(6) Stock-Based and Long-Term Compensation

During 2016, the 2016 Incentive Award Plan was approved and it replaced the previous plan. The Compensation Committee determines the recipients of the equity awards, the type of awards made, the required performance measures, and the timing and duration of each grant. At December 31, 2016, 8,700,000 shares of the Company’s common stock were available for future grants under the plan.

Total stock-based compensation expense and the associated tax benefits are as follows (in thousands):



Compensation Expense	Years ended December 31,
	2016		2015		2014
Stock options	$	4,870	$	3,663	$	3,900
Restricted stock		382		9,219		15,800
Restricted stock units		24,762		19,699		11,282
Performance and strategic performance share units		10,167		12,991		13,092
Total	$	40,181	$	45,572	$	44,074

Tax Benefit	Years ended December 31,
	2016		2015		2014
Stock options	$	1,802	$	1,355	$	1,443
Restricted stock		141		3,411		5,846
Restricted stock units		9,162		7,289		4,174
Total	$	11,105	$	12,055	$	11,463

Total stock-based compensation expense is reflected in general and administrative expenses in the consolidated statements of operations.

Stock Options

Stock options are granted with an exercise price equal to the market price of our ordinary shares at the date of grant. The stock options generally vest in equal installments over three years and expire in ten years from the grant date. Non-vested stock options are generally forfeited upon termination of employment.

The Company recognizes compensation expense for stock option grants based on the fair value at the date of grant using the Black-Scholes-Merton option pricing model. The Company uses historical data, among other factors, to estimate the expected volatility and the expected life of the stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the stock option. The dividend yield is based on our historical and projected dividend payouts.

The weighted average fair values of stock options granted and the assumptions used in estimating those fair values are as follows:



	Years ended December 31,
	2016			2015			2014
Weighted average fair value of stock options granted	$	3.61		$	6.25		$	6.95

Black-Scholes-Merton Assumptions:
Risk free interest rate		1.46	%		1.33	%		1.42	%
Expected life (years)		5			5			4
Volatility		55.72	%		47.07	%		34.50	%
Dividend yield		3.28			1.30			1.23

The following table summarizes stock option activity for 2016:



	Number of Options	Weighted Average Option Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2015	4,591,141	$	23.60	5.3	$	256
Granted	2,121,417	$	9.76
Exercised	(40,723)	$	12.86
Forfeited	(289,820)	$	9.76
Expired	(371,181)	$	27.21
Outstanding as of December 31, 2016	6,010,834	$	19.23	6.0		14,145
Exercisable as of December 31, 2016	3,671,241	$	23.86	4.2	$	1,104
Options expected to vest as of December 31, 2016	2,339,593	$	11.97	8.8	$	13,041

The total intrinsic value of stock options exercised during 2016, 2015 and 2014 was $0.3 million, $2.3 million and $17.1 million, respectively. The Company received $0.5 million, $8.8 million and $10.6 million during 2016, 2015 and 2014, respectively, from employee stock option exercises. The Company has reported tax benefits of $0.1 million, $0.9 million and $5.6 million from the exercise of stock options for 2016, 2015 and 2014, respectively.

The following table summarizes non-vested stock option activity for 2016:



	Number of Options	Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2015	1,102,879	$	20.81
Granted	2,121,417	$	9.76
Vested	(594,883)	$	21.54
Forfeited	(289,820)	$	9.76
Non-vested as of December 31, 2016	2,339,593	$	11.97

At December 31, 2016, the unrecognized compensation expense related to non-vested stock options was $5.7 million. The Company expects to recognize $3.3 million and $2.4 million of compensation expense associated with these options during 2017 and 2018, respectively.

Restricted Stock

Since 2014, no restricted stock has been granted. The following table summarizes restricted stock activity for 2016:



	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2015	292,937	$	23.13
Vested	(291,779)	$	23.13
Forfeited	(1,158)	$	23.03
Non-vested as of December 31, 2016	-	$	-

The total fair value of restricted stock vested during 2016, 2015 and 2014 was $6.8 million, $12.1 million and $23.0 million, respectively.

Restricted Stock Units

Beginning in 2014, restricted stock unit awards (RSUs) were granted to eligible employees instead of restricted stock. Prior to 2014, only non-employee directors were granted RSUs. RSUs granted to employees vest in equal annual installments over three years. On the vesting date, each RSU is converted to one share of the Company’s common stock having an aggregate value determined by the Company’s closing stock price on the vesting date. Holders of RSUs are not entitled to any rights of a stockholder, such as the right to vote shares.

Each non-employee director is issued annually a number of RSUs having an aggregate dollar value determined by the Company’s Board of Directors. The exact number of RSUs granted is determined by dividing the aggregate dollar value determined by the Company’s Board of Directors by the fair market value of the Company’s common stock on the day of the annual stockholders’ meeting. If the director’s election occurs at a time other than at the annual meeting, the director will receive a pro-rata number of RSUs based on the number of months between his or her election date and the anniversary of the last annual stockholder meeting. Each RSU granted prior to 2013 represents the right to receive from the Company, within 30 days of the date the director ceases to serve on the Board, one share of the Company’s common stock. The RSUs granted will vest and pay out in shares of the Company’s common stock in the year following the grant date on the date of Company’s annual meeting.

The following table summarizes RSU activity for 2016:



	Number of RSUs	Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2015	2,787,889	$	20.41
Granted	2,549,112	$	9.98
Vested	(1,127,930)	$	20.62
Forfeited	(522,779)	$	13.56
Non-vested as of December 31, 2016	3,686,292	$	14.10

At December 31, 2016, there was $24.2 million of unrecognized compensation expense related to unvested RSUs. The Company expects to recognize $16.6 million, $7.3 million, and $0.3 million associated with unvested RSUs for 2017, 2018, and 2019, respectively.

Performance Share Units

The Company has issued performance share units (PSUs) to its employees as part of the Company’s long-term incentive program. There is a three-year performance period associated with each PSU grant. The two performance measures applicable to all participants are the Company’s return on invested capital and total stockholder return relative to those of the Company’s pre-defined “peer group.” If the participant has met specified continued service requirements, the PSUs will settle in cash or a combination of cash and up to 50% of equivalent value in the Company’s common stock, at the discretion of the Compensation Committee of the Board of Directors. At December 31, 2016, there were 368,394 PSUs outstanding (121,168, 129,852 and 117,374 related to performance periods ending December 31, 2016, 2017 and 2018, respectively). The Company has recorded both current and long-term liabilities for this liability-based compensation award.

In February 2014, the Company granted strategic performance share units (SPSUs) to the executive officers of the Company. The number of target SPSUs was established at the beginning of a two-calendar year performance period. The final value of SPSUs earned was based upon the level of the Company’s free cash flow achieved for 2015 and 2014. All SPSU awards were paid out during 2016.

Employee Stock Purchase Plan (ESPP)

Eligible employees are allowed to purchase shares of the Company’s common stock at a discount during six-month offering periods beginning on January 1 and July 1 of each year and ending on June 30 and December 31 of each year, respectively.

The following table summarizes ESPP activity (in thousands except shares):



	Years ended December 31,
	2016		2015		2014
Cash received for shares issued	$	3,681	$	4,803	$	4,870
Compensation expense	$	1,492	$	835	$	1,078
Shares issued		290,987		332,467		246,480

401(k)/Profit Sharing Plan

The Company maintains a defined contribution profit sharing plan for employees who have satisfied minimum service requirements. Employees may contribute up to 75% of their eligible earnings to the plan subject to the contribution limitations imposed by the Internal Revenue Service. The Company provides a nondiscretionary match of 100% of an employee’s contributions to the plan, up to 4% of the employee’s salary. The Company made contributions of $8.7 million, $13.9 million and $16.7 million 2016, 2015 and 2014, respectively.

Non-Qualified Deferred Compensation Plans

The Company has a non-qualified deferred compensation plan which allows senior management to defer up to 75% of their base salary, up to 100% of their bonus, up to 100% of the cash portion of their PSU compensation and up to 100% of the vested RSUs to the plan. The Company also has a non-qualified deferred compensation plan for its non-employee directors which allows each director to defer up to 100% of their cash compensation paid by the Company and up to 100% of the vested RSUs to the plan. Payments are made to participants based on their annual enrollment elections and plan balances. Participants earn a return on their deferred compensation that is based on hypothetical investments in certain mutual funds. Changes in market value of these hypothetical participant investments are reflected as an adjustment to the deferred compensation liability of the Company with an offset to compensation expense. The Company makes contributions that approximate the participant deferrals into various investments, principally life insurance that is invested in mutual funds similar to the participants’ hypothetical investment elections. Changes in market value of the investments and life insurance are reflected as adjustments to the deferred compensation plan asset with an offset to other income (expense) in the consolidated statements of operations.

The following table summarizes deferred compensation balances (in thousands):



		December 31,
	Balance sheet location	2016		2015
Deferred compensation assets	Intangible and other long-term assets, net	$	12,360	$	11,548
Deferred compensation liabilities, short-term	Accounts payable	$	1,115	$	721
Deferred compensation liabilities, long-term	Other long-term liabilities	$	18,489	$	17,367

Supplemental Executive Retirement Plan

The Company has a supplemental executive retirement plan (SERP). The SERP provides retirement benefits to the Company’s executive officers and certain other designated key employees. The SERP is an unfunded, non-qualified defined contribution retirement plan, and all contributions under the plan are unfunded credits to a notional account maintained for each participant. Under the SERP, the Company will generally make annual contributions to a retirement account based on age and years of service. The participants in the plan receive contributions ranging from 5% to 35% of salary and annual cash bonus, which totaled $2.2 million, $1.2 million and $1.2 million during 2016, 2015 and 2014, respectively. The Company recorded compensation expense of $1.4 million, $2.1 million and $1.6 million in general and administrative expenses during 2016, 2015 and 2014, respectively. The Company may also make discretionary contributions to a participant’s account. During 2016, 2015 and 2014, the Company paid $1.4 million, $3.7 million and $3.0 million, respectively, to eligible participants in the SERP.