9. Share-based Compensation

2018 Omnibus Incentive Plan

In June 2018, the Board approved the 2018 Omnibus Incentive Plan (the “Incentive Plan”) to become effective in connection with the offering. The Company has reserved an aggregate of 3.2 million shares of its Class A common stock for issuance of awards under the Incentive Plan. Participants in the Incentive Plan will be selected by the Compensation Committee from the executive officers, directors, employees and consultants of the Company. Awards under the Incentive Plan may be made in the form of stock options, stock appreciation rights, stock awards, restricted stock units, performance awards, performance units, and any other form established by the Compensation Committee pursuant to the Incentive Plan.

The following is a summary of the Incentive Plan restricted stock and restricted stock unit activity for the six months ended June 30, 2019:


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Unvested at December 31, 2018	270,742	$	14.20
Granted	730,211		8.21
Vested	(83,157)		14.16
Forfeited	(99,523)		8.43
Unvested at June 30, 2019	818,273	$	9.55

Service based restricted stock grants vest over periods of one to five years and account for 643,273 of the unvested shares. Performance based awards account for 175,000 of the unvested shares and vest based upon achievement of certain performance goals, as defined by the Company. The Company recognized compensation expense related to service based awards of $0.6 million and $1.2 million during the three and six months ended June 30, 2019, respectively and $0 for the three and six months ended June 30, 2018. At June 30, 2019, the Company had $5.5 million in unrecognized compensation expense related to the service based restricted stock awards which is expected to be recognized over a weighted average period of approximately 3.7 years. The performance based awards have $1.3 million of unrecognized compensation expense.

The following is a summary of the Incentive Plan stock option activity from December 31, 2018 to June 30, 2019:


		Weighted
	Number of	Average Grant
	Options	Date Fair Value
Unvested at December 31, 2018	177,260	$	6.09
Granted	244,785		4.41
Vested	(44,312)		6.09
Forfeited	(18,474)		6.09
Unvested at June 30, 2019	359,259	$	4.95

The stock options vest over a period of four years and expire ten years from the date of grant. The Company recognized compensation expense of $0.2 million and $0.3 million during the three and six months ended June 30, 2019, respectively and $0 for the three and six months ended June 30, 2018. The fair value of the stock option grant was estimated using the Black-Scholes method as of the grant date using the following assumptions:


Strike price	$	9.40
Risk-free interest rate		2.50	%
Expected dividend yield		—	%
Expected volatility		45.65	%
Expected term (in years)		6.25

At June 30, 2019, the Company had $1.5 million in unrecognized compensation expense related to the stock option awards which is expected to be recognized over a weighted average period of approximately 2.9 years.

Pre-IPO Restricted Stock Units

The following is a summary of the activity related to restricted stock units issued prior to the IPO for the six months ended June 30, 2019:


	Number of	Weighted
	Units	Average
Unvested at December 31, 2018	1,401,674	$	2.00
Vested	(450,221)		1.70
Forfeited	(100,006)		2.15
Unvested at June 30, 2019	851,447	$	2.14

The vesting schedule for these restricted unit grants range from 3 to 7 years. The Company recognized compensation expense of $0.1 million and $0.3 million during the three and six months ended June 30, 2019, respectively, and $0.4 million and $0.6 million during the three and six months ended June 30, 2018, respectively. At June 30, 2019, the Company had approximately $1.7 million in unrecognized compensation expense related to restricted units, which is expected to be recognized over a weighted average period of approximately 4.4 years. The fair value of the restricted units and corresponding compensation expense was determined using the income approach.

Employee Stock Purchase Plan

In June 2018, our Employee Stock Purchase Plan became effective. The Company has reserved an aggregate of 2.3 million shares of its Class A common stock for issuance of under the ESPP. Eligible employees may elect to purchase shares of our Class A common stock through payroll deductions up to 15% of eligible compensation. The purchase price of the shares during each offering period will be 85% of the lower of the fair market value of our Class A common stock on the first trading day of each offering period or the last trading day of the offering period. The common stock will be purchased in January and July of each year. The first offering period commenced on January 1, 2019 and we recognized compensation expense of $0.1 million associated with the plan.