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, 2017, there were stock option awards outstanding, net of awards expired, for the purchase in aggregate of 0.2 million shares of the Company’s common stock. Effective November 21, 2016 no new awards can be granted under the 2007 Plan.

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, 2017, there were stock option awards outstanding, net of awards expired, for an aggregate of 0.1 million shares of the Company’s common stock. No new awards will be granted under the 2010 Plan and forfeited or terminated shares will be added to the 2017 Plan pool as described below.

The Company adopted a Performance Incentive Plan effective July 1, 2014 (the "Fiscal 2015 Performance Plan"). The Fiscal 2015 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 2015 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 2015 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 a single installment 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 award through the end of the third 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, 2015 (the "Fiscal 2016 Performance Plan") and July 1, 2016 (the "Fiscal 2017 Performance Plan"). The Fiscal 2016 Performance Plan and Fiscal 2017 Performance Plan include performance-based and service-based vesting requirements and payment terms that are substantially the same as described above the Fiscal 2015 Performance Plan.

The Company adopted and the shareholders approved the 2017 Long-Term Incentive Plan (the “2017 Plan”), effective February 16, 2017 to provide incentives to eligible employees, directors and consultants. The maximum number of shares that can be issued under the 2017 Plan is not to exceed 1,125,000 shares, calculated as the sum of (i) 650,000 shares and (ii) up to 475,000 shares previously reserved for issuance under the 2010 Plan, including shares returned upon cancellation, termination or forfeiture of awards that were previously granted under that plan. Awards expire in accordance with the terms of each award and the shares subject to the award are added back to the 2017 Plan upon expiration of the award.

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, 2017, 2016 and 2015, stock-based compensation of $2.3 million, $2.0 million and $1.7 million, respectively, was reflected as an increase to additional paid in capital and $0.7 million, $0.7 million and $0.1 million was reflected as an increase to other accrued expenses for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. For the fiscal years ended June 30, 2017, 2016 and 2015, all stock-based compensation was employee related.

At June 30, 2017, there was $4.5 million of unrecognized compensation cost related to nonvested share-based compensation arrangements under the 2010 and 2017 Plans, 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 1.94 years.

Stock Options

There were no stock option grants during the fiscal years ended June 30, 2017, 2016 and 2015. The following is a summary of stock option activity for the years ended June 30, 2017, 2016 and 2015:



	Options (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
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

Granted	—		$	—
Exercised	(4	)	4.14			$	17
Forfeited	(62	)	12.64
Expired or Canceled	(7	)	2.45
Outstanding at June 30, 2017	310		6.35		2.71	$	139
Exercisable at June 30, 2017	310		$	6.35	2.71	$	139

Restricted Shares

The following is a summary of restricted shares granted during the years ended June 30, 2017, 2016 and 2015:



Nonvested Shares	Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at June 30, 2014	246		$	17.25

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	—		—

Granted	156		$	5.81
Vested	(88	)	8.31
Forfeited	(22	)	10.70
Nonvested at June 30, 2017	277		4.98
Vested at June 30, 2017	—		$	—

The total vesting date fair value of restricted shares that vested during the years ended June 30, 2017, 2016 and 2015 was $0.7 million, $0.4 million and $0.6 million, respectively.

Performance Restricted Stock Units

During the year ended June 30, 2015, the Company awarded performance restricted 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 restricted 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 restricted 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 restricted 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 restricted 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 restricted 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 years ended June 30, 2017 and 2016, the Company awarded additional performance restricted stock units ("FY 2017 Performance Stock Units" and "FY 2016 Performance Stock Units") to its executive officers and senior management. The FY 2017 Performance Stock Units and 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.

The fair values of performance restricted stock units granted during the years ended June 30, 2017, 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, 2017		June 30, 2016		June 30, 2015
Risk-free interest rate	1.49	%	1.31	%	1.07	%
Dividend yield	—	%	—	%	—	%
Expected volatility - Company	62.0	%	55.5	%	54.1	%
Expected volatility - peer company	17.1	%	15.7	%	15.7	%
Total measurement period (years)	2.8		3.0		3.0

The following is a summary of performance restricted stock units granted during the years ended June 30, 2017, 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

Granted	420		$	4.69
Vested	(10	)	10.76
Forfeited	(111	)	12.86
Nonvested at June 30, 2017	762		8.51
Vested at June 30, 2017	—		$	—

The total vesting date fair value of performance restricted stock units that vested during the years ended June 30, 2017 and 2016 was $0.1 million and $0.1 million, respectively. There were no performance restricted stock units that vested during the year ended June 30, 2015.

Cash-Settled Performance Units

The following is a summary of cash-settled performance units granted during the years ended June 30, 2017, 2016 and 2015:



	Number of Units (in thousands)		Weighted Average Grant Date Fair Value
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

Granted	95		$	13.17
Vested	(25	)	—
Forfeited	(89	)	$	12.43
Outstanding at June 30, 2017, nonvested	32

The fair value of vested awards under the cash-settled performance plan for the years ended June 30, 2017, 2016 and 2015 was $0.1 million, $0.2 million and $0.2 million. Payments of $0.2 million, $0.1 million and $0.3 million were made to settle vested cash-settled performance units during the years ended June 30, 2017, 2016 and 2015, respectively.

Warrants

As of June 30, 2017, the Company had no outstanding warrants.

The following is a summary of the warrant activity for the years ended June 30, 2017, 2016 and 2015 (in thousands):



	Common Stock Warrants
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

Issued	—
Canceled	—
Exercised	(80	)
Expired	—
Outstanding and exercisable, June 30, 2017	—

As of June 30, 2017, 2016 and 2015, the Company had no warrants classified as derivative liabilities.