CJ 2017 Annual Report

awards granted to employees during the fourth quarter of 2017 will vest over three years of continuous service from the grant date, with one-third vesting on each of the first, second and third anniversaries. To the extent permitted by law, the recipient of an award of restricted stock will generally have all of the rights of a stockholder with respect to the underlying common stock, including the right to vote the common stock and to receive all dividends or other distributions made with respect to the common stock. Dividends on restricted stock will be deferred until the lapsing of the restrictions imposed on the stock and will be held by the Company for the account of the recipient (either in cash or to be reinvested in restricted stock) until such time. Payment of the deferred dividends and accrued interest, if any, shall be made upon the lapsing of restrictions on the restricted stock, and any dividends deferred in respect of any restricted stock shall be forfeited upon the forfeiture of such restricted stock. As of December 31, 2017, the Company had not issued any dividends. A summary of the status and changes during the year ended December 31, 2017 of the Company’s shares of non- vested restricted shares is presented below: Shares Weighted Average Grant-Date Fair Value (in thousands) Non-vested at December 31, 2016 (Predecessor) 898 $ 15.34 Canceled (898) (15.34) Non-vested at January 1, 2017 (Successor) — $ — Granted 1,664 37.92 Forfeited (38) 43.00 Vested (288) 43.83 Non-vested at December 31, 2017 (Successor) 1,338 $ 36.51 As of December 31, 2017, the Company had approximately $38.9 million in unrecognized compensation cost related to restricted stock to be expensed over a weighted average remaining service period of 2.6 years. Performance Stock During the fourth quarter of 2017, the Company granted approximately 0.1 million shares of performance stock under the MIP to certain of the Company's executive officers at a fair market value of approximately $37.20 per share of restricted stock. The performance award cliff vests at the end of a three year performance period, and the participants may earn between 0% and 200% of the target number of the shares granted based on actual stock price performance upon comparison to a peer group. The vesting of these awards is subject to the employee's continued employment. The Company values equity awards with market conditions at the grant date using a Monte Carlo simulation model which simulates many possible future outcomes. The following table presents the assumptions used in determining the fair value of the performance stock granted during the fourth quarter of 2017. Year Ended December 31, 2017 Expected volatility, including peer group 30.8% - 81.6% Expected dividends None 30 calendar day volume weighted average stock price, including peer group $2.13 - $133.20 Expected term (in years) 3.0 Risk-free rate 1.94% - 1.95% A summary of the status and changes during the year ended December 31, 2017 of the Company’s performance stock is presented below: C&J ENERGY SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 102