2, 2015. A subsequent grant of 15,700 options was made in August 2012, one third of which vest on each anniversary of the grant date over three years. In December 2012, we granted an additional 229,613 stock options that vest over five years in three equal tranches commencing on the third year anniversary date and each year thereafter.

In February 2013, we granted an additional 119,320 stock options that vest over four years. No stock options were granted during the years ended December 31, 2017, 2016 or 2015.

No options were exercised during the years ended December 31, 2017, 2016 or 2015. It is our policy that in the future any shares issued upon option exercise will be issued initially from any available treasury shares or otherwise as newly issued shares.

We use the Black-Scholes option pricing model to estimate the fair value of stock options granted to employees and non-employee directors. The fair value of the options is amortized to compensation expense on a straight-line basis over the requisite service periods of the stock awards, which are generally the vesting periods.

The following summary reflects the stock option activity and related information for the year ended December 31, 2017:



	Options		Weighted Average Exercise Price
Outstanding at January 1, 2017	935,720		$	12.74
Granted	—		—
Exercised	—		—
Forfeited/expired	(252,770	)	12.74
Outstanding at December 31, 2017	682,950		$	12.74
Exercisable at December 31, 2017	682,950		$	12.74

The number of options exercisable at December 31, 2017 was 682,950 with a weighted average remaining contractual life of 4.3 years and a weighted-average exercise price of $12.74 per share.

As of December 31, 2017, there was no unrecognized compensation cost related to outstanding stock options. The fair value of options that vested during the years ended December 31, 2017, 2016 and 2015 was zero, $0.4 million and $1.1 million, respectively.

Restricted Stock

Restricted stock awards consist of grants of our common stock that vest ratably over three to four years. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the estimated fair market value of our shares on the grant date. As of December 31, 2017, there was no unrecognized compensation cost related to unvested restricted stock awards.

A summary of the status of our restricted stock awards and of changes in restricted stock outstanding for the year ended December 31, 2017 is as follows:



	Shares		Weighted Average Grant Date Fair Value Per Share
Outstanding at January 1, 2017	147,368		$	10.67
Granted	—		—
Vested	(144,173	)	10.72
Forfeited/expired	(3,195	)	8.35
Outstanding at December 31, 2017	—		$	—

Restricted Stock Units

We have granted restricted stock units ("RSUs") to key employees under the 2012 Plan. We have granted three-year time vested RSUs, as well as performance-based and market-based RSUs, where each unit represents the right to receive, at the end of a vesting period, up to two shares of ICD common stock with no exercise price. Exercisability of the market-based RSUs is based on our total shareholder return ("TSR") as measured against the TSR of a defined peer group and vesting of the performance-based RSUs is based on our cumulative EBITDA, safety or uptime performance statistics, as defined in the restricted stock unit agreement, over a three year period. We used a Monte Carlo simulation model to value the TSR market-based RSUs. The fair value of the performance-based RSUs is based on the market price of our common stock on the date of grant. During the restriction period, the RSUs may not be transferred or encumbered, and the recipient does not receive dividend equivalents or have voting rights until the units vest. As of December 31, 2017, there was $2.9 million of total unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of 0.9 years.

No RSUs were issued during the year ended December 31, 2015.

The assumptions used to value our TSR market-based RSUs granted during the year ended December 31, 2016 were a a risk-free interest rate of 0.93%, an expected volatility of 56.3% and an expected dividend yield of 0.0%. Based on the Monte Carlo simulation, these RSUs were valued at $4.15.

The assumptions used to value our TSR market-based RSUs granted during the year ended December 31, 2017 were a a risk-free interest rate of 1.30%, an expected volatility of 55.5% and an expected dividend yield of 0.0%. Based on the Monte Carlo simulation, these RSUs were valued at $5.62.

A summary of the status of our RSUs as of December 31, 2017, and of changes in RSUs outstanding during the year ended December 31, 2017, is as follows:



	RSUs		Weighted Average Grant-Date Fair Value Per Share
Outstanding at January 1, 2017	1,030,658		$	7.18
Granted	656,631		5.76
Vested and converted	(350,895	)	8.45
Forfeited/expired	(343,074	)	9.14
Outstanding at December 31, 2017	993,320		$	5.11