Share-Based Compensation Arrangements

We may grant stock appreciation rights ("SARs") and phantom shares under our Long-Term Incentive Cash Award Plan. As both the SARs and the phantom shares are settled in cash rather than by issuing equity instruments, we record an expense with a corresponding liability on our balance sheet. The expense is based on the fair value of the awards on the last day of the reporting period and represents an amortization of that fair value over the vesting period of the awards.

The SARs and phantom shares do not entitle recipients to receive any of our common shares, nor do they provide recipients with any voting or other shareholder rights. Similarly, since the awards are not paid out in the form of equity, they do not change the number of shares we have available for any future equity compensation we may elect to grant and they do not dilute existing shareholders' ownership of the Company. However, because the value of the awards is based on the value of our Class A Common Stock, we believe they align employee and shareholder interests, and provide retention benefits in much the same way as would stock options and restricted stock awards.

Prior to 2011, two types of incentives were awarded: SARs and non-performance based phantom shares. SARs and non-performance phantom shares were generally granted to key employees in the first quarter of each year and vested one-third each year over a 3 year period. SARs were granted with an exercise price equal to the closing price of our common stock on the date of the grant, as reported by the Nasdaq Stock Market and expire seven years after their grant date.

Starting in 2011, we awarded performance based phantom shares to make our equity incentives reflect our performance during the respective calendar year. These performance phantom shares vest one-third each year over a 3 year period. Based on our calendar year results, the following number of performance phantom shares were awarded:



Year		Number of Phantom Shares Awarded
2011		0
2012		435,866
2013		23,642

A summary of activity under the plans during 2013 is as follows:



SARs:	Number of awards	Weighted average exercise price per share
Outstanding at January 1, 2013	100,539	$	11.14
Granted	—	$	—
Exercised	—	$	—
Forfeited	(48,460)	$	13.21
Outstanding at December 31, 2013	52,079	$	11.81



Phantom Shares: *	Number of awards		Weighted average grant date value per share
Outstanding at January 1, 2013	487,670		$	5.67
Granted	23,642		$	9.02
Exercised	(197,093	)	$	6.87
Forfeited	(78,277	)	$	4.73
Outstanding at December 31, 2013	235,942		$	5.98
* Includes both non-performance and performance based shares.

The initial value of the phantom shares is based on the closing price of our Class A Common Stock as of the grant date. The initial value of the SARs, which are the economic equivalent of options, is based on a Black-Scholes model as of the grant date.

Our liability with regard to these awards is re-measured in each quarterly reporting period. The fair value of the phantom shares is based on the closing stock price on our Class A Common Stock on the last day of the period. At December 31, 2013 and December 31, 2012, the closing stock price on our Class A Common Stock was $9.05 and $4.62 respectively.

We measure the fair value of each SAR based on the closing stock price of Class A Common Stock on the last day of the period, using a Black-Scholes valuation model. The fair value of each SAR was estimated as of December 31, 2013, 2012 and 2011 using the following assumptions:



	2013		2012		2011
Risk-free interest rate	0.16%-0.78%		0.27%-0.52%		0.4%-0.83%
Dividend yield	0.0	%	0.0	%	0.0	%
Expected life (years)	1.2-3.0 years		2.2-4.0 years		3.2-5.0 years
Volatility	62.21	%	63.63	%	80.66	%

Total compensation expense (income) related to this plan for the years ended December 31, 2013, 2012 and 2011 was $2.3 million, $2.6 million and $(1.6) million, respectively. The balance of the fair value that has not yet been recorded as expense is considered an unrecognized liability. The total unrecognized compensation liability as calculated at December 31, 2013 and 2012 was $1.7 million and $0.8 million, respectively. Total cash paid under this plan for the years ended December 31, 2013 and 2012 was $1.6 million and $0.1 million, respectively.

In addition to the awards to our employees, we grant deferred stock units ("DSUs") to our non-employee directors under our Outside Directors' Deferred Stock Unit Plan. These awards are fully vested when made. We measure the fair value of outstanding DSUs based upon the closing stock price of our Class A Common Stock on the last day of the reporting period. We pay out the DSUs to a director after the earlier of a Company Change in Control, as defined in the plan, or the date when he or she ceases to be a non-employee director for any reason. Since the DSUs are settled in cash rather than by issuing equity instruments, we record an expense with a corresponding liability on our Consolidated Balance Sheets. Total expense related to the DSUs for the years ended December 31, 2013 and 2012 was $0.8 million and $0.5 million, respectively. Total expense related to the DSUs for the year ended December 31, 2011 was immaterial. We recorded a liability of $1.2 million and $0.6 million as of December 31, 2013 and 2012, respectively. Total cash paid for DSUs in the year ended December 31, 2013 was $0.2 million; no cash was paid out for DSUs in the year ended December 31, 2012.

As of December 31, 2013 and January 20, 2014, two of our Board members resigned from our Board of Directors. Cash paid in the first quarter of 2014 to settle these directors' DSUs totaled $0.7 million.