Equity Transactions and Stock-Based Compensation Plans

Equity Transactions

In May 2015, we filed a registration statement that permits us to sell equity or debt in one or more offerings up to a total dollar amount of $300 million. As of September 30, 2015, the entire $300 million under the shelf registration statement is available for equity or debt offerings. In the future, we may consider equity and/or debt offerings, as appropriate, to meet our liquidity needs.

Stock-based Compensation Plans

We grant stock option and restricted stock awards with vesting based on time of service conditions. We also grant restricted stock unit awards with vesting based on time of service conditions, and in certain cases, subject to performance and market conditions. We recognize compensation cost for stock option, restricted stock and restricted stock unit awards based on the fair value estimated in accordance with ASC Topic 718, Compensation—Stock Compensation. For our awards with graded vesting, we recognize compensation expense on a straight-line basis over the service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The following table summarizes the compensation expense recognized for stock option, restricted stock and restricted stock unit awards during the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):



	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Stock option awards	$	240	$	311	$	717	$	964
Restricted stock awards	88		127		311		421
Restricted stock unit awards	707		1,496		1,247		4,376
	$	1,035	$	1,934	$	2,275	$	5,761

Stock Options

We grant stock option awards which generally become exercisable over a three-year period and expire ten years after the date of grant. Our stock-based compensation plans require that all stock option awards have an exercise price that is not less than the fair market value of our common stock on the date of grant. We issue shares of our common stock when vested stock option awards are exercised.

We estimate the fair value of each option grant on the date of grant using a Black-Scholes option pricing model. There were no stock options granted during the three months ended September 30, 2015 or 2014. The following table summarizes the assumptions used in the Black-Scholes option pricing model based on a weighted-average calculation for the nine months ended September 30, 2015 and 2014:



	Nine months ended September 30,
	2015		2014
Expected volatility	64	%	66	%
Risk-free interest rates	1.4	%	1.7	%
Expected life in years	5.52		5.49
Options granted	341,638		221,440
Grant-date fair value	$2.31		$4.87

The assumptions used in the Black-Scholes option pricing model are based on multiple factors, including historical exercise patterns of homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same homogeneous groups and volatility of our stock price. As we have not declared dividends since we became a public company, we did not use a dividend yield. In each case, the actual value that will be realized, if any, will depend on the future performance of our common stock and overall stock market conditions. There is no assurance the value an optionee actually realizes will be at or near the value we have estimated using the Black-Scholes options-pricing model.

During the three and nine months ended September 30, 2015, 7,200 and 203,300 stock options, respectively, were exercised at a weighted-average exercise price of $3.84 for both periods. During the three and nine months ended September 30, 2014, 690,877 and 906,277 stock options were exercised at a weighted-average exercise price of $9.70 and $9.14, respectively. We receive a tax deduction for certain stock option exercises during the period the options are exercised, generally for the excess of the fair market value of our stock on the date of exercise over the exercise price of the options. In accordance with ASC Topic 718, when we have excess tax benefits resulting from the exercise of stock options, we report them as financing cash flows in our condensed consolidated statement of cash flows, unless otherwise disallowed under ASC Topic 740, Income Taxes.

Restricted Stock

Historically, we have generally granted restricted stock awards that vest over a three-year period with a fair value based on the closing price of our common stock on the date of the grant. However, beginning in 2013, we began granting restricted stock awards with a vesting period of one year. When restricted stock awards are granted, or when restricted stock unit awards are converted to restricted stock, shares of our common stock are considered issued, but subject to certain restrictions. During the nine months ended September 30, 2015 and 2014, we granted 47,296 and 32,100 shares of restricted stock awards, with a weighted-average grant-date fair value of $7.40 and $14.33, respectively.

Restricted Stock Units

We grant restricted stock unit awards with vesting based on time of service conditions only (“time-based RSUs”), and we grant restricted stock unit awards with vesting based on time of service, which are also subject to performance and market conditions (“performance-based RSUs”). Shares of our common stock are issued to recipients of restricted stock units only when they have satisfied the applicable vesting conditions.

There were no restricted stock units granted during the three months ended September 30, 2015. The following table summarizes the number and weighted-average grant-date fair value of the restricted stock unit awards granted during the three months ended September 30, 2014, and nine months ended September 30, 2015 and 2014:



	Three months ended September 30,		Nine months ended September 30,
	2014		2015		2014
Time-based RSUs:
Time-based RSUs granted	13,330		151,919		360,665
Weighted-average grant-date fair value	$	13.73	$	4.08	$	8.64

Performance-based RSUs:
Performance-based RSUs granted	—		531,522		321,606
Weighted-average grant-date fair value	$	—	$	6.18	$	9.90

Our time-based RSUs generally vest over a three-year period, with fair values based on the closing price of our common stock on the date of grant.

Our performance-based RSUs generally cliff vest after 39 months from the date of grant and are granted at a target number of issuable shares, for which the final number of shares of common stock is adjusted based on our actual achievement levels that are measured against predetermined performance conditions. The number of shares of common stock awarded will be based upon the Company’s achievement in certain performance conditions, as compared to a predefined peer group, over the performance period, generally three years.

Approximately one-third of the performance-based RSUs granted during 2012 and 2013, and half of the performance-based RSUs granted during 2014 and 2015, are subject to a market condition based on relative total shareholder return, as compared to that of our predetermined peer group, and therefore the fair value of these awards is measured using a Monte Carlo simulation model. Compensation expense for awards with a market condition is reduced only for estimated forfeitures; no adjustment to expense is otherwise made, regardless of the number of shares issued. The remaining performance-based RSUs are subject to performance conditions, based on our EBITDA and return on capital employed, relative to our predetermined peer group, and therefore the fair value is based on the closing price of our common stock on the date of grant, applied to the estimated number of shares that will be awarded. Compensation expense ultimately recognized for awards with performance conditions will be equal to the fair value of the restricted stock unit award based on the actual outcome of the service and performance conditions.

In April 2015, we determined that 64% of the target number of shares granted during 2012 were actually earned based on the Company’s achievement of certain performance measures, as compared to the predefined peer group, over the performance period from January 1, 2012 through December 31, 2014. The performance-based RSUs granted during 2012 vested and were converted to common stock at the end of April 2015. As of September 30, 2015, we estimated that our actual achievement level for the performance-based RSUs granted during 2013, 2014 and 2015 will be approximately 40%, 80% and 100% of the predetermined performance conditions, respectively.