Share-Based Compensation

Employee Stock-Based Compensation Plan — On May 29, 2008, the Company's shareholders approved the 2008 Omnibus Employee Incentive Plan (the “2008 Plan”) providing for the grant of stock options, stock appreciation rights, non-vested stock and performance shares. The 2008 Plan provides for the issuance of an aggregate of 5,000,000 shares. During the three years ended December 31, 2015, options for the purchase of 1,350,000, 359,700 and 325,000, respectively, shares were granted under the 2008 Plan. During the years ended December 31, 2015 and 2014, no shares of restricted stock were granted. During the year ended December 31, 2013, 205,532 shares of restricted stock were granted, which vest immediately but cannot be sold for one year from date of grant, to the Company's Chief Executive Officer as settlement for a discretionary bonus of $0.1 million. As of December 31, 2015, 2,265,318 shares remain available for grant under the 2008 Plan.

On May 24, 2011, the Company's shareholders approved the 2011 Omnibus Employee Incentive Plan (as subsequently amended and restated, the "2011 Plan") providing for the grant of stock options and non-vested stock awards. The 2011 Plan provides for the issuance of an aggregate of 3,500,000 shares. On June 11, 2014, the Company's shareholders approved an amendment and restatement of the 2011 Plan to rename the 2011 Plan as the Hooper Holmes, Inc. 2011 Omnibus Incentive Plan and also to include non-employee directors and consultants as eligible participants. The 2011 Plan is to remain in effect until the earlier of (i) the 10th anniversary of the plan's original effective date of May 24, 2011, or (ii) the date all shares of stock available for issuance have been issued. During the years ended December 31, 2015 and 2014, the Company granted a total of 600,000 and 400,000, respectively, stock awards to non-employee members of the Board of Directors that immediately vested. During the three years ended December 31, 2015, 2014 and 2013, options for the purchase of 700,000, 300,000 and 2,000,000 shares, respectively, were granted under the 2011 Plan. As of December 31, 2015, 15,120 shares remain available for grant under the 2011 Plan. Effective December 31, 2015, the Company amended certain 2014 and 2015 employee award agreements to specify that any exercise of options under the agreement would be satisfied by an issuance of shares authorized under the 2008 Plan rather than the 2011 Plan. The award agreements were not amended in any other respect, and the options granted thereunder have not been amended in any respect and remain subject to their original exercise prices and vesting schedules.

Options under the 2008 and 2011 Plans are granted at fair value on the date of grant, are exercisable in accordance with a vesting schedule specified in the grant agreement, and have contractual lives of 10 years from the date of grant. Options to purchase 2,000,000 and 750,000, shares, respectively, of the Company's stock granted to the Chief Executive Officer of the Company in September 2013 and to certain executives in October 2015, vest 25% upon receipt of the grant and 25% on the first, second, and third anniversaries of the grant. Options to purchase 250,000 shares of the Company's stock granted to certain executives of the Company in the 3rd quarter of 2015 vest 25% quarterly for one year. All other options vest one-third on each of the first, second and third anniversaries of the grant.

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



	2015		2014		2013
Expected life (years)	4.9		5.3		5.4
Expected volatility	68.9	%	82.9	%	89.6	%
Expected dividend yield	—		—		—
Risk-free interest rate	1.7	%	1.8	%	1.5	%
Weighted average fair value of options granted during the year	$0.18		$0.39		$0.34

The expected life of options granted is derived from the Company’s historical experience and represents the period of time that options granted are expected to be outstanding. Expected volatility is based on the Company’s historical volatility. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

The following table summarizes stock option activity for the year ended December 31, 2015:



				Weighted
			Weighted Average	Average Remaining	Aggregate Intrinsic
	Number of Shares		Exercise Price Per Share	Contractual Life (years)	Value (in thousands)
Outstanding at December 31, 2014	3,652,200		$0.67
Granted	2,050,000		$0.32
Exercised	(50,000	)	0.45
Forfeited and Expired	(1,253,500	)	$0.94
Outstanding at December 31, 2015	4,398,700		$0.43	8.3	$0
Exercisable at December 31, 2015	1,905,721		$0.53	7.4	$0

For the year ended December 31, 2015, 50,000 stock options valued with a weighted average exercise price of $0.45 were exercised under the 2008 Plan. No stock options were exercised during the year end December 31, 2015 under the 2011 Plan. For the year ended December 31, 2014, 57,300 stock options valued with a weighted average exercise price of $0.52 were exercised under the 2008 Plan. No stock options were exercised during the year ended December 31, 2014 under the 2011 Plan. For the year ended December 31, 2013, 173,050 and 9,880 stock options valued with a weighted average exercise price of $0.38 and $0.65, respectively, were exercised under the 2008 Plan and 2011 Plan, respectively.

Options for the purchase of 843,121, 770,600 and 1,498,850 shares of common stock vested during the years ended December 31, 2015, 2014 and 2013, respectively, and the aggregate fair value at grant date of these options was $0.3 million, $0.3 million and $0.7 million, respectively. As of December 31, 2015, there was approximately $0.4 million of unrecognized compensation cost related to stock options which is expected to be recognized over a weighted average period of 1.6 years.

Employee Stock Purchase Plan - The Company's 2004 Employee Stock Purchase Plan (the "2004 Plan") provides for the granting of purchase rights for up to 2,000,000 shares of the Company's stock to eligible employees of the Company. Under the 2004 Plan, purchase rights for approximately 233,000 shares were granted in the February 2013 offering period with an aggregate fair value of $0.03 million, based on the Black-Scholes option pricing model. The February 2013 offering period concluded in March 2014 and, in accordance with the 2004 Plan's automatic termination provision, there were 36,154 shares issued. The February 2012 offering period concluded in March 2013 and, in accordance with the 2004 Plan's automatic termination provision, no shares were issued.

Other Stock Awards — On May 30, 2007, the Company’s shareholders approved the Hooper Holmes, Inc. 2007 Non-Employee Director Restricted Stock Plan (the “2007 Plan”), which provides for the automatic grant, on an annual basis for 10 years, of shares of the Company’s stock to the Company's non-employee directors. The total number of shares that may be awarded under the 2007 Plan is 600,000. There were no shares awarded under the 2007 Plan for the years ended December 31, 2015 and 2014. For the year ended December 31, 2013, shares awarded under the 2007 Plan totaled 30,000. The fair value of these stock awards was based on the grant date market value and totaled $0.02 million.

The Company recorded $0.4 million, $0.5 million and $0.6 million of share-based compensation expense in selling, general and administrative expenses for each of the years ended December 31, 2015, 2014 and 2013, respectively, related to stock options, non-vested stock, restricted stock awards and the 2004 Plan. In connection with the resignation of former executive officers, the Company reclassified previously recorded share-based compensation expense totaling $0.2 million during the year ended December 31, 2013. The reclassifications were recorded in restructuring charges (See Note 5). There were no reclassifications during 2015 or 2014.