NOTE L — STOCK-BASED COMPENSATION

On May 19, 2017, the Board of Directors approved the Hanger, Inc. Special Equity Plan (the “Special Equity Plan”). The Special Equity Plan authorized up to 1.5 million shares of Common Stock and operates completely independent from our 2016 Omnibus Incentive Plan. All awards under the Special Equity Plan were made on May 19, 2017 which consisted of 0.8 million stock options and 0.3 million performance-based stock awards. No further grants of awards will be authorized or issued under the Special Equity Plan.

On April 15, 2016, our Board of Directors approved the Hanger, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the issuance of (a) up to 2.3 million shares of Common Stock, plus (b) 0.4 million shares available for issuance under the 2010 Plan that had not been subject to outstanding awards as of the effective date of the 2016 Plan and (c) any shares that would have become available again for new grants under the terms of the 2010 Omnibus Plan (“2010 Plan”) if such plan were still in effect.

Upon approval of the 2016 Plan, our 2010 Plan was no longer available for future awards.

As of December 31, 2017, approximately 1.2 million shares were available for future issuance. The available shares consisted of (a) 2.3 million shares of common stock authorized for issuance under the 2016 Plan plus (b) 0.4 million shares rolled forward from the 2010 Plan plus (c) 0.4 million shares forfeited and added back to the pool less (d) 1.9 million shares issued for awards. In 2017, shares issued under equity plans are issued from authorized and unissued shares. Total unrecognized stock-based compensation cost related to unvested restricted stock unit awards is approximately $11.8 million as of December 31, 2017, and is expected to be recognized as compensation expense over approximately 2.3 years.

On May 13, 2010, our shareholders approved the 2010 Plan and prohibited future awards under the Amended and Restated 2002 Stock Incentive and Bonus Plan (the “2002 Plan”) and 2003 Non-Employee Directors’ Stock Incentive Plan (the “2003 Plan”).

For the years ended December 31, 2017, 2016 and 2015, we recognized a total of approximately $12.9 million, $9.8 million and $11.1 million, respectively, of stock-based compensation expense for the 2002, 2003, 2010 and 2016 plans. Stock compensation expense, net of forfeitures, relates to restricted stock units, performance-based restricted stock units and options.

Restricted Stock Units

The summary of restricted stock units, performance-based stock units, and weighted average grant date fair values are as follows:

	Employee Service-Based Awards				Employee Performance- Based Awards				Director Awards
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value

Nonvested at December 31, 2015	810,840		$	26.90	145,451		$	25.83	94,169		$	18.25

Granted	631,011		6.90		192,600		6.90		71,000		6.53
Vested	(279,421	)	26.64		(19,722	)	23.99		(93,704	)	18.16
Forfeited	(95,832	)	20.69		(192,600	)	6.90		—		—


Nonvested at December 31, 2016	1,066,598		16.30		125,729		26.11		71,465		6.72

Granted	555,280		13.74		512,458		17.21		98,406		12.66
Vested	(363,834	)	19.27		(5,551	)	29.66		(71,465	)	6.72
Forfeited	(75,005	)	14.58		—		—		—		—


Nonvested at December 31, 2017	1,183,039		$	14.30	632,636		$	18.87	98,406		$	12.66

During the years ended December 31, 2017, 2016 and 2015, approximately 0.4 million, 0.4 million, and 0.4 million of restricted common stock units with an intrinsic value of $5.9 million, $2.1 million and $9.0 million, respectively, became fully vested. As of December 31, 2017, total unrecognized compensation expense related to unvested restricted stock units and unvested performance based restricted stock units for which we have concluded the performance condition was probable of achievement was approximately $19.4 million and the related weighted-average period over which it is expected to be recognized is approximately 2.4 years. The aggregate granted units have vesting dates through May 2020. The 2017, 2016 and 2015 aggregate grants had total estimated grant date fair values of $17.7 million, $6.2 million and $16.1 million, respectively.

A special equity grant of performance-based restricted stock units was granted on May 19, 2017 and vests 100% three years after the date of issuance, assuming the performance goal is achieved. The financial target for this grant is to achieve a compounded annual growth rate (“CAGR”) of our common stock price of 20% as of market close on May 18, 2020. This equates to a share price on that date of $22.07 compared to the closing price on the eve of grant of $12.77. The grant provides for the vesting of 50% of the original targeted shares if a CAGR of 10% (a stock price of $17.00) is achieved. The grant also provides for the vesting of up to 200% of the original targeted shares if a CAGR of 30% (a stock price of $28.06) or more is achieved. The percentage of vested shares will be interpolated on a linear basis between 50% and 200% for a CAGR between 10% and 30%. The stock price at time of award was $12.77, but given market condition performance criteria the Monte Carlo Simulation valuation was used to calculate a fair value of $19.29 per share.

Options

The summary of option activity and weighted average exercise prices are as follows:

	Director Awards
Weighted Average Exercise Price	Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (Years)

Outstanding at December 31, 2016	—	$	—	$	—	—
Granted	798,020	12.77		2,378,100		9.4

Outstanding at December 31, 2017	798,020	$	12.77	$	2,378,100

No options were exercisable under our stock-based compensation plans at December 31, 2016 and 2015. At December 31, 2017, 0.8 million options were granted but not yet exercisable with a weighted average exercise price of $12.77, average remaining contractual terms of 9.4 years and aggregate intrinsic values of approximately $2.4 million. As of December 31, 2017, there was unrecognized compensation cost related to stock option awards of $5.5 million. As of December 31, 2016 and 2015, there was no unrecognized compensation cost related to stock option awards.

There were 0.8 million options outstanding as of December 31, 2017 and no options outstanding as of December 31, 2016 and 2015.