STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Stock Issuance

On August 15, 2014, the Company completed its acquisition of Digiplex pursuant to an Agreement and Plan of Merger with Digiplex and Badlands Acquisition Corporation, a wholly-owned subsidiary of the Company. Upon completion of the merger, each issued and outstanding share of Digiplex Class A common stock and Class B common stock, except for any shares owned by the Company, Digiplex or any of their respective subsidiaries, was converted into the right to receive 0.1765 shares of the Company’s common stock, referred to as the “exchange ratio,” or approximately 1.4 million shares of the Company’s common stock in the aggregate. See Note 4—Acquisitions.

On July 25, 2013, the Company issued 4.5 million shares of its common stock, at a price to the public of $18.00 per share through a registered public offering. The Company granted the underwriters an option to purchase up to an additional 675,000 shares of the Company’s common stock to cover over-allotments, if any, which the underwriters could exercise within 30 days of the date of the final prospectus. The underwriters purchased the additional 675,000 shares of common stock on August 16, 2013. The offering was made pursuant to the Company’s existing shelf registration statement previously filed with the Securities and Exchange Commission (“SEC”). The net proceeds received from the transaction were approximately $88,043. The funds received from the issuance of the shares have been used for general corporate purposes, including potential acquisitions, working capital and other capital expenditures.

Share Repurchase Program

On December 10, 2015, the Company announced that its Board of Directors had authorized a $50 million share repurchase program. The shares may be repurchased from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws. The share repurchase program will expire on December 10, 2018, but it may be suspended or discontinued at any time. Through December 31, 2015, the Company purchased 188,119 shares for approximately $4,222, at an average price of $22.44. Subsequent to December 31, 2015, the Company has repurchased 116,487 shares of its common stock at an aggregate purchase price of approximately $2,608.

A summary of the Company's purchase of its common stock on a monthly basis during the three months ended December 31, 2015 is as follows:



	Total Number of Shares Purchased	Average Price per Share		Total Number of Cumulative Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value That May Yet Be Purchased Under the Plans or Programs
2015	188,119	$	22.44	188,119	$	45,778
	188,119	$	22.44

Share-Based Compensation

In May 2014, the Board of Directors adopted the Carmike Cinemas, Inc. 2014 Incentive Stock Plan (the “2014 Incentive Stock Plan”). The Company’s Compensation and Nominating Committee (or similar committee) may grant stock options, stock grants, stock units, and stock appreciation rights under the 2014 Incentive Stock Plan to certain eligible employees and to outside directors. As of December 31, 2015, there were 1,116,804 shares available for future grants under the 2014 Incentive Stock Plan. The Company’s policy is to issue new shares upon exercise of options and the issuance of stock grants.

The determination of the fair value of stock option awards on the date of grant using option-pricing models is affected by the Company’s stock price, as well as assumptions regarding a number of other inputs. These variables include the Company’s expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The expected volatility is based on the historical volatility. The Company uses historical data to estimate stock option exercise and forfeiture rates. The expected term represents the period over which the share-based awards are expected to be outstanding. The dividend yield is an estimate of the expected dividend yield on the Company’s stock. The risk-free rate is based on U.S. Treasury yields in effect at the time of the grant for the expected term of the stock options. All stock option awards are amortized based on their graded vesting over the requisite service period of the awards.

The Company also issues restricted stock awards to certain key employees and directors. Generally, the restricted stock vests over a one to three year period and compensation expense is recognized over the one to three year period equal to the grant date value of the shares awarded to the employee. In addition, the Company issues performance-based awards which are dependent on the achievement of EBITDA targets and are earned over a three-year period. The performance-based awards vest at the end of the three-year period. As of December 31, 2015, the Company had 193,891 shares of performance-based awards outstanding, all of which have been earned due to the achievement of EBITDA targets. Performance-based stock awards are recognized as compensation expense over the vesting period based on the fair value on the date of grant and the number of shares ultimately expected to vest.

The Company’s total stock-based compensation expense was $6,341, $4,909 and $2,527 in 2015, 2014 and 2013, respectively. Stock-based compensation expense is included in general and administrative expenses in the consolidated statement of operations with the exception of the accelerated vested awards which are included in Severance Agreement Charges. Beginning in 2013, certain employees became retirement-eligible under the terms of the 2014 Incentive Stock Plan. For retirement-eligible employees, stock-based compensation expense is recognized immediately for awards with service-based conditions and upon meeting the required performance-based targets for performance-based awards. As of December 31, 2015, the Company had approximately $1,786 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s plans. This cost is expected to be recognized as stock-based compensation expense over a weighted-average period of 1.4 years. This expected cost does not include the impact of any future stock-based compensation awards.

Options-Service Condition Vesting

The Company currently uses the Black-Scholes option pricing model to determine the fair value of its stock options. Such stock options vest equally over a three-year period, except for options granted to members of the Board of Directors that vest immediately upon issuance. The stock options expire ten years after the grant date.

No options were granted during 2015, 2014 and 2013.

The following table sets forth the summary of option activity for the year ended December 31, 2015:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at January 1, 2015	600,000		$	8.65	5.1	10,574
Granted	—		$	—	—	$	—
Exercised	(50,000	)	$	8.38	—	$	1,026
Expired	—		$	—	—	—
Forfeited	—		$	—	—	$	—
Outstanding at December 31, 2015	550,000		$	8.67	4.1	$	7,848
Exercisable on December 31, 2015	550,000		$	8.67	4.1	$	7,848
Expected to vest at December 31, 2015	—		$	—	—	$	—

The fair value of options vested during the years ended December 31, 2015, 2014 and 2013 was $0, $608, and $588, respectively. The intrinsic value of the options exercised during the years ended December 31, 2015, 2014 and 2013 was $1,026, $70 and $232, respectively. Cash received from options exercised for the years ended December 31, 2015, 2014 and 2013 was $419, $18 and $125, respectively. The cash tax benefits realized from stock awards exercised for December 31, 2015, 2014 and 2013 were $390, $28 and $88 respectively.

Options-Market Condition Vesting

In April 2007, the Compensation and Nominating Committee approved (pursuant to the 2004 Incentive Stock Plan) the grant of an aggregate of 260,000 stock options, at an exercise price equal to $25.95 per share, to a group of eight senior executives. The April 2007 stock option grants are aligned with market performance, as one-third of these stock options each will vest when the Company achieves an increase in the trading price of its common stock (over the $25.95 exercise price) equal to 25%, 30% and 35%, respectively. The stock option grants expire 10 years from date of issuance. The Company determined the aggregate grant date fair value of these stock options to be approximately $1,430. The fair value of these options was estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is not subsequently adjusted for the number of shares that are ultimately vested.

The following table sets forth the summary of option activity for Company’s stock options with market condition vesting for the year ended December 31, 2015:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at January 1, 2015	100,000		$	25.95	2.28	$	32
Granted	—		—		—	—
Exercised	(26,666	)	25.95		—	$	76
Forfeited	—		—		—	—
Outstanding at December 31, 2015	73,334		$	25.95	1.28	$	—
Exercisable on December 31, 2015	40,000		$	25.95	1.28	$	—
Expected to vest at December 31, 2015	—		$	—	—	$	—

Restricted Stock

The following table sets forth the summary of activity for restricted stock grants for the year ended December 31, 2015:



	2015				2014				2013
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested at beginning of year	559,774		$	17.35	573,353		$	12.51	458,981		$	10.85
Granted	184,492		$	33.13	138,855		$	29.44	215,800		$	15.77
Vested	(355,472	)	$	14.61	(128,437	)	$	8.80	(97,928	)	$	11.78
Forfeited	—		$	—	(23,997	)	$	17.44	(3,500	)	$	15.66
Nonvested at end of year	388,794		$	27.34	559,774		$	17.35	573,353		$	12.51

The total fair value for restricted share awards that vested during 2015, 2014 and 2013 was $8,229, $4,091 and $1,617, respectively.

Employee Stock Purchase Plan

On July 1, 2014, the Company adopted an Employee Stock Purchase Plan (“ESPP”) which enables employees who have completed one year of service and meet certain minimum work requirements, to purchase the Company’s common stock through payroll deductions at a price equal to 90 percent of the stock price at the end of each 3 month purchase period, subject to certain limits. All shares purchased under the ESPP are immediately vested. The number of shares issued under the ESPP during the years ended December 31, 2015 and 2014 was 5,571 and 1,947, respectively. At December 31, 2015, there were 242,482 shares available for future issuance under the ESPP.