11. Share-Based and Cash-Based Incentive Compensation

As allowed by the Plan, in 2015, 2014 and 2013, the Company granted RSUs to certain of its employees.  In 2015, 2014 and 2013, restricted stock was granted to the Company’s non-employee directors under the Directors Compensation Plan.  In addition to share-based compensation, the Company granted cash-based incentive awards to substantially all eligible employees in 2015, 2014 and 2013.

On May 7, 2013, after receiving shareholder approval, 4,000,000 shares of common stock were added to the amount available for issuance under the Plan.  As of December 31, 2015, there were 4,239,548 shares of common stock available for issuance in satisfaction of awards under the Plan and 444,024 shares of common stock available for issuance in satisfaction of awards under the Directors Compensation Plan.  The shares available for both plans are reduced when restricted stock is granted.  RSUs reduce the shares available in the Plan only when RSUs are settled in shares of common stock, net of withholding tax.  Although the Company has the option to settle RSUs in stock or cash at vesting, only common stock has been used to settle vested RSUs to date.

Restricted Stock

Under the Directors Compensation Plan, shares of restricted stock (“Restricted Shares”) were issued in 2015, 2014 and 2013 to the Company’s non-employee directors.  See Note 10 for additional information concerning Restricted Shares.  A summary of activity related to Restricted Shares is as follows:

Subject to the satisfaction of service conditions, the Restricted Shares outstanding as of December 31, 2015 are expected to vest as follows:

Restricted stock fair value at grant date: The grant date fair value of restricted stock granted during 2015, 2014 and 2013 was $0.3 million for all periods based on the Company’s closing price on the date of grant.

Restricted stock fair value at vested date: The fair value of the restricted stock that vested during 2015, 2014 and 2013 was $0.1 million, $0.3 million and $0.4 million, respectively, based on the Company’s closing price on the date of vesting.

Restricted Stock Units

During 2015, 2014 and 2013, the Company granted RSUs to certain employees, with nearly all grants being contingent upon meeting specified performance requirements.  The grants are subject to adjustments at the end of the applicable performance period using a predefined scale based on the Company achieving certain predetermined performance criteria.  See Note 10 for additional information concerning RSUs.

The fair value of the RSUs granted in 2015 and 2014 was determined using the Company’s closing price on the grant dates as the performance measures were all company-specific performance measures comprised of Adjusted EBITDA and Adjusted EBITDA Margin.  

The fair value of the RSUs granted in 2013 was determined separately for each component.  For the components related to the company-specific performance measures (Adjusted EBITDA and Adjusted EBITDA Margin), the fair value was determined using the Company’s closing price on the grant date.  The components related to Adjusted EBITDA and Adjusted EBITDA Margin comprised 40% and 30%, respectively, of the amount granted.  For the component related to TSR ranking, the fair value was determined using a Monte Carlo simulation probabilistic model.  The component related to TSR ranking totaled 30% of the amount granted, with 10% for each of the three-year performance periods.  The inputs used in the model for the Company and the peer companies were: average closing stock prices during January 2013; risk-free interest rates using the LIBOR ranging from 0.27% to 0.91% over the service period; expected volatilities ranging from 30% to 63%; expected dividend yields ranging from 0.0% to 3.1%; and correlation factors ranging from a negative 84% to a positive 95%.  The expected volatilities, expected dividends and correlation factors were developed using historical data.  For the RSUs granted in 2013 that were not subject to performance measures, the fair value was determined using the closing price on the date of grant.

A summary of activity related to RSUs is as follows:

Subject to the satisfaction of service conditions, the RSUs outstanding as of December 31, 2015 are eligible to vest in the year indicated in the table below:

RSUs fair value at grant date: During 2015, 2014 and 2013, the grant date fair value of RSUs granted was $9.4 million, $20.1 million and $12.8 million, respectively.

RSUs fair value at vested date: The fair value of the RSUs that vested during 2015, 2014 and 2013 was $2.1 million, $2.0 million and $7.2 million, respectively, based on the Company’s closing price on the vesting date.

Common Stock

An issuance of 37,316 shares of common stock was made in March 2015 to the CEO pursuant to the terms of his 2014 annual incentive compensation award, which valued the shares at a predetermined price.  The number of shares was determined after deductions for withholding and payroll taxes and the shares were valued at the Company’s closing price as of the date of issuance.  A grant and issuance of 42,547 shares of common stock was made in March 2014 to the CEO pursuant to the terms of his 2013 annual incentive compensation award.  The number of shares was determined after deductions for withholding and payroll taxes and the shares were valued at the Company’s closing price as of the date of grant.  See Note 10 for additional information concerning the CEO annual incentive compensation award.

    Share-Based Compensation

A summary of compensation expense under share-based payment arrangements and the related tax benefit is as follows (in thousands):

As of December 31, 2015, unrecognized share-based compensation expense related to our awards of Restricted Shares and RSUs was $0.5 million and $12.7 million, respectively.  Unrecognized compensation expense will be recognized through April 2018 for restricted shares and November 2017 for RSUs.

Cash-based Incentive Compensation

As defined by the Plan, annual incentive awards payable in cash may be granted to eligible employees.  These awards are performance-based awards consisting of one or more business criteria or individual performance criteria and a targeted level or levels of performance with respect to each of such criteria.  Generally, the performance period is the calendar year and determination and payment is made in cash in the first quarter of the following year, although the 2015 awards were designed with an additional financial condition that may be satisfied prior to December 31, 2017.

Share-Based Compensation and Cash-Based Incentive Compensation Expense

A summary of incentive compensation expense is as follows (in thousands):