Share-Based Compensation

Long-Term Incentive Plans

The Company adopted and the shareholders approved the 2007 Long-Term Incentive Plan (the “2007 Plan”), effective November 21, 2006, to provide incentives to certain eligible employees, directors and consultants. A maximum of 1.4 million shares of the Company’s common stock can be issued under the 2007 Plan in connection with the grant of awards. Awards to purchase common stock have been granted pursuant to the 2007 Plan and are outstanding to various employees, officers, directors, Scientific Advisory Board members and independent distributors at prices between $1.47 and $10.50 per share, with initial vesting periods of one to three years. Awards expire in accordance with the terms of each award and the shares subject to the award are added back to the 2007 Plan upon expiration of the award. The contractual term of stock options granted is generally ten years. As of June 30, 2016 there were awards outstanding, net of awards expired, for the purchase in aggregate of 0.3 million shares of the Company’s common stock.

The Company adopted and the shareholders approved the 2010 Long-Term Incentive Plan (the “2010 Plan”), effective September 27, 2010, as amended on August 21, 2014, to provide incentives to certain employees, directors and consultants. A maximum of 1.5 million shares of the Company’s common stock can be issued under the 2010 Plan in connection with the grant of awards. Awards to purchase common stock have been granted pursuant to the 2010 Plan and are outstanding to various employees, officers and directors. Outstanding stock options awarded under the 2010 Plan have exercise prices between $4.41 and $24.71 per share, and vest over one to four year vesting periods. Awards expire in accordance with the terms of each award and the shares subject to the award are added back to the 2010 Plan upon expiration of the award. The contractual term of stock options granted is generally ten years. As of June 30, 2016 there were awards outstanding, net of awards expired, for an aggregate of 0.1 million shares of the Company’s common stock.

The Company adopted a Performance Incentive Plan effective July 1, 2013 (the "Fiscal 2014 Performance Plan"). The Fiscal 2014 Performance Plan is intended to provide selected employees an opportunity to earn performance-based cash bonuses whose value is based upon the Company’s stock value and to encourage such employees to provide services to the Company and to attract new individuals with outstanding qualifications. The Fiscal 2014 Performance Plan seeks to achieve this purpose by providing for awards in the form of performance share units (the “Units”). No shares will be issued under the Fiscal 2014 Performance Plan. Awards may be settled only with cash and will be paid subsequent to award vesting. The fair value of share-based compensation awards, that include performance shares, are accounted for as liabilities. Vesting for the Units is subject to achievement of both service-based and performance-based vesting requirements. Performance-based vesting occurs in three installments if the Company meets certain performance criteria generally set for each year of a three-year performance period. The service-based vesting criteria occurs in three annual installments which are achieved at the end of a given fiscal year only if the participant has continuously remained in service from the date of award through the end of that fiscal year. The fair value of these awards is based on the trading price of the Company's common stock and is remeasured at each reporting period date until settlement. The Company adopted separate Performance Incentive Plans effective July 1, 2014 (the "Fiscal 2015 Performance Plan") and July 1, 2015 (the "Fiscal 2016 Performance Plan"). The Fiscal 2015 and 2016 Performance Plans are substantially similar to the Fiscal 2014 Performance Plan except that the service-based vesting criteria occurs in a single installment and is achieved at the end of the third fiscal year after the awards are granted if the participant has continuously remained in service from the date of the award through the end of the third fiscal year.

Stock-Based Compensation

In accordance with accounting guidance for stock-based compensation, payments in equity instruments for goods or services are accounted for by the fair value method. For the fiscal years ended June 30, 2016, 2015, and 2014, stock-based compensation of $2.0 million, $1.7 million and $2.6 million, respectively, was reflected as an increase to additional paid in capital and $0.7 million, $0.1 million and $0.3 million was reflected as an increase to other accrued expenses for the fiscal years ended June 30, 2016, 2015 and 2014, respectively. For the fiscal years ended June 30, 2016, 2015, and 2014, all stock-based compensation was employee related.

At June 30, 2016 there was $5.6 million of unrecognized compensation cost related to nonvested share-based compensation arrangements under the 2010 Plan, based on management's estimate of the shares that will ultimately vest. The Company expects to recognize such costs over a weighted-average period of 2.3 years.

Stock Options

There were no stock option grants during the fiscal years ended June 30, 2016, 2015 and 2014. The following is a summary of stock option activity for the years ended June 30, 2016, 2015, and 2014:



	Options (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2013	1,002		$	7.56

Granted	—		$	—
Exercised	(200	)	4.83			$	2,282
Forfeited	(67	)	12.88
Expired or Canceled	—		—
Outstanding at June 30, 2014	735		8.23

Granted	—		$	—
Exercised	(22	)	5.04			$	60
Forfeited	(251	)	9.18
Expired or Canceled	—		—
Outstanding at June 30, 2015	462		7.87

Granted	—		$	—
Exercised	(46	)	5.66			$	209
Forfeited	(33	)	17.85
Expired or Canceled	—		—
Outstanding at June 30, 2016	383		7.28		3.87	$	2,765
Exercisable at June 30, 2016	383		$	7.28	3.87	$	2,765

Restricted Shares

The following is a summary of restricted shares granted during the years ended June 30, 2016, 2015, and 2014:



Nonvested Shares	Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at June 30, 2013	391		18.10

Granted	32		$	12.51
Vested	(109	)	18.56
Forfeited	(68	)	17.82
Nonvested at June 30, 2014	246		17.25
Vested at June 30, 2014	—		—

Granted	189		$	5.57
Vested	(75	)	16.57
Forfeited	(110	)	15.54
Nonvested at June 30, 2015	250		9.36
Vested at June 30, 2015	—		—

Granted	60		$	5.94
Vested	(40	)	15.64
Forfeited	(39	)	16.21
Nonvested at June 30, 2016	231		6.24
Vested at June 30, 2016	—		—

The total vesting date fair value of restricted shares that vested during the years ended June 30, 2016, 2015 and 2014 was $0.4 million, $0.6 million and $1.2 million, respectively.

Performance Stock Units

During the year ended June 30, 2015, the Company awarded performance stock units (the "FY 2015 Performance Stock Units") to its executive officers and senior management (the "Recipients"). Vesting for the FY 2015 Performance Stock Units occurs over three consecutive annual performance periods and is subject to achievement of both service-based and market-based performance vesting requirements. Subject generally to the Recipient's continued service with the Company (the service based requirement), each Performance Stock Unit represents a contingent right for the Recipient to receive, within thirty days after the end of each of three annual performance periods, a distribution of shares of common stock of the Company equal to 0% to 200% of the target number of Performance Stock Units subject to the award for each performance period. The actual number of shares distributed will be based on the Company's total stockholder return ("TSR") performance during the relevant performance period, subject to acceleration upon a change in control of the Company. The vesting for 50% of the target Performance Stock Units is based upon the Company's absolute TSR for the Performance Period as compared to a matrix of fixed numeric values and the vesting for the other 50% of the target Performance Stock Units is based upon the relative comparison of the Company's TSR to the Vanguard Russell 2000 exchange traded fund TSR. The fair value of the Performance Stock Units will be recognized on a straight-line basis over the requisite service period of the awards, regardless of when, if ever, the market-based performance conditions are satisfied.

During the year ended June 30, 2016, the Company awarded additional Performance Stock Units (the "FY 2016 Performance Stock Units") to its executive officers and senior management. The FY 2016 Performance Stock Units are substantially similar to the FY 2015 Performance Stock Units except that the service-based vesting criteria occurs in a single installment and is achieved at the end of the three year performance period if the participant has continuously remained in service from the date of the award through the end of the performance period. There were no Performance Stock Units granted during the year ended June 30, 2014.

The fair values of Performance Stock Units granted during the years ended June 30, 2016 and 2015 were estimated using a Monte Carlo simulation model which included the following assumptions in order to reflect the performance conditions that must be satisfied for the share units to vest:



	June 30, 2016		June 30, 2015
Risk-free interest rate	1.31	%	1.07	%
Dividend yield	—	%	—	%
Expected volatility - Company	55.5	%	54.1	%
Expected volatility - peer company	15.7	%	15.7	%
Total measurement period (years)	3.0		3.0

The following is a summary of Performance Stock Units granted during the years ended June 30, 2016 and 2015:



	Number of Units (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at June 30, 2014	—		—

Granted	229		$	10.76
Vested	—		—
Forfeited	(114	)	10.76
Nonvested at June 30, 2015	115		10.76

Granted	848		$	12.30
Vested	(15	)	10.76
Forfeited	(485	)	11.25
Nonvested at June 30, 2016	463		13.07
Vested at June 30, 2016	—		—

Cash-Settled Performance Units

The following is a summary of cash-settled performance units granted during the years ended June 30, 2016, 2015, and 2014:



	Number of Units (in thousands)		Weighted Average Grant Date Fair Value
Outstanding at June 30, 2013, nonvested	—

Granted	35		$	10.36
Vested	(31	)	—
Forfeited	(4	)	$	10.57
Outstanding at June 30, 2014, nonvested	—

Granted	69		$	8.05
Vested	(51	)	—
Forfeited	(18	)	$	8.12
Outstanding at June 30, 2015, nonvested	—

Granted	77		$	8.47
Vested	(13	)	—
Forfeited	(13	)	$	8.30
Outstanding at June 30, 2016, nonvested	51

The fair value of vested awards under the Performance Plan as of June 30, 2016 was $0.2 million. Payments of $0.1 million and $0.3 million were made to settle vested cash-settled performance units during the years ended June 30, 2016 and 2015, respectively. No payments were made to settle vested cash-settled performance units during the year ended June 30, 2014.

Warrants

As of June 30, 2016, the Company had outstanding warrants which were issued in conjunction with convertible debentures between November 2009 and February 2010.

The following is a summary of the warrant activity for the years ended June 30, 2016, 2015, and 2014 (in thousands):



	Common Stock Warrants
Outstanding and exercisable, June 30, 2013	1,177

Issued	—
Canceled	—
Exercised	(571	)
Expired	—
Outstanding and exercisable, June 30, 2014	606

Issued	—
Canceled	—
Exercised	(519	)
Expired	—
Outstanding and exercisable, June 30, 2015	87

Issued	—
Canceled	—
Exercised	(7	)
Expired	—
Outstanding and exercisable, June 30, 2016	80

As of June 30, 2016, 2015, and 2014, the Company had no warrants classified as derivative liabilities.