11. STOCKHOLDERS’ EQUITY

Equity-Based Compensation Plans

As of March 31, 2015, $44.9 million of total unrecognized compensation costs related to non-vested stock options, restricted stock unit awards (RSUs), performance share units (PSUs) and share unit awards are expected to be recognized over a remaining weighted average period of 1.9 years. Although the share unit awards may, at the Company’s discretion, be settled in stock, they have historically been settled in cash and are accounted for as liability awards. There were no significant capitalized equity-based compensation costs at March 31, 2015.

Stock Options

Stock options are awards that allow the recipient to purchase shares of the Company’s common stock at a fixed price. Stock options are granted at an exercise price equal to the Company’s stock price at the date of grant. These awards generally vest over one to five years following the grant date and have a contractual term of ten years.

The following table summarizes the stock option activity (in thousands, except per share amounts):

 

		Shares				Weighted Average Option Exercise Price Per Share				Weighted Average Grant Date Fair Value Per Share				Aggregate Intrinsic Value
Outstanding as of December 31, 2014			10,411			$	7.32
Granted			292			$	30.76			$	13.25
Exercised			(1,575	)		$	7.64							$	34,624
Forfeited			(15	)		$	23.00
Outstanding as of March 31, 2015			9,113			$	7.99							$	187,935
Exercisable at March 31, 2015			7,319			$	7.53							$	153,764
Expected to vest			1,790			$	9.83							$	34,132

 

The exercise prices of outstanding options at March 31, 2015 were in the following ranges:

 

		Options Outstanding												Options Exercisable
Range of Exercise Prices		Shares  (in thousands)				Weighted Average Remaining Contractual Life  (in years)				Weighted Average Exercise Price Per Share				Shares  (in thousands)				Weighted Average Exercise Price Per Share
$2.96 to $5.35			821				3.0			$	3.66				821			$	3.66
$5.36 to $5.67			837				6.8			$	5.57				499			$	5.57
$5.68 to $8.54			5,005				5.8			$	5.74				3,849			$	5.74
$8.55 to $8.90			1,548				5.0			$	8.65				1,548			$	8.65
$8.91 to $23.00			602				8.9			$	23.00				602			$	23.00
$23.01 to $30.76			300				9.9			$	30.55				—			$	—
$2.96 to $30.76			9,113				5.9			$	7.99				7,319			$	7.53

The Company uses the Black-Scholes model to estimate the fair value of stock option awards. Key input assumptions used in the model include the grant date fair value of common stock, exercise price of the award, the expected option term, stock price volatility, the risk-free interest rate and the Company’s projected dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair values of its stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards. Subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The following table presents the weighted average assumptions used to estimate the fair value of stock option awards granted.

 

		Three Months Ended
		March 31,
		2015				2014
Expected option term (in years)			6.0				5.0
Risk-free interest rate			1.6	%			1.5	%
Expected volatility			43.0	%			45.0	%
Expected dividend yield			—	%			—	%
Weighted average exercise price		$	30.76			$	23.00
Weighted average fair value at grant date		$	13.25			$	9.40

Performance Share Units

PSUs are stock awards in which the number of shares ultimately received by the employee depends on Company performance against specified targets. Such awards vest and shares are issued over three years if the performance targets are met. The fair value of each PSU is determined on the date of grant, based on the Company’s stock price. Over the performance period, the number of shares that are expected to be issued is adjusted upward or downward based upon the probable achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized will be based on the final performance metrics compared to the targets specified in the grants.

 

The following table summarizes the PSU activity (in thousands, except per share data):

 

		Performance Share Units				Weighted Average Grant Date Fair Value Per Share
Outstanding and non-vested as of December 31, 2014			—			$	—
Granted			184			$	30.76
Forfeited			—				—
Outstanding and non-vested as of March 31, 2015			184			$	30.76

Restricted Stock Units

RSUs entitle the holder to shares of common stock after a one to three-year vesting period. The fair value of the awards is determined on the grant date based on the Company’s stock price.

The following table summarizes the RSU activity (in thousands, except per share data):

 

		Restricted Stock Units				Weighted Average Grant Date Fair Value Per Share
Outstanding and non-vested as of December 31, 2014			372			$	22.99
Granted			980			$	30.76
Vested and shares issued			(3	)		$	18.25
Forfeited			(14	)		$	25.00
Outstanding and non-vested as of March 31, 2015			1,335			$	28.68

Other

Share unit award expense of $1.3 million and $1.1 million for the three months ended March 31, 2015 and 2014, respectively, is included in equity-based compensation as an adjustment to reconcile net income to net cash generated by (used in) operating activities on the Condensed Consolidated Statements of Cash Flows.