18.	STOCK-BASED COMPENSATION

The Company has several programs for stock-based payments to employees and directors, including stock options and restricted stock. Stock-based compensation expense is recorded in General and administrative expenses, Selling expenses and Cost of goods sold in the Consolidated Statements of Operations.

The Company recognized stock-based compensation expense (benefit) in the following line items on the Consolidated Statements of Operations for the fiscal years ended March 31, 2017, 2016, and 2015:

(Amounts in thousands)	2017		2016			2015
Component of income before income taxes:
Cost of goods sold	$	177	$	(300	)	$	1,100
Selling expenses		177		(500	)		1,500
General and administrative expenses		7,953		(5,068	)		21,647
Total stock-based compensation expense (benefit)	$	8,307	$	(5,868	)	$	24,247

The following table summarizes stock-based compensation expense (benefit) by award type for the fiscal years ended March 31, 2017, 2016, and 2015:

(Amounts in thousands)	2017		2016			2015
Stock-based compensation expense (benefit):
Liability-classified Stock Options	$	4,936	$	(6,784	)	$	21,666
Equity-classified Stock Options		108		—			—
Restricted Stock		1,945		916			1,681
Non-Employee Director		1,318		—			900
Total stock-based compensation expense (benefit)	$	8,307	$	(5,868	)	$	24,247

Stock Options

Liability-Classified Options – Prior to fiscal 2017, the Company permitted employees to satisfy their personal tax liability associated with the exercise of the stock options through the net settlement of shares in excess of the minimum tax withholding required by law. In addition, prior to the Company’s initial public offering in fiscal 2015, the Company had periodically repurchased shares resulting from option exercises within six months of the exercise date. As such, the Company accounts for all 2000 Plan and 2013 Plan awards issued prior to fiscal 2017 as liability-classified awards.

Liability-classified stock option awards are re-measured at fair value at each relevant reporting date, and the pro-rata vested portion of the award is recognized as a liability. The stock-based compensation liability associated with stock options expected to vest within the next twelve months is recorded in Current portion of liability-classified stock-based awards, with the portion related to those expected to vest beyond twelve months recorded in Other liabilities in the Consolidated Balance Sheets. When stock options are exercised, the liability is reclassified to additional paid in capital at fair value. The proceeds from the exercise are also recorded as additional paid in capital.

Compensation expense for stock options is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. For liability-classified options, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model at the end of each period. The following table summarizes the assumptions used in estimating the fair value of liability-classified stock options:

	2017		2016		2015
Common stock price	$18.70 - $28.17		$18.34 - $33.03		$14.33 - $29.94
Expected stock price volatility	29.6% - 33.0%		31.1% - 39.3%		28.2% - 51.0%
Risk-free interest rate	0.9% - 1.9%		0.5% - 1.5%		0.1% - 1.8%
Weighted-average expected option life (years)	0.5 – 5.1		0.5 – 6.2		0.5 - 7.2
Dividend yield		0.9%		0.9%		0.5%

2000 Plan - The Company’s 2000 stock option plan (“2000 Plan”) provides for the issuance of statutory and non-statutory stock options to management based upon the discretion of the Board of Directors. The plan generally provides for grants with the exercise price equal to fair value on the date of grant, which vest in three equal annual amounts beginning in year five and expire after approximately 10 years from issuance. The Company had approximately 1.1 million shares available for grant under the 2000 Plan as of March 31, 2017.

The stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:

(Share amounts in thousands)	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year		515		$	11.82		4.2
Granted		—			—		—
Exercised		(292	)		10.63		—
Forfeited		(28	)		12.50		—
Outstanding at end of year		195			13.31		5.4
Vested at end of year		136			12.26		4.7
Unvested at end of year		59			15.74		7.0
Fair value of options granted during the year				$	—

All outstanding options are expected to vest.

The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:

(Share amounts in thousands)	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		76		$	6.76
Granted		—			—
Vested		—			—
Forfeitures		(17	)		6.76
Unvested at end of year		59		$	6.76

As of March 31, 2017, there was a total of $0.3 million of unrecognized compensation expense related to unvested stock option awards under the 2000 plan that will be recognized as an expense as the awards vest over the remaining weighted average service period of 1.3 years.

The total fair value of liability-classified options issued under the 2000 Plan that vested during the fiscal year ended March 31, 2015 was $8.1 million. No options vested during the fiscal years ended March 31, 2017 and 2016. The weighted average grant date fair value of stock options granted during the fiscal year ended March 31, 2015 was $6.76. No options were granted during the fiscal years ended March 31, 2017 and 2016. The aggregate intrinsic value for options outstanding and currently exercisable as of March 31, 2017 was $1.7 million and $1.3 million, respectively. The total intrinsic value of options exercised during the fiscal years ended March 31, 2017, 2016, and 2015 were $3.7 million, $3.7 million and $3.4 million, respectively.

2013 Plan - The Company’s 2013 stock option plan (“2013 Plan”) provides for the issuance of non-statutory common stock options to management subject to the Board’s discretion. The plan generally provides for grants with the exercise price equal to fair value on the date of grant. The grants generally vest in five equal annual amounts beginning in year one and expire after approximately 10 years from issuance. Options issued to the Chief Executive Officer vest equally over four years and expire after approximately 10 years from issuance.

In May 2014, the Board of Directors approved the increase of shares available for granting under the 2013 plan to 1.4 million shares. The Company had 1.0 million shares available for grant under the 2013 Plan as of March 31, 2017.

The liability-classified stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:

(Share amounts in thousands)	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year		1,911		$	13.64		7.4
Issued		—			—		—
Exercised		(66	)		13.64		—
Forfeited		(99	)		13.64		—
Outstanding at end of year		1,746			13.64		6.0
Vested at end of year		1,125			13.64		6.0
Unvested at end of year		621			13.64		6.0
Fair value of options granted during the year				$	—

All outstanding options are expected to vest.

The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:

(Share amounts in thousands)	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		1,095		$	6.22
Vested		(375	)		—
Forfeited		(99	)		6.22
Unvested at end of year		621		$	6.22

As of March 31, 2017, there was a total of $3.6 million of unrecognized compensation expense related to unvested stock option awards under the 2013 Plan that will be recognized as an expense as the awards vest over the remaining weighted average service period of 1.1 years.

The aggregate intrinsic value for options outstanding and currently exercisable as of March 31, 2017 was $14.4 million and $9.3 million, respectively. The total fair value of options that vested during the fiscal years ended March 31, 2017, 2016, and 2015 were $3.4 million, $3.6 million, and $7.2 million, respectively. The total intrinsic value of options exercised during the fiscal year ended March 31, 2017 was $0.8 million.

Equity-Classified Options - The Company accounts for awards under the 2013 Plan granted during the fiscal year ended March 31, 2017 as equity-classified awards as employees are no longer permitted to satisfy their personal tax liability in excess of the minimum statutory withholding. Equity-classified stock option awards are measured based on the grant-date estimated fair value of each award. Compensation expense for stock options is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. The Company determines the fair value of the options based on the Black-Scholes option pricing model at the grant date. This methodology requires significant inputs including the price of the Company’s common stock, risk-free interest rate, dividend yield and expiration date. The following table summarizes the assumptions used in estimating the fair value of the equity-classified stock options:

	2017
Common stock price	$24.20
Expected stock price volatility	31.5% - 35.6%
Risk-free interest rate	2.0% - 2.2%
Weighted-average expected option life (years)	4.9 – 6.1
Dividend yield		1.0%

The equity-classified stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:

(Share amounts in thousands)	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year		—		—
Granted		514	$	24.20		—
Exercised		—		—		—
Forfeited		—		—		—
Outstanding at end of year		514		24.20		9.0
Vested at end of year		15		24.20		9.0
Unvested at end of year		499		24.20		9.0
Fair value of options granted during the year			$	7.81

All outstanding options are expected to vest except options granted to an executive with a planned retirement.

The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:

(Share amounts in thousands)	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		—			—
Granted		514		$	7.81
Vested		(15	)		6.72
Forfeited		—			—
Unvested at end of year		499		$	7.84

As of March 31, 2017, there was a total of $2.6 million of unrecognized compensation expense related to unvested equity-classified stock option awards that will be recognized as an expense as the awards vest over the remaining weighted average service period of 2.9 years. The weighted average grant fair value of stock options granted during the fiscal years ended March 31, 2017, 2016, and 2015 were $7.81, $0.00, and $0.00, respectively. The total fair value of options that vested during the fiscal years ended March 31, 2017, 2016, and 2015 were $0.1 million, less than $0.1 million, and less than $0.1 million, respectively. There were no options exercised during the fiscal years ended March 31, 2017, 2016, and 2015.

Restricted Stock

On September 16, 2008, the Board of Directors adopted the restricted stock plan, which provides for the issuance of restricted stock awards to certain key employees. The restricted stock generally vest ratably over a five-year period from the original restricted stock grant date, contingent on the employee’s continuous employment by ADS. In certain instances, however, a portion of the grants vested immediately or for accounting purposes were deemed to have vested immediately, including the grants to the Chief Executive Officer, which do not have a substantial risk of forfeiture as a result of different vesting provisions. Under the restricted stock plan, vested shares are considered issued and outstanding. Employees with restricted stock have the right to dividends on the shares awarded (vested and unvested) in addition to voting rights on non-forfeited shares.

Prior to the Company’s initial public offering in fiscal 2015, the Company periodically repurchased shares from employees within six months of the shares vesting. As such, for the periods prior to the Company’s initial public offering, the restricted stock awards were accounted for as liability-classified awards. In the periods subsequent to the initial public offering, the Company discontinued repurchasing employee held restricted shares due to the existence of a public market for the shares. Accordingly, upon the initial public offering the Company has modified the restricted stock awards from being accounted for as liability-classified to equity-classified awards and reclassified the carrying amount of the awards of $4.8 million to Paid-in capital in the Consolidated Balance Sheets. The restricted stock has been accounted for as equity-classified awards for the periods subsequent to the initial public offering. The fair value of restricted stock is based on the fair value of the Company’s common stock. Compensation expense is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant.

The Company had approximately 0.2 million shares available for grant under this plan as of March 31, 2017.

The information about the unvested restricted stock grants as of March 31, 2017 is as follows:

(Share amounts in thousands)	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		112		$	12.65
Granted		191			24.20
Vested		(49	)		16.15
Forfeited		—
Unvested at end of year		254		$	21.92

The Company expects all restricted stock grants to vest.

At March 31, 2017, there was approximately $3.5 million of unrecognized compensation expense related to the restricted stock that will be recognized over the weighted average remaining service period of 2.4 years. During the fiscal year ended March 31, 2017, the weighted average grant date fair value of restricted stock granted was $24.20. No restricted stock was granted during the fiscal years ended March 31, 2016 and 2015. During the fiscal years ended March 31, 2017, 2016, and 2015 the total fair value of restricted stock that vested was $1.2 million, $1.1 million and $1.9 million, respectively.

Non-Employee Director Compensation Plan

On June 18, 2014, the Company amended its then-existing Stockholders’ Agreement to authorize 0.3 million shares of restricted stock to be granted to non-employee members of its Board of Directors. The shares typically will vest one year from the date of issuance. Under this stock plan, the vested shares granted are considered issued and outstanding. Non-employee directors with this stock have the right to dividends on the shares awarded (vested and unvested) in addition to voting rights.

The Company has determined that the restricted stock granted to directors should be accounted for as equity-classified awards. The Company had approximately 0.2 million and 0.2 million shares available for grant under this plan as of March 31, 2017 and 2016.

The following table summarizes information about the unvested Non-Employee Director Compensation stock grants as of March 31, 2017 :

	2017
(Share amounts in thousands)	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		—			—
Granted		77		$	24.20
Vested		(37	)		24.20
Unvested at end of year		40		$	24.20

As of March 31, 2017, there was approximately $0.5 million of unrecognized compensation expense related to this restricted stock that will be recognized over the weighted average remaining service period of 0.6 years.