SHARE-BASED COMPENSATION

Under the terms of the Company’s 2013 Equity Compensation Plan (“2013 Plan”), the Company may grant incentive stock options, non-qualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees and non-employee directors. Under the 2013 Plan, a committee of the Company's Board of Directors (the "Board") approves grants to officers and other employees, and the Board approves grants to non-employee directors. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at the discretion of the Company, but in no event greater than ten years from the date of grant, and at the date of grant the Company has discretion to determine the date or dates on which granted options become exercisable. Service-based stock options outstanding as of December 31, 2018 become exercisable at the rate of 25% per year commencing one year after the date of grant. Market-based stock options outstanding as of December 31, 2018 become exercisable only if certain market conditions and service requirements are satisfied, and the date(s) on which they become exercisable will depend on the period in which such market conditions and service requirements are met, if at all, except that vesting and exercisability are accelerated upon a change of control. Outstanding service-based restricted stock units ("RSUs") granted to employees vest at either: (i) the rate of 50% of the shares underlying the grant at each of the third and fourth anniversaries of the date on which the award was granted or (ii) the rate of 25% of the shares underlying the grant on each of the first four anniversaries of the date on which the award was granted. Service-based RSUs granted to directors and outstanding as of December 31, 2018 will not vest until July 29, 2019. Market-based and performance-based RSUs outstanding at December 31, 2018 will vest only if certain market or performance conditions and service requirements have been met, and the date(s) on which they vest will depend on the period in which such market or performance conditions and service requirements are met, if at all, except that vesting and redemption are accelerated upon a change of control. At December 31, 2018, there were 582,180 shares available for grant under the 2013 Plan.

The fair value of each stock option granted under the above plan was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:



	Nine Months Ended December 31,
	2018		2017
Risk-free interest rate	3.22	%	2.21	%
Volatility	30.94	%	34.44	%
Dividend yield	5.97	%	2.90	%
Expected life of option (in years)	6.25		6.25

The fair value of each performance-based and service-based RSU granted to employees was estimated on the day of grant based on the closing price of the Company's common stock reduced by the present value of the expected dividend stream during the vesting period using the risk-free interest rate. The fair value of each service-based RSU granted to directors, for which dividend equivalents are paid upon vesting of the underlying awards, was estimated on the day of grant based on the closing price of the Company's common stock. There were no market-based RSUs granted during the nine months ended December 31, 2018 and 2017.

During the nine months ended December 31, 2018 and 2017, the Company granted 10,000 and 124,000 stock options with a weighted average fair value of $2.19 and $7.40. During the nine months ended December 31, 2018 and 2017, the Company granted 201,013 and 88,680 RSUs, respectively, with a weighted average fair value of $14.46 and $25.42, respectively. As of December 31, 2018, there were 403,975 and 308,648 outstanding stock options and RSUs, respectively.

As of December 31, 2018, there was $863,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.0 years. As of December 31, 2018, there was $2,959,000 of total unrecognized compensation cost related to non-vested RSUs granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.0 years.

On August 11, 2015, the Company granted 10,000 RSUs to the Chair of the Company's Board of Directors. The RSUs vested on August 15, 2017 and were converted into a lump sum cash payment of approximately $266,000 which represented the fair market value of corresponding shares of common stock of the Company. Prior to vesting, the RSUs were classified as liability awards because they were to be paid in cash upon vesting. The RSU award liability was measured at its fair market value at the end of each reporting period.

Compensation cost related to stock options and RSUs (inclusive of the liability classified awards described above) recognized in operating results (included in selling, general and administrative expenses) was $637,000 and $583,000 in the quarters ended December 31, 2018 and 2017, respectively, and $1,694,000 and $1,443,000 in the nine months ended December 31, 2018 and 2017, respectively.