11. EQUITY-BASED COMPENSATION

In accordance with ASC 718, Compensation-Stock Compensation, the Company measures the cost of employee services rendered in exchange for share-based compensation based upon the grant date fair market value. The cost is recognized over the requisite service period, which is generally the vesting period unless service or performance conditions require otherwise. The Company recognizes the impact of forfeitures as they occur. The Company has granted stock options, time-vesting restricted shares, time-vesting restricted stock units, performance-vesting restricted shares and performance-vesting restricted stock units.

Total equity compensation expense was $7,545 and $4,114 for the three months ended March 31, 2018 and 2017, respectively. Equity compensation expense for the three months ended March 31, 2018 includes approximately $4,500 related to certain equity awards which were accelerated to vest in the first quarter of 2018 in connection with the departure of certain executives as required by their respective employment agreements. See Note 13–Restructuring Program and Other Separation Costs for further details. Equity compensation expense is included in selling, general and administrative expenses and in operating expenses in the accompanying unaudited condensed consolidated statements of comprehensive loss. Total unrecognized equity compensation expense for all equity compensation awards probable of vesting as of March 31, 2018 was approximately $34,600 which is expected to be recognized over the respective service periods.

The activity related to the Company’s time-vesting and performance-vesting awards during the three months ended March 31, 2018 is as follows:

						Performance-Vesting Restricted shares/units
	Time-Vesting Restricted shares/units					Bonus Performance Restricted shares/units					Long-Term Incentive Performance Restricted shares/units					2.75x Performance Restricted shares
	Shares/Units			Weighted Average Grant Date Fair Value per Share/Unit		Shares/Units			Weighted Average Grant Date Fair Value per Share/Unit		Shares/Units			Weighted Average Grant Date Fair Value per Share/Unit		Shares			Weighted Average Grant Date Fair Value per Share
Outstanding at December 31, 2017		1,852,512		$	17.09		805,245		$	18.09		864,572		$	18.50		616,793		$	3.56
Granted		188,577		$	14.71		707,981		$	14.66		1,122,526		$	14.74		—			—
Vested		(281,861	)	$	18.90		(69,221	)	$	18.07		(9,010	)	$	18.79		—			—
Forfeited		(432,341	)	$	18.12		(754,750	)	$	18.01		(554,388	)	$	18.34		(3,893	)	$	13.93
Outstanding at March 31, 2018		1,326,887		$	16.04		689,255		$	14.66		1,423,700		$	15.60		612,900		$	3.49

The activity related to the Company’s stock option awards during the three months ended March 31, 2018 is as follows:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2017		2,923,448		$	18.78
Granted		—			—
Forfeited		(323,903	)	$	18.11
Expired		(33,641	)	$	18.65
Exercised		(484	)	$	14.17
Outstanding at March 31, 2018		2,565,420		$	18.86		7.34	$	57
Exercisable at March 31, 2018		2,094,948		$	19.14		7.24	$	15

Omnibus Incentive Plan

The Company has reserved 15,000,000 shares of common stock for issuance under its Omnibus Incentive Plan (the “Omnibus Incentive Plan”), of which approximately 7,650,000 shares are available for future issuance as of March 31, 2018.

As part of the Company’s annual compensation-setting process and in accordance with the Company’s Equity Award Grant Policy (the “Equity Grant Policy”), the Compensation Committee approved an annual bonus plan (the “2018 Bonus Plan”) and a long-term incentive plan grant (the “2018 Long-Term Incentive Grant”) for the fiscal year ending December 31, 2018 (“Fiscal 2018”).

Bonus Performance Restricted Awards

The 2018 Bonus Plan provides for bonus awards payable 50% in cash and 50% in performance-vesting restricted units (the “Bonus Performance Restricted Units”) and is based upon the Company’s achievement of specified performance goals with respect to Fiscal 2018, as defined by the 2018 Bonus Plan. The total number of shares eligible to vest is based on the level of achievement of the targets for Fiscal 2018 which ranges from 0% (if below threshold performance), to 50% (for threshold performance), to 100% (for target performance) and up to 150% (at or above maximum performance). Pursuant to the Equity Grant Policy, Bonus Performance Restricted Units representing the total units that could be earned under the maximum performance level of achievement were granted during the three months ended March 31, 2018.

The Company also had an annual bonus plan for the fiscal year ended December 31, 2017 (“Fiscal 2017”), under which certain employees were eligible to vest in performance-vesting restricted shares (the “Bonus Performance Restricted Shares”) based upon the Company’s achievement of certain performance goals with respect to Fiscal 2017. Based on the Company’s actual Fiscal 2017 results, a portion of these Bonus Performance Restricted Shares vested in the three months ended March 31, 2018 and the remaining forfeited in accordance with their terms.

Long-Term Incentive Awards

The 2018 Long-Term Incentive Grant is comprised of time-vesting restricted units (the “Long-Term Incentive Time Restricted Units”) and performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the “Long-Term Incentive Awards”). Pursuant to the Equity Grant Policy, the Long-Term Incentive Awards related to the 2018 Long-Term Incentive Grant were granted during the three months ended March 31, 2018.

Long-Term Incentive Time Restricted Units

Certain Long-Term Incentive Time Restricted Units granted under the 2018 Long-Term Incentive Grant vest over five years, with one-third vesting on each of the third, fourth and fifth anniversaries of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense for these units is recognized using the straight line method with one-third recognized over the initial three year vesting period and the remaining two-thirds recognized over the remaining vesting period.

Other Long-Term Incentive Time Restricted Units granted under the 2018 Long-Term Incentive Grant vest over three years, with all of the units vesting on the third anniversary of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense for these units is recognized using the straight line method over the three year vesting period.

Long-Term Incentive Performance Restricted Units

The Long-Term Incentive Performance Restricted Units granted under the 2018 Long-Term Incentive Plan are expected to vest following the end of the three-year performance period beginning on January 1, 2018 and ending on December 31, 2020 based upon the Company’s achievement of specified performance goals for Fiscal 2020, as defined by the 2018 Long-Term Incentive Grant. The total number of Long-Term Incentive Performance Restricted Units eligible to vest will be based on the level of achievement of the performance goals and ranges from 0% (if below threshold performance), to 50% (for threshold performance), to 100% (for target performance), and up to 200% (for at or above maximum performance). For actual performance between the specified threshold, target and maximum levels, the resulting vesting percentage will be adjusted on a linear basis. The 2018 Long-Term Incentive Grant provides additional incentive for early achievement of the Adjusted EBITDA target as follows: if the Company’s Fiscal 2020 Adjusted EBITDA target is achieved in 2018, 30% of target Long-Term Incentive Performance Restricted Units will be earned and delivered in 2019; if the Company’s Fiscal 2020 Adjusted EBITDA target is achieved in 2019, 20% of target Long-Term Incentive Performance Restricted Units will be earned and delivered in 2020, in each case subject to the overall maximum award of 200% of target. Pursuant to the Equity Grant Policy, Long-Term Incentive Performance Restricted Units representing the total units that could be earned under the maximum performance level of achievement were granted during the three months ended March 31, 2018.

Other

The Company also has outstanding Long-Term Incentive Time Restricted shares, Long-Term Incentive Performance Restricted shares and Long-Term Incentive Options granted under previous long-term incentive plan grants. During the three months ended March 31, 2018, a portion of the previously granted Long-Term Incentive Performance Restricted Shares related to completed performance periods vested, with the remainder forfeiting in accordance with their terms. The remaining outstanding Long-Term Incentive Performance Restricted Shares are eligible to vest based upon the Company’s achievement of pre-established performance goals for the respective performance period, as defined.

The Company recognizes equity compensation expense for its performance-vesting restricted awards ratably over the related performance period, if the performance condition is probable of being achieved. Based on the Company’s progress towards its respective performance goals, a portion of its performance-vesting restricted awards are considered probable of vesting as of March 31, 2018; therefore, equity compensation expense has been recorded accordingly. If the probability of vesting related to these awards changes in a subsequent period, all equity compensation expense related to those awards that would have been recorded over the requisite service period had the awards been considered probable at the new percentage from inception, will be recorded as a cumulative catch-up at such subsequent date.

Total unrecognized equity compensation expense for all outstanding performance-vesting restricted awards not probable of vesting was approximately $13,300 as of March 31, 2018.

2.75x Performance Restricted Shares

The Company has awarded under both its Omnibus Incentive Plan and its previous incentive plan (the “Pre-IPO Incentive Plan”) certain performance-vesting restricted shares (the “2.75x Performance Restricted shares”). During the first quarter of 2017, the Company modified the 2.75x Performance Restricted shares to vest 60% upon the closing of the ZHG Transaction (see Note 9–Related-Party Transactions). Under the terms of the Stock Purchase Agreement, if in certain circumstances the Buyer acquires a majority of the Company’s then outstanding common shares prior to the one-year anniversary of the closing of the ZHG Transaction, then the Buyer is required as a condition to the closing of the acquisition that results in such majority ownership, to pay to the Seller, in respect of each share of common stock sold to the Buyer at the closing of the ZHG Transaction, the excess, if any, of the highest price per share paid by the Buyer for shares of the Company’s common stock over $23.00 (the “Additional Payment”). As such, the outstanding unvested 2.75x Performance Restricted shares continued to be eligible to vest in accordance with their terms if Seller had received an Additional Payment from the Buyer sufficient to satisfy the 2.75x cumulative return multiple in the twelve month period following the closing of the ZHG Transaction. The period expired on May 8, 2018, as such, these shares forfeited in the second quarter of 2018.

The ZHG Transaction was considered a liquidity event and was subject to customary closing conditions (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act). As the modification discussed above was based on a liquidity event, for accounting purposes, the 2.75x Performance Restricted shares were not considered probable of vesting until such time the ZHG Transaction was consummated. In accordance with the guidance in ASC 718, Compensation-Stock Compensation, as the 2.75x Performance Restricted shares were not considered probable of vesting before or after the date of modification, the Company used the respective modification date fair value to record equity compensation expenses related to the modified shares when the liquidity event occurred. As a result, the Company recognized non-cash equity compensation expense related to all of the 2.75x Performance Restricted shares of approximately $8,400 upon closing of the ZHG Transaction on May 8, 2017 and paid cash accumulated dividends of approximately $1,300 in the second quarter of 2017.