15.  SHARE-BASED COMPENSATION

 

Prior to the Separation, our employees participated in the Masco share-based compensation program and received restricted stock awards and stock options.  Effective July 1, 2015, our employees participate in the 2015 TopBuild Long-Term Incentive Plan (the “2015 Plan”).  The 2015 Plan authorizes the Board of Directors to grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and dividend equivalents.  No more than 4.0 million shares of common stock may be issued under the 2015 Plan. 

 

Prior to the Separation, share-based compensation expense was allocated to TopBuild based on the awards and options previously granted by Masco to TopBuild employees.  Outstanding, unvested Masco stock options and restricted stock awards held by employees of TopBuild as of June 30, 2015, were forfeited upon Separation and replaced with TopBuild long-term incentive awards immediately subsequent to the Separation.  The replacement awards are subject to the same terms and conditions in effect prior to the Separation and are of generally equivalent value.

 

For the year ended December 31, 2015 and 2014, share-based compensation was $4.7 million and $3.8 million, respectively.  The following table presents a summary of our share-based compensation activity for the six months ended December 31, 2015, in thousands (except per share amounts):

 

 

As of December 31, 2015, there was $9.1 million of unrecognized compensation expense related to unvested restricted stock awards.  Such awards had a weighted average remaining vesting period of 1.5 years.  The total fair value of restricted stock awards that vested during the year ended December 31, 2015, was $0.5 million.

 

As of December 31, 2015, there was $3.0 million of unrecognized compensation expense related to unvested stock options.  Such options had a weighted average remaining vesting period of 2.0 years and a weighted average remaining contractual life of 8.6 years.  The total fair value of stock options that vested during the year ended December 31, 2015, was $0.0 million.  The weighted average remaining contractual term for vested but unexercised stock options is 4.8 years.

 

The fair value of stock options granted under the 2015 Plan was calculated using the Black-Scholes Options Pricing Model.  The following table presents the assumptions used to estimate the fair values of the options granted: