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 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 September 30, 2018, approximately 1,016,855 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:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2018		2017		2018		2017
Compensation cost recognized:
Stock options	$	—	$	—	$	—	$	—
Restricted stock and restricted stock units	718		867		2,080		3,036
Total stock-based compensation	$	718	$	867	$	2,080	$	3,036

No stock-based compensation was capitalized in connection with rig construction activity during the three and nine months ended September 30, 2018 or 2017.

Stock Options

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.

There were no stock options granted during the nine months ended September 30, 2018 or 2017.

A summary of stock option activity and related information for the nine months ended September 30, 2018 is as follows:



	Nine Months Ended September 30, 2018
	Options	Weighted Average Exercise Price
Outstanding at January 1, 2018	682,950	$	12.74
Granted	—	—
Exercised	—	—
Forfeited/expired	—	—
Outstanding at September 30, 2018	682,950	$	12.74
Exercisable at September 30, 2018	682,950	$	12.74

The number of options vested at September 30, 2018 was 682,950 with a weighted average remaining contractual life of 3.6 years and a weighted average exercise price of $12.74 per share. There were no unvested options or unrecognized compensation cost related to outstanding stock options at September 30, 2018.

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 September 30, 2018, there was no unrecognized compensation cost related to unvested restricted stock awards and all previously issued restricted stock awards had vested.

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 three-year 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 September 30, 2018, there was $3.7 million of total unrecognized compensation cost related to unvested RSUs. This cost was expected to be recognized over a weighted average period of 0.9 years, however as a result of the Sidewinder Merger that closed on October 1, 2018, all of these awards were accelerated or forfeited in accordance with the change in control provisions of the RSU's. A non-cash charge of approximately $2.6 million will be recorded in the fourth quarter of 2018.

A summary of the status of our RSUs as of September 30, 2018, and of changes in RSUs outstanding during the nine months ended September 30, 2018, is as follows:



	Nine Months Ended September 30, 2018
	RSUs		Weighted Average Grant-Date Fair Value Per Share
Outstanding at January 1, 2018	993,320		$	5.11
Granted	641,041		4.55
Vested and converted	(350,528	)	5.03
Forfeited	(57,660	)	5.36
Outstanding at September 30, 2018	1,226,173		$	4.83