Share-based Compensation

On May 25, 2017, we held our annual meeting of stockholders. At the annual meeting, our stockholders approved the Chart Industries, Inc. 2017 Omnibus Equity Plan (the “2017 Omnibus Equity Plan”). As described in our definitive proxy statement for the annual meeting, our directors, officers and employees (including its principal executive officer, principal financial officer and other “named executive officers”) are eligible to be granted stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares and common shares under the 2017 Omnibus Equity Plan. The maximum number of shares available for grant was 1.70, which may be treasury shares or unissued shares. As of December 31, 2017, 0.01 RSUs, were outstanding under the 2017 Omnibus Equity Plan.

Under the Amended and Restated 2009 Omnibus Equity Plan (“2009 Omnibus Equity Plan”) which was originally approved by our shareholders in May 2009 and re-approved by shareholders in May 2012 as amended and restated, we could grant stock options, SARs, RSUs, restricted stock, performance shares, leveraged restricted shares, and common shares to employees and directors. The maximum number of shares available for grant was 3.35, which could be treasury shares or unissued shares. As of December 31, 2017, 1.20 stock options, 0.32 shares of restricted stock and RSUs, and 0.08 performance units were outstanding under the 2009 Omnibus Equity Plan.

Under the Amended and Restated 2005 Stock Incentive Plan (“2005 Stock Incentive Plan”) which became effective in October 2005, we could grant stock options, SARs, RSUs, stock awards, and performance based stock awards to employees and directors. The 2005 Stock Incentive Plan had reserved 3.42 shares of our common stock for issuance. As of December 31, 2017, 0.06 options were outstanding under the Stock Incentive Plan. We no longer grant awards under the 2009 Omnibus Equity Plan and 2005 Stock Incentive Plan.

We recognized share-based compensation expense of $11.1, $10.7, and $11.3 for the years ended December 31, 2017, 2016 and 2015, respectively. This expense is included in selling, general and administrative expenses in the consolidated statements of operations. The tax impact related to share-based compensation expense was insignificant during the year ended December 31, 2017, which was recorded in income tax (benefit) expense, net. The tax impact related to share-based compensation expense was $1.7 and $0.9 for the years ended December 31, 2016 and 2015, respectively, which was recorded in additional paid-in capital in the consolidated balance sheets. As of December 31, 2017, total share-based compensation of $5.8 is expected to be recognized over the remaining weighted-average period of approximately 2.1 years.

Stock Options

We use a Black-Scholes option pricing model to estimate the fair value of stock options. The expected volatility is based on historical information. The risk-free rate is based on the U.S. Treasury yield in effect at the time of the grant. Weighted-average grant-date fair values of stock options and the assumptions used in estimating the fair values are as follows:



	Year Ended December 31,
	2017			2016			2015
Weighted-average grant-date fair value per share	$	20.10		$	10.36		$	19.04
Expected term (years)	5.4			5.2			5.6
Risk-free interest rate	2.00		%	1.66		%	1.70		%
Expected volatility	60.31		%	61.40		%	61.54		%

Stock options generally have a four-year graded vesting period, an exercise price equal to the fair market value of a share of common stock on the date of grant, and a contractual term of 10 years. The following table summarizes our stock option activity:



	December 31, 2017
	Number of Shares		Weighted-average Exercise Price		Aggregate Intrinsic Value		Weighted- average Remaining Contractual Term
Outstanding at beginning of year	1.11		$	31.13
Granted	0.32		37.06
Exercised	(0.08	)	25.71
Forfeited / Cancelled	(0.10	)	36.16
Outstanding at end of year	1.25		$	32.58	$	21.9	6.4 years
Vested and expected to vest at end of year	1.24		$	32.60	$	9.4	6.4 years
Exercisable at end of year	0.56		$	36.29	$	21.7	4.7 years

As of December 31, 2017, total unrecognized compensation cost related to stock options expected to be recognized over the weighted-average period of approximately 2.4 years is $2.4.

The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $1.2, $0.2, and $0.7, respectively. The total fair value of stock options vested during the years ended December 31, 2017, 2016 and 2015 was $3.4, $3.9, and $3.6, respectively.

Restricted Stock and RSUs

Restricted stock and RSUs generally vest ratably over a three-year period and are valued based on our market price on the date of grant. The following table summarizes our unvested restricted stock and RSUs activity:



	December 31, 2017
	Number of Shares		Weighted-Average Grant-Date Fair Value
Unvested at beginning of year	0.33		$	24.06
Granted	0.16		37.13
Forfeited	(0.03	)	26.51
Vested	(0.13	)	28.52
Unvested at end of year	0.33		$	28.38

As of December 31, 2017, total unrecognized compensation cost related to unvested restricted stock and RSUs expected to be recognized over the weighted-average period of approximately 1.8 years is $2.6.

The weighted-average grant-date fair value of restricted stock and RSUs granted during the years ended December 31, 2017, 2016, and 2015 was $37.13, $19.08, and $34.15, respectively. The total fair value of restricted stock and RSUs that vested during the years ended December 31, 2017, 2016, and 2015 was $4.8, $1.2, and $1.6, respectively.

Performance Units

Performance units are earned over a three-year period. Based on the attainment of pre-determined performance condition targets as determined by the Compensation Committee of the Board of Directors, performance units earned may be in the range of between 0% and 200%. The following table, which is stated at a 100% earned percentage, summarizes our performance units activity:



	December 31, 2017
	Number of Shares		Weighted-Average Grant-Date Fair Value
Unvested at beginning of year	0.08		$	31.84
Granted	0.03		38.00
Forfeited / Cancelled	(0.01	)	31.14
Vested	(0.02	)	93.34
Unvested at end of year	0.08		$	24.81

As of December 31, 2017, total unrecognized compensation cost related to performance units expected to be recognized over a weighted-average period of approximately 1.6 years is $0.8.

The weighted-average grant-date fair value of performance units granted during the years ended December 31, 2017, 2016, and 2015 was $38.00, $19.94, and $28.25, respectively. The total fair value of performance units that vested during the years ended December 31, 2017, 2016, and 2015 was $0.8, $1.8, and $0.8, respectively.

Leveraged Restricted Share Units

Leveraged restricted share unit awards vest based on the attainment of pre-determined market condition targets as determined by the Compensation Committee of the Board of Directors over a three-year performance period. Units earned may be in the range of between 50% and 150%. We valued the leverage restricted share unit awards based on market conditions using a Monte Carlo Simulation model. The following table, which is stated at a 100% earned percentage, summarizes our leveraged restricted share unit awards activity:



	December 31, 2017
	Number of Shares		Weighted-average Grant-Date Fair Value
Unvested at beginning of year	0.010		$	106.90
Forfeited / Cancelled	(0.005	)	106.90
Vested	(0.005	)	106.90
Unvested at end of year	—		$	—

The total fair value of leveraged restricted share units that vested during the years ended December 31, 2017, 2016, and 2015 was $0.2, $1.0 and $0.6, respectively.

Directors’ Stock Grants

In 2017, 2016 and 2015, we granted the non-employee directors stock awards covering 0.02, 0.03, and 0.02 shares of common stock, respectively, which had fair values of $0.7, $0.6, and $0.7, respectively. These stock awards were fully vested on the grant date. Likewise, the fair values were recognized immediately on the grant date.