STOCK-BASED COMPENSATION

On May 3, 2011, the Company's shareholders approved the 2011 Incentive Stock Plan (the "Plan"), which was amended on May 6, 2014. The Plan's purpose is to enhance the profitability and value of the Company for the benefit of its shareholders by attracting, retaining, and motivating officers and other key employees who make important contributions to the success of the Company. The Plan initially reserved 750,000 shares of the Company's common stock (as such amount may be adjusted in accordance with the terms of the Plan, the "Authorized Plan Amount") to be issued for grants of several different types of incentives including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock incentives, and performance share incentives. Any shares of common stock granted under options or stock appreciation rights prior to May 6, 2014 shall be counted against the Authorized Plan Amount on a one-for-one basis and any shares of common stock granted as awards other than options or stock appreciation rights shall be counted against the Authorized Plan Amount as two (2) shares of common stock for every one (1) share of common stock subject to such award. On May 6, 2014, the Company's Board of Directors approved an amendment to the plan to (a) increase the number of shares available for the plan to 1,500,000, and (b) change the ratio of shares of common stock granted as awards other than options or stock appreciation rights to be counted against the Authorized Plan Amount as 1.75 shares of common stock for every one (1) share of common stock subject to such award. Authorized and issued shares of common stock or previously issued shares of common stock purchased by the Company for purposes of the Plan may be issued under the Plan.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation. The guidance simplifies

several areas of accounting for share based compensation arrangements, including income tax consequences, classification of

awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is expected to impact net

income, EPS, and the statement of cash flows. In particular, the tax effects of all stock compensation awards will be included in

income.

Under the new guidance, entities are permitted to make an accounting policy election for the impact of forfeitures on

the recognition of expense for share based payment awards. Forfeitures can be estimated or recognized when they occur. If

elected, the change to recognize forfeitures when they occur needs to be adopted using a modified retrospective approach, with

a cumulative effect adjustment recorded to opening retained earnings. The Company adopted this guidance as of March 31,

2017, and has elected to recognize forfeitures as they occur. The adjustments recorded did not have a material impact on our

financial statements.

Stock-based compensation to employees is recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations based on the fair value at the grant date of the award. These non-cash compensation costs were included in the "Depreciation and amortization" amounts in the Consolidated Statements of Cash Flows.

A summary of stock-based compensation expense is as follows (in thousands):



	Year Ended December 31,
	2017		2016		2015
Stock Options	$	274	$	—	$	—
Restricted stock/unit awards	180		244		322
Performance share incentives	100		—		(608		)
Total stock-based compensation expense	$	554	$	244	$	(286	)

Stock options, restricted stock/unit awards, and performance share incentives are the only award types currently outstanding and are discussed below.

Stock Options

There were 310,000 non-qualified stock options granted in the year ended December 31, 2017. There are no other vested or unvested stock options outstanding. None of the stock options outstanding are exercisable at December 31, 2017. The fair market value of stock options is estimated using the Black Scholes valuation model. A summary of stock option activity, including assumptions used in the Black Scholes model used to calculate the fair value of stock options granted in 2017, is as follows:



		Year Ended December 31, 2017
Expected volatility		36.6% - 38.5%
Expected dividend yield		0.0% - 0.66%
Risk free rate		1.32% - 2.02%
Expected term (in years)		6.0 - 6.5
Weighted average grant date fair value		$4.81
Weighted average exercise price		$12.64

Unamortized deferred compensation cost (in millions)		$1.2
Expected weighted-average recognition period for unrecognized compensation cost (in years)		2.3

Stock options vest over a two or three-year period based on either a service period or a combination of service period and performance measures. Deferred compensation for stock options is amortized on a straight-line basis for stock options, which vest over a specified service period, and is recognized ratably for stock options, which also have a performance requirement to the extent that it is probable that the performance target will be met. The Company used the simplified method of calculating the expected term of of stock options as exercise data relating to stock options was not available. All stock options granted have a ten-year contractual term.

The aggregate intrinsic value of stock options at December 31, 2017 was $1.5 million, which is calculated as the difference between the stock price as of December 31, 2017 and the exercise price of the option.

Restricted Stock/Unit Awards

Restricted stock/units (the "RSAs") are awarded to certain employees. RSAs vest at the end of the service period and are subject to forfeiture as well as transfer restrictions. During the vesting period, the RSAs are held by the Company and the recipients are entitled to exercise rights pertaining to such shares, including the right to vote such shares. When dividends are declared, such dividends are deemed to be paid to the recipients. The Company withholds and accumulates the deemed dividends until such point that the RSAs are earned. If the RSAs are not earned, the accrued dividends are forfeited. The RSAs are valued based on the closing market price of the Company's common stock on the date of the grant. The deferred compensation is being amortized on a straight-line basis over three years for all outstanding RSAs.

All outstanding RSAs are unvested. A summary of the RSA activity is as follows (in shares):



	Year Ended December 31,
	2017			2016			2015
RSAs outstanding at beginning of year	37,500			105,875			160,175
Awarded	47,350			—			—
Vested	(34,700		)	(65,052		)	(50,000		)
Canceled or forfeited	(9,650		)	(3,323		)	(4,300		)
RSAs outstanding at end of year	40,500			37,500			105,875

Unamortized deferred compensation cost (in millions)	$	0.4		$	0.1		$	0.3
Expected weighted-average recognition period for unrecognized compensation cost (in years)	1.97			0.92			1.20

Performance Share Incentives

Performance share incentives ("PSI") are awarded to certain employees. PSIs are expressed as shares of the Company's common stock. They are earned only if the Company meets specific performance targets over the specified performance period. During this period, PSI recipients have no voting rights. When dividends are declared, such dividends are deemed to be paid to the recipients. The Company withholds and accumulates the deemed dividends until such point that the PSIs are earned. If the PSIs are not earned, the accrued dividends are forfeited. The payment of PSIs can be in cash, or in the Company's common stock, or a combination of the two, at the discretion of the Company. The PSIs are valued based on the closing market price of the Company's common stock on the date of the grant. The deferred compensation is being recognized into earnings based on the passage of time and achievement of performance targets.

A summary of the PSI activity is as follows (in shares):



	Year Ended December 31,
	2017			2016			2015
PSIs outstanding at beginning of year	51,809			105,875			105,875
Awarded	47,350			—			—
Canceled or forfeited	(54,574		)	(54,066		)	—
PSIs outstanding at end of year	44,585			51,809			105,875

Unamortized deferred compensation cost (in millions)	$	0.4		$	0.6		$	1.2
Expected weighted-average recognition period for unrecognized compensation cost (in years)	2.31			0.97			1.16