Stock-Based Compensation

The Company recognizes compensation expense using a fair-value based method for costs associated with all share-based awards issued to the Company’s directors, employees and outside consultants under its stock plan. The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service periods in the Company’s Consolidated Statements of Income.

The Company has adopted the simplified method to calculate the beginning balance of the additional paid-in capital pool of the excess tax benefit and to determine the subsequent effect on the APIC pool and Consolidated Statements of Cash Flows of the tax effects of employee stock-based compensation awards that were outstanding upon adoption.

The Company calculates stock-based compensation expense based on the number of awards ultimately expected to vest, net of estimated forfeitures. The Company estimates forfeiture rates at the time of grant and revise such rates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation expense was determined using the Black-Scholes option pricing model.

Stock-based compensation expense for employees and directors and non-employees for the years ended December 31, 2016, 2015 and 2014, is presented below:



	Year Ended December 31,
Stock-based Compensation	2016		2015		2014
(In thousands)
Employees and directors	$	3,679	$	1,952	$	1,157
Non-employees	63		93		344
Total	$	3,742	$	2,045	$	1,501

Stock-Based Incentive Plans

The Company currently has one active stock-based incentive plan under which it may grant stock-based awards to the Company’s employees, directors and non-employees.

The total number of shares of common stock authorized for issuance, shares of common stock issued upon exercise of options or grant of restricted stock, shares of common stock subject to outstanding awards and available for grant under this plan as of December 31, 2016, is as follows:



Title of Plan	Total Shares of Common Stock Authorized	Total Shares of Common Stock Issued	Total Shares of Common Stock Subject to Outstanding Awards	Total Shares of Common Stock Available for Grant
2005 Equity Incentive Plan⁽¹⁾	6,200,000	2,767,700	—	3,432,300
2002 Outside Directors Stock Option Plan⁽²⁾	157,000	157,000	—	—
1999 Non-statutory Stock Option Plan⁽²⁾	4,966,183	4,966,183	—	—
1999 Stock Option Plan⁽²⁾	3,694,485	3,694,485	—	—

_________________________


(1)	As of December 31, 2016, there were 1,471,910 shares of unvested restricted stock awards outstanding.


(2)	Plan terminated in 2009, subject to options outstanding under the plan.

Under the Company’s Amended and Restated 2005 Equity Incentive Plan effective May 28, 2015 (the “2005 Equity Incentive Plan”), the Company is authorized to issue a variety of incentive awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance share and performance unit awards, deferred compensation awards and other stock-based or cash-based awards.

In 2009, the compensation committee of the Company’s board of directors (the “Compensation Committee”) terminated the 1999 Outside Director Stock Option Plan, the 1999 Nonstatutory Stock Option Plan and the 2002 Outside Directors Stock Option Plan, subject to any outstanding options.

Stock Option Activity

A summary of the Company’s stock option activity is presented below:



	2016			2015				2014
	Number of shares (in thousands)	Weighted-Average Exercise Price		Number of shares (in thousands)		Weighted-Average Exercise Price		Number of shares (in thousands)		Weighted-Average Exercise Price
Outstanding at beginning of year	—	$	—	58		$	5.41	172		$	16.52
Expired	—	$	—	(58	)	$	5.41	(114	)	$	22.08
Outstanding at end of year	—	$	—	—		$	—	58		$	5.41
Exercisable at end of year	—	$	—	58		$	—	58		$	5.41

As of December 31, 2016, there are no stock options outstanding.

Restricted Stock

Restricted stock has the same rights as other issued and outstanding shares of the Company’s common stock, including, in some cases, the right to accrue dividends, which are held in escrow until the award vests. The compensation expense related to these awards is determined using the fair market value of the Company’s common stock on the date of the grant, and the compensation expense is recognized ratably over the vesting period. Under the Company’s restricted stock plans, restricted stock awards typically vest over one to five years. In addition to service requirements, vesting of restricted stock awards may be subject to the achievement of specified performance goals set by the Compensation Committee. If the performance goals are not met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

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



	2016				2015				2014
	Number of shares (in thousands)		Weighted-average grant-date fair value per share		Number of shares (in thousands)		Weighted-average grant-date fair value per share		Number of shares (in thousands)		Weighted- average grant-date fair value per share
Nonvested at beginning of year	586		$	7.13	277		$	8.39	114		$	7.45
Awards granted	1,264		$	3.31	522		$	6.40	312		$	8.39
Awards vested	(366	)	$	6.65	(173	)	$	8.38	(149	)	$	7.67
Forfeited	(12	)	$	7.10	(40	)	$	7.79	—		$	—
Nonvested at end of year	1,472		$	3.96	586		$	7.13	277		$	8.39

Stock-based compensation expense associated with the Company’s restricted stock for the years ended December 31, 2016, 2015 and 2014, was $3.5 million, $2.0 million and $1.5 million, respectively. As of December 31, 2016, the aggregate intrinsic value of non-vested restricted stock was $3.1 million. Total unrecognized compensation costs associated with non-vested restricted stock as of December 31, 2016, was $3.2 million, excluding forfeitures, which the Company expects to recognize over a weighted-average period of 1.8 years.