12. Stock Compensation

Overview

We have stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards (“RSAs”), performance stock awards (“PSAs”), restricted stock units (“RSUs”), performance stock units (“PSUs”), and options to purchase shares of our common stock at exercise prices generally equal to the fair value of such stock at the dates of grant. We also maintain a shareholder-approved Employee Stock Purchase Plan (the “ESPP”) for the benefit of our employees. The ESPP allows eligible employees to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period.

Equity Grants

During the three months ended March 31, 2018 the Compensation Committee of our Board of Directors (the “Committee”) authorized awards from approved stock incentive plans of RSUs to certain employees and RSAs and PSUs to certain Company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 273,000 shares and had an aggregate grant date market value of $5.9 million. The PSUs granted in 2018 represent the right to receive from 60% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2018 is based on attaining specified levels of adjusted EBITDA, as defined in the PSU grant documents, for the 2018 calendar year. We currently believe that achievement of the performance component is probable, and we reevaluate this likelihood on a quarterly basis.

During the three months ended March 31, 2017 the Committee authorized awards from approved stock incentive plans of RSUs to certain employees and RSAs and PSUs to certain Company officers, which, including PSUs at target levels, together totaled 239,000 shares of common stock and had an aggregate grant date market value of $4.0 million. The PSUs granted in 2017 represented the right to receive from 60% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2017 was based on attaining specified levels of adjusted EBITDA, adjusted inventory levels, and trade accounts receivable days’ sales outstanding, each as defined in the PSU grant documents, for the 2017 calendar year. The PSUs granted in 2017 earned 90% of the target number of shares.

The Committee authorized, from approved stock incentive plans, grants of stock options to purchase a total of 219,000 and 260,000 shares to certain Company officers during the three months ended March 31, 2018 and 2017, respectively. The exercise prices of the options were equal to the closing stock prices on their respective grant dates.

Employees purchased common stock totaling 36,000 and 45,000 shares in the three months ended March 31, 2018 and 2017, respectively, through the ESPP.

Stock Compensation Expense

The following weighted‑average assumptions were used to determine the fair value of options:


	Three Months Ended				Three Months Ended
	March 31, 2018				March 31, 2017
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		5.0 Years		0.5 Years		4.8 Years		0.5 Years
Expected stock price volatility		0.40		0.35		0.40		0.35
Risk-free interest rate		2.64%		1.53%		1.87%		0.62%

The following table summarizes total stock compensation expenses prior to the capitalization of amounts into deferred preservation and inventory costs (in thousands):


	Three Months Ended
	March 31,
	2018		2017
RSA, PSA, RSU, and PSU expense	$	948	$	1,346
Stock option and ESPP option expense		406		518
Total stock compensation expense	$	1,354	$	1,864

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to the ESPP. The total stock compensation expense also included expenses related to PSAs during the three months ended March 31, 2017. These amounts were recorded as stock compensation expense and were subject to our normal allocation of expenses to inventory costs and deferred preservation costs. We capitalized $106,000 and $68,000 in the three months ended March 31, 2018 and 2017, respectively, of the stock compensation expense into our inventory costs and deferred preservation costs.

As of March 31, 2018 we had total unrecognized compensation costs of $10.4 million related to RSUs, RSAs, and PSUs and $3.1 million related to unvested stock options. As of March 31, 2018 this expense is expected to be recognized over a weighted-average period of 2.2 years for RSUs, 2.1 years for stock options, 1.5 years for RSAs, and 1.5 years for PSUs.