L. EQUITY‑BASED COMPENSATION

We currently maintain four equity compensation plans, namely our Third Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), our Amended and Restated 2000 Stock Plan (the “2000 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 (discussed below) have an exercise price equal to the closing price of a share of our common stock on the grant date.

Our 2007 Plan was originally approved by our stockholders in November 2007, and succeeded our 2000 Plan, under which no further grants may be made under the 2000 Plan. Any shares that remained available for issuance under the 2000 Plan as of the date of adoption of the 2007 Plan are included in the number of shares that may be issued under the 2007 Plan. Any shares subject to outstanding awards granted under the 2000 Plan that expire or terminate for any reason prior to exercise will be added to the total number of shares of our stock available for issuance under the 2007 Plan. The total number of shares issuable pursuant to awards under this plan is 6,215,325, including the 1,700,000 shares which were added to the 2007 Plan upon approval by our stockholders of an amendment to our 2007 Plan at our Meeting of Stockholders held on May 21, 2015 (the “2015 Annual Meeting”). As of December 31, 2015, there were 2,231,795 shares remaining available for issuance under the 2007 Plan, which excludes shares subject to outstanding awards under the 2000 Plan. All outstanding options under the 2007 Plan have either a seven or ten-year term and all outstanding options under the 2000 Plan have a ten-year term.

In November 2014, we assumed the Lumara Health 2013 Plan in connection with the acquisition of Lumara Health. The total number of shares issuable pursuant to awards under this plan as of the effective date of the acquisition and after taking into account any adjustments as a result of the acquisition, was 200,000 shares. As of December 31, 2015, there were 39,984 shares remaining available for issuance under the Lumara Health 2013 Plan, which are available for grants to certain employees, officers, directors, consultants, and advisors of AMAG and our subsidiaries who are newly-hired or who previously performed services for Lumara Health. All outstanding options under the Lumara Health 2013 Plan have a ten-year term.

The 2007 Plan and the Lumara Health 2013 Plan provides for the grant of stock options, RSUs, restricted stock, stock, stock appreciation rights and other equity interests in our company. We generally issue common stock from previously authorized but unissued shares to satisfy option exercises and restricted stock awards. The terms and conditions of each award are determined by our Board of Directors (the “Board”) or the Compensation Committee of our Board. The terms and conditions of each award assumed in the acquisition of Lumara Health were previously determined by Lumara Health prior to being assumed in connection with the acquisition, subject to applicable adjustments made in connection with such acquisition.

At our 2015 Annual Meeting, our stockholders approved our 2015 ESPP, which authorizes the issuance of up to 200,000 shares of our common stock to eligible employees. The terms of the 2015 ESPP permit eligible employees to purchase shares (subject to certain plan and tax limitations) in semi-annual offerings through payroll deductions of up to an annual maximum of 10% of the employee’s “compensation” as defined in the 2015 ESPP. Shares are purchased at a price equal to 85% of the fair market value of our common stock on either the first or last business day of the offering period, whichever is lower. Plan periods consist of six-month periods typically commencing June 1 and ending November 30 and commencing December 1 and ending May 31. As of December 31, 2015, no shares have been issued under our 2015 ESPP.

During 2015, 2014 and 2013, we also granted equity through inducement grants outside of these plans to certain newly hired executive officers and certain employees. All outstanding stock options granted as inducement awards 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 in our equity plans for the twelve months ended December 31, 2015:


	2007 Equity	2000 Equity	2013 Lumara
	Plan	Plan	Equity Plan	Total
Outstanding at December 31, 2014	2,051,017	35,266	44,000	2,130,283
Granted	919,675	—	76,000	995,675
Exercised	(657,724)	(21,226)	—	(678,950)
Expired or terminated	(349,806)	—	(24,000)	(373,806)
Outstanding at December 31, 2015	1,963,162	14,040	96,000	2,073,202

Restricted Stock Units

The following table summarizes RSU activity in our equity plans for the twelve months ended December 31, 2015:


	2007 Equity	2000 Equity	2013 Lumara
	Plan	Plan	Equity Plan	Total
Outstanding at December 31, 2014	360,826	—	20,000	380,826
Granted	268,954	—	60,225	329,179
Vested	(73,432)	—	(11,666)	(85,098)
Expired or terminated	(110,018)	—	(16,209)	(126,227)
Outstanding at December 31, 2015	446,330	—	52,350	498,680

Other Equity Compensation Grants

During 2015, 2014 and 2013, our Board granted options to purchase 220,000, 165,000 and 270,000 shares of our common stock, respectively, and 82,250, 87,900 and 115,000 RSUs, respectively, to certain new-hire employees, to induce them to accept employment with us (collectively, “Inducement Awards”). The options were granted at an exercise price equal to the fair market value of a share of our common stock on the respective grant dates and will be exercisable in four equal annual installments beginning on the first anniversary of the respective grant dates. The RSU grants will vest in three equal annual installments beginning on the first anniversary of the respective grant dates. The foregoing grants were made pursuant to inducement grants outside of our stockholder approved equity plans as permitted under the NASDAQ Stock Market listing rules. We assessed the terms of these awards and determined there was no possibility that we would have to settle these awards in cash and therefore, equity accounting was applied.

Since we first began issuing inducement grants outside of our plans in 2012 as permitted under the NASDAQ Stock Market listing rules, we have issued a total of 1,646,250 shares of common stock pursuant to inducement grants, of which 243,875 stock options and 90,001 RSUs have been expired or terminated and of which 186,250 options have been exercised and 139,474 shares of common stock have been issued pursuant to RSUs that became fully vested. As of December 31, 2015, there were 830,975 options and 155,675 RSUs outstanding under Inducement Awards.

In August 2014, we granted certain members of our senior management performance-based RSUs under our 2007 Plan covering a maximum of 195,000 shares of common stock, which will be earned, if at all, based on the achievement of certain (a) targets based upon the calculated value expected to be realized with respect to certain business and corporate development transactions and (b) stock price minimums, during the 30-month period ending January 2, 2017, measured as of January 4, 2016 and January 2, 2017. Fifty percent of the RSU grant that was earned through January 4, 2016 vested as of such date, and 100% of the RSU grant that is earned through January 2, 2017 (less the portion previously vested) shall vest as of January 2, 2017, subject to the continued employment of the grantee through each such date. As of January 4, 2016, the first measurement date, 60,000 shares were cancelled due to employee terminations, 83,070 shares were earned and 41,535 shares vested. The maximum total fair value of these RSUs is $2.1 million, which will be recognized to expense over a period of approximately three years from the date the vesting conditions outlined in these grants are deemed probable, net of any estimated and actual forfeitures. We recognized $0.2 million and $0.1 million of expense related to these awards during 2015 and 2014, respectively, based on the target for expected value to be realized that was considered probable of occurring at that time.

In February 2013, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 82,500 shares of common stock, which are subject to a performance condition tied to the price of our common stock. At the end of the three‑year period performance period ended December 31, 2015, the RSUs earned based on the achievement of the target stock price range were vested on January 15, 2016. On this date, 36,600 shares vested based upon the achievement of the target stock price. There were 27,500 shares cancelled due to employee terminations and another 18,400 shares cancelled due to non-achievement of the maximum target stock price range. The maximum total fair value of these RSUs was $0.5 million, which was recognized to expense over a period of three years from the date of grant, net of actual forfeitures.

Equity‑based compensation expense

Equity‑based compensation expense for 2015, 2014 and 2013 consisted of the following (in thousands):


	Years Ended December 31,
	2015		2014		2013
Cost of product sales	$	371	$	122	$	121
Research and development		2,992		1,596		2,149
Selling, general and administrative		13,874		6,907		5,734
Total equity-based compensation expense	$	17,237	$	8,625	$	8,004
Income tax effect		(4,885)		—		—
After-tax effect of equity-based compensation expense	$	12,352	$	8,625	$	8,004

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.

As a result of our historical net losses, there was no income tax effect on our equity-based compensation expense for 2014 and 2013.

We have not recognized any excess tax benefits from equity-based compensation in additional paid-in capital because the excess tax benefits have not yet reduced cash taxes paid. Accordingly, there was no impact recorded in cash flows from financing activities or cash flows from operating activities as reported in the accompanying consolidated statements of cash flows.

The following table summarizes the weighted average assumptions we utilized for purposes of valuing grants of options to our employees and non‑employee directors:


	Years Ended December 31,
	2015		2014		2013
		Non-Employee		Non-Employee		Non-Employee
	Employees	Directors	Employees	Directors	Employees	Directors
Risk free interest rate (%)	1.55	1.24	1.56	1.28	0.95	0.85
Expected volatility (%)	47	46	47	46	59	46
Expected option term (years)	5.00	4.00	5.00	4.00	5.00	4.00
Dividend yield	none	none	none	none	none	none

Risk free interest rates utilized are based upon published U.S. Treasury yields at the date of the grant for the expected option term. During 2015, 2014 and 2013, we estimated our expected stock price volatility by using the historical volatility of our own common stock price over the prior period equivalent to our expected option term, in order to better reflect expected future volatility. To compute the expected option term, we analyze historical exercise experience as well as expected stock option exercise patterns.

The following table summarizes details regarding stock options granted under our equity incentive plans for the year ended December 31, 2015:


	December 31, 2015
				Weighted
				Average
				Remaining	Aggregate Intrinsic
		Weighted Average		Contractual	Value ($ in
	Options	Exercise Price		Term	millions)
Outstanding at beginning of year	2,996,383	$	22.60	—	$	—
Granted	1,215,675		55.72	—		—
Exercised	(836,450)		21.58	—		—
Expired and/or forfeited	(471,431)		33.66	—		—
Outstanding at end of year	2,904,177	$	34.97	7.8	$	17,114
Outstanding at end of year - vested and unvested expected to vest	2,632,232	$	34.40	7.8	$	16,039
Exercisable at end of year	948,034	$	23.44	6.1	$	9,402

The weighted average grant date fair value of stock options granted during 2015, 2014 and 2013 was $23.57, $10.63 and $8.60, respectively. A total of 846,011 stock options vested during 2015. The aggregate intrinsic value of options exercised during 2015, 2014 and 2013, excluding purchases made pursuant to our employee stock purchase plans, measured as of the exercise date, was approximately $31.2 million, $5.9 million and $1.0 million, respectively. The intrinsic value of a stock option is the amount by which the fair market value of the underlying stock on a specific date exceeds the exercise price of the common stock option.

The following table summarizes details regarding RSUs granted under our equity incentive plans for the year ended December 31, 2015:


	December 31, 2015
		Weighted Average
	Restricted	Grant Date
	Stock Units	Fair Value
Outstanding at beginning of year	541,226	$	20.62
Granted	411,429		52.71
Vested	(149,572)		23.56
Forfeited	(148,728)		34.78
Outstanding at end of year	654,355	$	36.90
Outstanding at end of year and expected to vest	567,954	$	36.85

The weighted average grant date fair value of RSUs granted during 2015, 2014 and 2013 was $52.71, $22.88 and $16.31, respectively. The total grant date fair value of RSUs that vested during 2015, 2014 and 2013 was $3.5 million, $2.7 million and $2.8 million, respectively.

At December 31, 2015, the amount of unrecorded equity‑based compensation expense for both option and RSU awards, net of forfeitures, attributable to future periods was approximately $44.8 million. Of this amount, $28.2 million was associated with stock options and is expected to be amortized on a straight‑line basis to expense over a weighted average period of approximately three years, and $16.6 million was associated with RSUs and is expected to be amortized on a straight‑line basis to expense over a weighted average period of approximately two years. Such amounts will be amortized primarily to research and development or selling, general and administrative expense. These future estimates are subject to change based upon a variety of future events, which include, but are not limited to, changes in estimated forfeiture rates, employee turnover, and the issuance of new stock options and other equity‑based awards.