EQUITY‑BASED COMPENSATION

We currently maintain three equity compensation plans; our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”) and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). All outstanding stock options granted under each of our equity compensation plans other than our 2015 ESPP have an exercise price equal to the closing price of a share of our common stock on the grant date.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2018:



	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	2,590,373		125,536		815,450		3,531,359
Granted	451,411		—		—		451,411
Exercised	(7,782	)	—		—		(7,782	)
Expired or terminated	(160,797	)	(15,436	)	(27,875	)	(204,108	)
Outstanding at March 31, 2018	2,873,205		110,100		787,575		3,770,880

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2018:



	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	966,623		11,611		91,541		1,069,775
Granted	712,781		—		—		712,781
Vested	(317,638	)	(10,150	)	(15,666	)	(343,454	)
Expired or terminated	(38,078	)	(460	)	—		(38,538	)
Outstanding at March 31, 2018	1,323,688		1,001		75,875		1,400,564

In March 2018, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 206,250 shares of common stock. These performance-based RSUs will vest, if at all, on March 1, 2021, based on our total shareholder return performance measured against the median total shareholder return of a defined group of companies over a three-year period. The maximum aggregate total fair value of these RSUs is $3.8 million, which is being recognized as expense over a period of three years from the date of grant, net of any estimated and actual forfeitures.

Equity-Based Compensation Expense

Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands):



	Three Months Ended March 31,
	2018			2017
Cost of product sales and services	$	347		$	129
Research and development	720			756
Selling, general and administrative	4,466			4,893
Total equity-based compensation expense	5,533			5,778
Income tax effect	(942		)	(1,605		)
After-tax effect of equity-based compensation expense	$	4,591		$	4,173

We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur.