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Stock Based Compensation

The Company recognizes compensation cost for stock options awarded to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average fair value per share for the stock options granted to employees for the years ended December 31, 2015, 2014 and 2013 were $15.29, $7.15 and $7.97, respectively.

The following assumptions were used in determining the fair value of stock options for grants issued in 2015, 2014 and 2013:

	2015			2014			2013

Expected volatility	41.84%	-	58.25%	35.14%	-	46.32%	44.17%	-	71.58%
Expected term (years)	1.25	-	6.83	1.75	-	4.75	1.25	-	4.75
Risk-free interest rate	0.24%	-	1.93%	0.43%	-	1.50%	0.12%	-	1.37%

The Company does not have any publicly traded stock options; therefore, expected volatilities are based on historical volatility of the Company’s stock. The risk-free interest rate is based on the yield of a zero-coupon U.S. Treasury bond whose maturity period approximates the option’s expected term. The expected life assumption represents the weighted-average period of time that newly granted stock-based awards are expected to remain outstanding. The expected life is estimated by analyzing three components of historical grants with the same vesting schedules: (i) observed post-vesting forfeiture, (ii) observed exercise behavior, and (iii) expected exercise behavior. The expected time to early exercise is calculated by assuming that the options outstanding as of the valuation date will be exercised at the midpoint between the final vest date and the expiration date. If a grant is already fully vested, it is assumed the outstanding options exercise at the midpoint between the valuation date and the expiration date. The three components are then option-weighted to estimate expected life. The Company stratifies its employees as Board of Directors, Named Executives and all other employees, each with their own exercise behavior and thus, expected life.

For 2015, 2014, and 2013, the Company recorded $2,975, $2,491 and $1,994, respectively, in selling, general and administrative expenses for stock options. As of December 31, 2015, the total compensation cost related to unvested stock option awards granted to employees but not yet recognized was $8,756. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 2.7 years.

The following table is a summary of the Company’s stock option activity issued to employees and related information:

				Weighted Average
	Number of Shares			Exercise Price		Options Exercisable


Outstanding at December 31, 2014		2,070,672		$	12.08		971,797

Granted		333,601			39.76
Exercised		(691,985	)		8.40
Forfeited or expired		(80,375	)		14.48

Outstanding at December 31, 2015		1,631,913			19.17
Exercisable at December 31, 2015		709,255		$	12.30

The aggregate intrinsic value for all stock options exercised for the years ended December 31, 2015, 2014 and 2013 was $24,432, $8,910 and $5,017, respectively. The aggregate intrinsic values for all stock options outstanding and exercisable as of December 31, 2015 were $45,558 and $24,672, respectively.

A summary of the Company’s nonvested stock options and restricted stock activity is presented below:

	Nonvested Stock Options					Nonvested Restricted Stock
	Number of Shares			Weighted- Average Grant- Date Fair Value		Number of Shares			Weighted- Average Grant- Date Fair Value

Nonvested at December 31, 2014		1,098,875		$	7.14		-		$	-

Granted		333,601			15.29		9,075			39.48
Vested during period		(429,443	)		6.62		(8,897	)		39.34
Forfeited		(80,375	)		6.90		-			-

Nonvested at December 31, 2015		922,658		$	10.35		178		$	46.91

Members of the Cambrex Board of Directors currently participate in an incentive plan which rewards service with restricted stock units. Awards are made annually and vest over six months. On the six month anniversary of the grant, restrictions on sale or transfer are removed and shares are issued to the Directors. These awards are classified as equity awards.

For 2015, 2014, and 2013, the Company recorded $353, $395, and $427, respectively, in selling, general and administrative expenses for restricted stock units. As of December 31, 2015, total compensation cost related to unvested restricted stock not yet recognized was $6. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 0.3 years.

The Company granted equity-settled performance shares (“PSs”) to certain executives. PS awards provide the recipient the right to receive a certain number of shares of the Company’s common stock in the future, which depends on the Company’s level of achievement of revenue and EBITDA growth as compared to the net revenue and EBITDA growth of the members of a specified peer group of companies over a three year period. The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company. For 2015, 2014 and 2013, the Company recorded $2,271, $2,116 and $404, respectively, in selling, general and administrative expenses related to these PS awards.

The Company granted cash-settled performance share units (“PSUs”) to certain executives. PSU awards provide the recipient the right to receive the cash value of a certain number of shares of the Company’s common stock in the future, which depends on the Company’s level of achievement of revenue and EBITDA growth as compared to the net revenue and EBITDA growth of the members of a specified peer group of companies over a three year period. The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company. As of December 31, 2015, there were no PSU awards outstanding. For 2014 and 2013, the Company recorded $445 and $2,620, respectively, in selling, general and administrative expenses for PSU awards. The decrease between 2014 and 2013 is primarily the result of the Company’s performance compared to the peer group partially offset by the Company’s higher share price.