Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

4. Stock-Based Compensation

Stock-Based Benefit Plan

PCM, Inc. 2012 Equity Incentive Plan

In April 2012, the Compensation Committee of our Board of Directors approved and adopted our 2012 Equity Incentive Plan (the “2012 Plan”). In June 2012, the Plan was approved by our stockholders at our 2012 annual stockholders meeting. Upon the adoption of the 2012 Plan, our 1994 Stock Incentive Plan (the “1994 Plan”) was terminated, canceling the shares that remained available for grant under the 1994 Plan. Outstanding awards granted under the 1994 Plan continue unaffected following the termination of the 1994 Plan.

The 2012 Plan authorizes our Board and the Compensation Committee to grant equity-based compensation awards in the form of stock options, SARs, restricted stock, RSUs, performance shares, performance units, and other awards for the purpose of providing our directors, officers and other employees incentives and rewards for performance. The 2012 Plan does not contain an evergreen provision. The 2012 Plan is administered by the Compensation Committee under delegated authority from the Board. The Board or Compensation Committee may delegate its authority under the 2012 Plan to a subcommittee. The Compensation Committee or the subcommittee may delegate to one or more of its members or to one or more of our officers, or to one or more agents or advisors, administrative duties, and the Compensation Committee may also delegate powers to one or more of our officers to designate employees to receive awards under the 2012 Plan and determine the size of any such awards (subject to certain limitations described in the 2012 Plan).

At December 31, 2016, a total of 1,413,762 shares of authorized and unissued shares were available for future grants. All options granted through December 31, 2016 have been Nonstatutory Stock Options. We satisfy stock option exercises and vesting of RSUs with newly issued shares.

Stock-Based Compensation

For the years ended December 31, 2016, 2015 and 2014, we recognized stock-based compensation expense of $2.0 million, $1.6 million and $1.5 million, respectively, in “Selling, general and administrative expenses” in our Consolidated Statements of Operations, and related deferred income tax benefits of $0.8 million, $0.6 million and $0.7 million, respectively.

Valuation Assumptions

We estimated the grant date fair value of each stock option grant awarded during the years ended December 31, 2016, 2015 and 2014 using the Black-Scholes option pricing model and management assumptions made regarding various factors which require extensive use of accounting judgment and financial estimates. We compute the expected term based upon an analysis of historical exercises of stock options by our employees. We computed our expected volatility using historical prices of our common stock for a period equal to the expected term of the options. The risk free interest rate was determined using the implied yield on U.S. Treasury issues with a remaining term within the contractual life of the award. Each year, we estimated an annual forfeiture rate based on our historical forfeiture data, which rate is revised, if necessary, in future periods if actual forfeitures differ from those estimates.

The following table presents the weighted average assumptions we used in each of the following years:

	Years Ended December 31,
	2016			2015			2014
Risk free interest rate		1.45	%		1.67	%		1.79	%
Expected volatility		44	%		46	%		62	%
Expected term (in years)		6			5			6
Expected dividend yield		None			None			None

Stock-Based Payment Award Activity

Stock Options

The following table summarizes our stock option activity during the year ended December 31, 2016 and stock options outstanding and exercisable at December 31, 2016 for the above plans:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
				Exercise		Contractual		Value
	Number			Price		Term (in years)		(in thousands)
Outstanding at December 31, 2015		1,872,855		$	7.64
Granted		372,750			10.98
Exercised		(375,255	)		6.84
Forfeited		(44,025	)		10.36
Expired/cancelled		(26,600	)		9.18
Outstanding at December 31, 2016		1,799,925			8.41		3.83	$	25,352
Exercisable at December 31, 2016		1,242,475			7.58		2.98		18,533

The aggregate intrinsic value is calculated for in-the-money options based on the difference between the exercise price of the underlying awards and the closing price of our common stock on December 30, 2016, which was $22.50.

	Years Ended December 31,
	2016		2015		2014
Weighted average grant-date fair value of options granted during the period	$	4.74	$	4.20	$	5.79
Total intrinsic value of options exercised during the period (in thousands)		3,391		1,526		3,115
Total fair value of shares vested during the period (in thousands)		767		898		1,124

As of December 31, 2016, there was $2.2 million of unrecognized compensation cost related to unvested outstanding stock options. We expect to recognize these costs over a weighted average period of 3.6 years.

Restricted Stock Units

We estimate the fair value of RSU awards based on the closing stock price of our common shares on the date of grant. The following table summarizes our RSU activity during the year ended December 31, 2016 issued under the above plans:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2015		391,600		$	9.30
Granted		109,000			10.05
Vested and distributed		(99,000	)		9.37
Forfeited		(20,000	)		8.99
Expired		(2,000	)		0.69
Non-vested at December 31, 2016		379,600			9.56

The weighted average grant-date fair value of RSUs granted during the year ended December 31, 2015 and 2014 was $9.66 and $9.48, respectively.

As of December 31, 2016, there was $2.8 million of unrecognized compensation cost related to unvested outstanding RSUs. We expect to recognize these costs over a weighted average period of 3.36 years.