EQUITY INCENTIVE PLANS

The Board has adopted The GEO Group, Inc. 2018 Stock Incentive Plan (the "2018 Plan"), which was approved by the Company's shareholders on April 24, 2018. The 2018 Plan replaced the 2014 Stock Incentive Plan (the "2014 Plan"). As of the date the 2018 Plan was adopted, it provided for a reserve of 4,600,000 shares of common stock that may be issued pursuant to awards granted under the 2018 Plan.

Stock Options

The Company uses a Black-Scholes option valuation model to estimate the fair value of each time based or performance based option awarded. There were no stock option awards granted during the three months ended March 31, 2018. A summary of the activity of stock option awards under Company plans is as follows for the three months ended March 31, 2018:



	Shares		Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)	Aggregate Intrinsic Value
	(in thousands)					(in thousands)
Options outstanding at January 1, 2018	1,230		$	25.02	7.33	$	3,117
Options granted	—		—
Options exercised	(15	)	16.83
Options forfeited/canceled/expired	(22	)	29.35
Options outstanding at March 31, 2018	1,193		$	25.04	7.12	$	1,381
Options vested and expected to vest at March 31, 2018	1,141		$	24.89	7.06	$	1,368
Options exercisable at March 31, 2018	755		$	23.43	6.41	$	1,259

For the three months ended March 31, 2018 and March 31, 2017, the amount of stock-based compensation expense related to stock options was $0.2 million and $0.7 million, respectively. As of March 31, 2018, the Company had $1.7 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 2.7 years.

Restricted Stock

Compensation expense for nonvested stock awards is recorded over the vesting period based on the fair value at the date of grant. Generally, the restricted stock awards vest in equal increments over either a three or four-year period. The fair value of restricted stock awards, which do not contain a market-based vesting condition, is determined using the closing price of the Company's common stock on the date of grant. The Company has historically issued share-based awards with service-based, performance-based and market-based vesting criteria.

A summary of the activity of restricted stock outstanding is as follows for the three months ended March 31, 2018:



	Shares		Wtd. Avg. Grant Date Fair Value
	(in thousands)
Restricted stock outstanding at January 1, 2018	1,770		$	30.47
Granted	—		—
Vested	(562	)	28.55
Forfeited/canceled	(9	)	28.27
Restricted stock outstanding at March 31, 2018	1,199		$	31.10

The Company did not grant any shares of restricted stock during the three months ended March 31, 2018.

For the three months ended March 31, 2018 and March 31, 2017, the Company recognized $5.6 million and $4.3 million, respectively, of compensation expense related to its restricted stock awards. As of March 31, 2018, the Company had $28.9 million of unrecognized compensation costs related to non-vested restricted stock awards, including non-vested restricted stock awards with performance-based and market-based vesting, that are expected to be recognized over a weighted average period of 2.9 years.

Employee Stock Purchase Plan

The Company previously adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan or "ESPP”) which was approved by the Company's shareholders. The purpose of the Plan, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions by the employees of GEO and designated subsidiaries of GEO in order to increase their identification with the Company’s goals and secure a proprietary interest in the Company’s success. These deductions are used to purchase shares of the Company’s common stock at a 5% discount from the then current market price. The Company has made available up to 750,000 shares of its common stock, which were registered with the Securities and Exchange Commission on May 4, 2012, as amended on July 18, 2014, for sale to eligible employees under the Plan.

The Plan is considered to be non-compensatory. As such, there is no compensation expense required to be recognized. Share purchases under the Plan are made on the last day of each month. During the three months ended March 31, 2018, 6,867 shares of the Company's common stock were issued in connection with the Plan.