Share-based Compensation

We may grant non-qualified stock options, incentive stock options, SSARs, restricted shares, and restricted share units under our shareholder-approved 2016 Stock Incentive Plan ("2016 Plan") for up to 2.0 million common shares, plus 957,575 common shares, the number of shares that were remaining for grant under the 2011 Stock Incentive Plan ("2011 Plan") as of the effective date of the 2016 Plan, plus the number of shares remaining for grant under the 2011 Plan that are forfeited, settled in cash, canceled or expired. The maximum aggregate number of restricted shares or restricted share units that may be granted under the 2016 Plan is 1.25 million. With respect to awards that are intended to qualify for the performance-based exception to the deductibility limitations of Section 162(m) of the Internal Revenue Code, the maximum number of shares subject to stock options or SSARs that may be granted to an individual in a calendar year is 800,000 shares, and the maximum number of shares subject to restricted shares or restricted share units that may be granted to an individual in a calendar year is 400,000 shares.

We may distribute authorized but unissued shares or treasury shares to satisfy share option and appreciation right exercises or restricted share and performance share awards.

We record compensation expense related to stock options, SSARs, restricted shares, and performance shares granted to certain employees and non-employee directors based on the fair value of the awards on the grant date. The fair value of restricted share and performance share awards is based on the closing price of our common shares on the grant date. The fair value of stock option and SSARs awards is estimated on the grant date using the Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of our common shares.

The following table summarizes the share-based compensation expense for options, SSARs, restricted and performance awards included in the Condensed Consolidated Statements of Operations:



	Three months ended				Six months ended
	September 30,				September 30,
(In thousands)	2018		2017		2018		2017
Product development	$	514	$	105	$	429	$	526
Sales and marketing	134		187		199		356
General and administrative	617		808		1,046		1,436
Total share-based compensation expense	1,265		1,100		1,674		2,318

Stock-Settled Appreciation Rights

SSARs are rights granted to an employee to receive value equal to the difference in the price of our common shares on the date of the grant and on the date of exercise. This value is settled in common shares of Agilysys, Inc.

The following table summarizes the activity during the six months ended September 30, 2018 for SSARs awarded under the 2011 and 2016 Plans:



	Number of Rights		Weighted-Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
(In thousands, except share and per share data)			(per right)		(in years)
Outstanding at April 1, 2018	1,103,160		$	10.60
Granted	158,244		14.22
Exercised	(176,181	)	10.32
Forfeited	(43,417	)	10.80
Cancelled/expired	(3,492	)	9.60
Outstanding at September 30, 2018	1,038,314		$	11.19	5.4	$	3,035
Exercisable at September 30, 2018	529,923		$	10.57	4.8	$	3,035

As of September 30, 2018, total unrecognized stock based compensation expense related to non-vested SSARs was $0.9 million, which is expected to be recognized over a weighted-average vesting period of 3.0 years.

Restricted Shares

We granted shares to certain of our Directors, executives and key employees, the vesting of which is service-based. The following table summarizes the activity during the six months ended September 30, 2018 for restricted shares awarded under the 2011 and 2016 Plans:



	Number of Shares		Weighted-Average Grant-Date Fair Value
(In thousands, except share and per share data)			(per share)
Outstanding at April 1, 2018	243,354		$	10.78
Granted	238,703		14.25
Vested	—		—
Forfeited	(58,647	)	10.54
Outstanding at September 30, 2018	423,410		$	12.77

The weighted-average grant date fair value of the restricted shares is determined based upon the closing price of our common shares on the grant date. As of September 30, 2018, total unrecognized stock based compensation expense related to non-vested restricted stock was $3.4 million, which is expected to be recognized over a weighted-average vesting period of 2.1 years.

Performance Shares

We awarded certain restricted shares to our Chief Executive Officer, the vesting of which is performance based. The number of shares that vest will be based on relative attainment of a performance metric and any unvested shares will forfeit upon settlement of the bonus.

The following table summarizes the activity during the six months ended September 30, 2018 for the performance shares awarded under the 2016 Plan:



	Number of Shares
(In thousands, except share and per share data)
Outstanding at April 1, 2018	91,463
Granted	63,291
Forfeited	(75,641	)
Vested	(15,822	)
Outstanding at September 30, 2018	63,291

Based on the performance goals, management estimates a liability of $450,000 to be settled through the vesting of a variable number of the performance shares subsequent to March 31, 2019. As of September 30, 2018, total unrecognized stock based compensation expense related to non-vested performance shares was $270,000, which is expected to be recognized over the remaining vesting period of 6 months.