Stock-Based Compensation

We offer stock-based compensation in the form of stock options and RSUs. We also offer an ESPP.

We grant stock options to employees and directors under our equity-based compensation plans with exercise prices that are not less than the fair market value of our common stock on the date of grant. The terms of the stock option and RSU awards, including the vesting schedule of such awards, are generally determined at the discretion of the compensation committee of our board of directors, subject to the terms of the applicable equity-based compensation plan. Options granted over the last several years have generally become exercisable in four or five equal annual installments beginning on the first anniversary of the date of grant or when certain performance targets are determined to have been met and have a maximum term of ten years. RSUs typically vest in four or five equal annual installments beginning on the first anniversary of the date of grant or when certain performance targets are determined to have been met. We record compensation cost for all stock options and RSUs based on the grant date fair value.

When we acquired Bally in November 2014, we consolidated the Bally 2010 Long Term Incentive Plan (amended and restated in 2013) (“Legacy Bally Plan”) with and into the Company’s 2003 Incentive Compensation Plan (the “2003 Plan”) such that the Legacy Bally Plan became a sub-plan of the 2003 Plan with respect to the Bally awards that we assumed (discussed below). In connection therewith, Bally equity awards that were not cashed out in connection with the acquisition were assumed and adjusted (using a customary exchange ratio based on the stock prices of Bally and the Company at the time of the acquisition) to become awards relating to approximately 1.4 million shares of our common stock. In addition, we assumed shares available for future awards under the Legacy Bally Plan that totaled (after adjustment using the customary exchange ratio) 3.4 million shares of our common stock (such shares, together with the shares underlying the assumed Bally equity awards, the “Legacy Bally Shares”).

As a result of merging the Legacy Bally Plan into the 2003 Plan, as of March 31, 2015, we had approximately 7.5 million shares available for future grants of equity awards under the 2003 Plan plus available shares from a pre-existing equity-based compensation plan (excluding shares underlying outstanding awards). Any Legacy Bally Shares issued following the Bally acquisition will be subject to the share counting provisions set forth in the Legacy Bally Plan, under which each Bally Legacy Share delivered in settlement of a “full-value” award (e.g., an RSU) is counted as 1.75 shares against the reserved shares (subject to any necessary adjustments). We also have outstanding stock options and RSUs granted as part of inducement awards that were not approved by our stockholders, as permitted by applicable stock exchange rules.

Under the share counting rules of our 2003 Plan, awards may be outstanding relating to a greater number of shares than the aggregate remaining shares available under our 2003 Plan so long as awards will not result in delivery and vesting of shares in excess of the number then available under the plan. Shares available for future issuance do not include shares expected to be withheld in connection with outstanding awards to satisfy tax withholding obligations, which would be available for future awards under our 2003 Plan under the applicable share counting rules.

Our ESPP allows for a total of up to 1.0 million shares of Class A common stock to be purchased by eligible employees under offerings made each January 1 and July 1. Employees participate through payroll deductions up to a maximum of 15% of eligible compensation. The term of each offering period is six months and shares are purchased on the last day of the offering period at a 15% discount to the stock's market value. As of March 31, 2015, we had approximately 0.1 million shares available for issuance under the ESPP.

Stock Options

A summary of the changes in stock options outstanding during the three months ended March 31, 2015 is presented below:



	Number of Options		Weighted Average Remaining Contract Term (Years)	Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding as of December 31, 2014	1.6		6.3	$	11.61	$	4.0
Granted	0.2			12.04		—
Exercised	(0.3	)		9.83		0.9
Canceled	—					—
Options outstanding as of March 31, 2015	1.5		7.2	$	11.78	$	1.2
Options exercisable as of March 31, 2015	0.9		5.9	$	11.14	$	0.9

The weighted average grant date fair value of options awarded during the three months ended March 31, 2015 and 2014 was $6.05 and $8.86, respectively. For the three months ended March 31, 2015 and 2014, we recognized stock-based compensation expense of $0.4 million and $0.5 million, respectively, related to the service period of stock options and a related tax benefit of $0.1 million and $0.2 million, respectively.

As of March 31, 2015, we had unrecognized compensation expense of $3.0 million relating to stock option awards that is scheduled to be expensed over a weighted average period of approximately two years.

Restricted Stock Units

A summary of the changes in RSUs outstanding during the three months ended March 31, 2015 is presented below:



	Number of RSUs		Weighted Average Grant Date Fair Value Per RSU
Unvested units as of December 31, 2014	5.0		$	13.12
Granted	0.3		13.15
Vested	(0.7	)	12.72
Canceled	(0.3	)	15.08
Unvested units as of March 31, 2015	4.3		$	13.39

For the three months ended March 31, 2015 and 2014, we recognized stock-based compensation expense of $4.7 million and $4.6 million, respectively, related to the service period of RSUs and a related tax benefit of $1.7 million and $1.7 million, respectively.

As of March 31, 2015, we had unrecognized compensation expense of $49.1 million relating to RSUs that is scheduled to be expensed over a weighted average period of approximately two years.