NOTE 13 - SHARE-BASED COMPENSATION

The table below sets forth the line items where share-based compensation expense was recorded for the twelve months ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
Cost of goods sold	$	775	$	716	$	438
Selling, general and administrative expense		10,567		16,228		12,438
Research and development expense		2,687		2,026		1,228
Total share-based compensation expense	$	14,029	$	18,970	$	14,104

The table below sets forth share-based compensation expense by type for the twelve months ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
Stock options	$	1,511	$	2,516	$	3,259
Share grants		12,518		16,454		10,845
Total share-based compensation expense	$	14,029	$	18,970	$	14,104

In 2016, approximately $2.7 million of the decrease in share grant expense is related to reversal of previously recorded expense related to performance grants and in 2015 approximately $4.0 million of the increase in restricted stock expense was related to Diodes restricted stock grants issued as replacement for unvested Pericom employee awards outstanding at the date of the acquisition.

In May 2013, our stockholders approved our 2013 Equity Incentive Plan (“2013 Plan”). Since the approval of the 2013 Plan, all stock options are granted under the 2013 Plan, and we will not grant any further stock options under our 2001 Plan. Stock options under the 2013 Plan generally vest in equal annual installments over a four-year period and expire eight years after the grant date. The number of shares authorized to be awarded under the 2013 Plan is 6 million shares. For additional information on the 2013 Plan, see our definitive proxy statement filed with the SEC.

Share-based compensation expense for stock options granted during 2014 was calculated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:

	2014
Weighted-average grant date fair value (1)	$	15.68
Weighted-average assumptions used:		53.36	%
Expected volatility		7.2
Expected term (years)		2.08	%
Risk-free interest rate		0.00	%
Expected dividend yield
(1) No stock options were granted in 2016 or 2015.

Expected volatility – We estimate expected volatility using historical volatility. Public trading volume on options in our stock is not material. As a result, we determined that utilizing an implied volatility factor would not be appropriate. We calculate historical volatility for the period that is commensurate with the options’ expected term assumption.

Expected term – We have evaluated expected term based on history and exercise patterns across our demographic population. We believe that this historical data is the best estimate of the expected term of a new option.

Risk free interest rate – We estimate the risk-free interest rate based on zero-coupon U.S. treasury securities for a period that is commensurate with the expected term assumption.

Forfeiture rate - The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest as forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinguished from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. This analysis will be re-evaluated at least annually, and the forfeiture rate for all grants will be adjusted as necessary.

Total cash received from option exercises was approximately $0.1 million, $10.2 million and $5.8 million during 2016, 2015 and 2014, respectively.

At December 31, 2016, unamortized compensation expense related to unvested options, net of estimated forfeitures, was approximately $1.2 million. The weighted average period over which share-based compensation expense related to these options will be recognized is approximately 1.1 years.

The table below sets forth a summary of activity in our stock option plans:

Stock Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2014		3,126		$	18.93
Granted		176			27.92
Exercised		(564	)		10.37
Forfeited or expired		(2	)		29.21
Outstanding at December 31, 2014		2,736			21.26
Granted		-			-
Exercised		(653	)		15.63
Forfeited or expired		(20	)		22.91
Outstanding at December 31, 2015		2,063			23.03
Granted		-			-
Exercised		(7	)		18.48
Forfeited or expired		(223	)		22.75
Outstanding at December 31, 2016		1,833			23.08		3.3	$	6,597
Exercisable at December 31, 2016		1,706			22.83		3.2	$	6,497

The table below sets forth information about stock options outstanding at December 31, 2016:

Plan	Range of exercise prices		Number outstanding		Weighted average remaining contractual life (years)		Weighted average exercise price
2001 Plan	$	15.05-28.45		1,492		3.0	$	22.50
2013 Plan	$	23.35-27.92		341		4.9	$	25.61

The table below summarizes information about stock options exercisable at December 31, 2016:

Share Grants—Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period. Since the approval of the 2013 Plan, all new grants are granted under the 2013 Plan, and we will not grant any further grants under our 2001 Plan.

The table below sets forth a summary of our non-vested share grants in 2016, 2015 and 2014:

Restricted Stock Grants	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Nonvested at January 1, 2014		1,131		$	22.35
Granted		788			25.08
Vested		(346	)		22.34
Forfeited		(38	)		24.98
Nonvested at December 31, 2014		1,535			23.32
Granted		1,557			22.46
Vested		(370	)		25.02
Forfeited		(43	)		26.08
Nonvested at December 31, 2015		2,679			23.51	$	61,247
Granted		880			18.63
Vested		(877	)		18.92	$	17,078
Forfeited		(62	)		20.80
Nonvested at December 31, 2016		2,620			21.31	$	67,247

Included in the restricted stock grant for 2015 were 724,000 shares granted to Pericom employees. During 2016, the Company paid $2.5 million in taxes related to the net share settlement on shares of stock that vested for Pericom employees. The total unrecognized share-based compensation expense as of December 31, 2015 was approximately $31.5 million, which is expected to be recognized over a weighted average period of approximately 2.7 years.