Note 8. Stock-Based Compensation

2017 Omnibus Incentive Plan

In connection with the Company’s IPO, the Company’s Board of Directors adopted and approved the 2017 Omnibus Incentive Plan (“2017 Plan”) and cancelled its former management D units equity incentive plan (“2016 Profit Interest Plan”). The 2017 Plan provides for grants of stock options, restricted stock and performance awards. The Company’s directors, officers and other employees and persons who engage in services for the Company are eligible for grants under the 2017 Plan. The purpose of the 2017 Plan is to provide the individuals with incentives to maximize stockholder value and otherwise contribute to the Company’s success and to enable the Company to attract, retain and reward the best available persons for positions of responsibility. The 2017 Plan has authorized 6,355,054 shares of its common stock to be available for issuance under the 2017 Plan, subject to adjustment in the event of a reorganization, stock split, merger or similar change in the Company’s corporate structure or the outstanding shares of common stock. The Company’s Compensation Committee will administer the 2017 Plan. The Board of Directors also has the authority to administer the 2017 Plan and to take all actions that the Company’s Compensation Committee is otherwise authorized to take under the 2017 Plan. The terms and conditions of each award made under the 2017 Plan, including vesting requirements, will be set forth consistent with the 2017 Plan in a written agreement with the grantee.

Employee Grants

Senior management that had participated in the 2016 Profit Interest Plan were granted (based on a conversion factor of management units to new common shares) new restricted stock to replace the shares that were cancelled in the 2016 Profit Interest Plan. Under the 2017 Plan, 394,052 shares of restricted stock were granted that will vest ratably at 33% per year beginning on June 30, 2018 assuming the award recipient continues to be employed by the Company. Senior management also received 450,356 shares of restricted stock in connection with long-term incentive compensation under the 2017 Plan. These restricted stock grants will vest ratably at 33% per year beginning on June 30, 2018 assuming the award recipient continues to be employed by the Company.

Employees that had participated in the 2016 Director Appreciation Rights Plan were granted new restricted stock (based on a conversion factor of the then calculated value of such pool). These employees were granted 78,050 shares of restricted stock under the 2017 Plan that will vest ratably at 33% per year beginning on June 30, 2018 assuming the award recipient continues to be employed by the Company.

Each year, the Company’s Compensation Committee, in consultation with the Company’s Chief Executive Officer (“CEO”), establishes an annual incentive bonus plan. In 2017, the 2017 Management Bonus Plan (“2017 MBP”) was established, which provides incentive cash bonuses for the majority of the Company’s employees based upon the achievement of certain business and individual or department objectives, including most prominently adjusted consolidated earnings before interest, tax, depreciation and amortization. Bonus payouts were established based on a percentage of the participant’s base salary based on the title/position. In connection with the Company’s IPO, the Compensation Committee, in consultation with the Company’s CEO, granted restricted shares out of the 2017 Plan. The Compensation Committee granted restricted shares equal to 100% to 150% achievement of the 2017 MBP. Such grant in aggregate totaled 866,708 shares and will vest 100% on June 30, 2018 assuming the participant continues to be employed by the Company.

Furthermore, the members of the Company’s Board of Directors received 54,361 shares, in aggregate, of restricted stock that will vest 100% beginning on June 30, 2018.

The following table summarizes the restricted stock awards granted during the nine months ended September 30, 2017.

	Number of Restricted Stock Shares

Outstanding January 1, 2017	—
Granted	1,843,527
Cancelled	—
Forfeited	(45,162	)

Outstanding September 30, 2017	1,798,365

The above table includes 472,102 of restricted shares that were granted from plans prior to the 2017 Plan, thus these restricted shares do not count towards the 6,355,054 shares authorized by the plan. These shares represented the unvested shares from the old 2016 Profit Interest Plan that will vest ratably at 33% per year beginning on June 30, 2018.

For restricted stock awards that contain only service conditions for vesting, the Company calculates the award fair value based on the closing stock price on the accounting grant date.

For the three months ended September 30, 2017 and 2016 the Company recorded $5.2 million and $0.4 million, respectively, of non-cash compensation expense which is reflected in selling, general and administrative expense and operating expenses (excluding depreciation and amortization), depending on the recipients’ duties, in the Company’s unaudited condensed consolidated statements of operations. During the nine months ended September 30, 2017 and 2016, the Company recorded $8.3 million and $0.5 million, respectively, of non-cash compensation expense which is reflected in selling, general and administrative expense and operating (excluding depreciation and amortization), depending on participants’ duties, in the Company’s unaudited condensed consolidated statements of operations.