NOTE 12: SHARE-BASED COMPENSATION

The Company accounts for its share-based compensation by recognizing the grant date fair value of share-based awards, net of estimated forfeitures, as compensation expense over the underlying requisite service periods of the related awards. The following table presents total share-based compensation expense, which is a non-cash charge, included in the Consolidated Statements of Income (Loss):

	Year Ended December 31,
	2014			2013			2012
	(in thousands)
Direct cost of operating revenue	$	2,359		$	660		$	201
Selling, general and administrative		10,739			9,348			6,518

Pre-tax share-based compensation expense		13,098			10,008			6,719
Income tax benefit		(5,508	)		(4,135	)		(2,908	)

Total share-based compensation expense, net of tax	$	7,590		$	5,873		$	3,811

As of December 31, 2014, there was $5.3 million and $1.8 million of total unrecognized compensation cost related to outstanding, unvested restricted stock and stock options, respectively, which will be recognized over a weighted-average period of approximately 2.5 years and 3.0 years.

Included in share-based compensation expense for the year ended December 31, 2014 is $6.5 million of expense recognized with respect to executive officer and employee incentive compensation awards which, based on the closing share price as of December 31, 2014 of $17.08 (as reported by NASDAQ Global Markets), is equal to approximately 381,000 shares of common stock. The $6.5 million includes executive officer awards of $1.4 million which were approved by the Compensation Committee of the Company's Board of Directors on February 20, 2015. The accrual is recorded in "Accrued compensation" on the accompanying Consolidated Balance Sheets as of December 31, 2014.

The Current Plan limits the combined grant of options to acquire shares of common stock, stock appreciation rights, and nonvested share (commonly referred to as restricted stock) awards to 7,500,000 shares. Any grant under the Current Plan that expires or terminates unexercised, becomes unexercisable or is forfeited will be available for further grants. At December 31, 2014, there were approximately 1.1 million shares of common stock available for future equity-related grants under the Current Plan. The purpose of the Current Plan is to provide employees of the Company and members of our Board of Directors additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Equity grants awarded under the Current Plan generally vest over four years based on continued employment.

As part of certain acquisitions and as an inducement in hiring of certain new key executives, stock options are issued outside of the Current Plan from time to time. These options are granted at an option exercise price equal to fair market value of the common stock on the date of grant, are non-qualified options, are exercisable for up to 10 years from the date of grant, and generally vest 25% on the second anniversary of the grant date and continue to vest 25% per year on each anniversary of the grant date until fully vested.

Although various forms of equity instruments may be issued under the Current Plan, through December 31, 2014, we have only issued incentive stock options, nonqualified stock options, and nonvested share awards.

Stock Options

Stock options are issued with an exercise price equal to the grant date closing market price of our common stock. Stock options become exercisable under various vesting schedules, ranging from immediate vesting to a seven year vesting period, and expire ten years from the date of grant.

The estimated fair value of stock options is determined using the Black-Scholes valuation model. Key inputs and assumptions to estimate the fair value of stock options include the grant price of the award, the expected option term, the volatility of the Company's stock, the risk-free interest rate, and the company's dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by individuals who receive equity awards, and 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 and the weighted-average fair value per option granted. No stock options were granted during the year ended December 31, 2013.

	Year Ended December 31,
	2014			2012
Expected life of stock option in years		7.0			6.8
Expected volatility		36	%		39	%
Risk-free interest rate		2.1	%		1.1	%
Dividend yield		2.5	%		2.3	%
Weighted average grant-date fair value	$	4.33		$	3.51

We estimate the expected term of our stock options based on the historical exercise pattern of groups of employees that have similar historical exercise behavior. The expected volatility is estimated based upon implied volatilities from traded stock options on our stock and on our stock's historical volatility, based on daily stock prices. The expected risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. We calculate the expected dividend yield based on an average of historical stock prices and on our estimate of dividends expected to be paid.

A summary of option activity during the year ended December 31, 2014 is presented below (shares and aggregate intrinsic value in thousands):

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Term		Aggregate Intrinsic Value
Outstanding, beginning of period		3,825		$	13.32
Granted		143			14.38
Exercised		(1,128	)		11.70
Forfeited and expired		(489	)		15.67

Outstanding, end of period		2,351		$	13.66		3.68	$	8,117


Options vested and expected to vest, end of period		2,304		$	13.67		3.58	$	7,937


Options exercisable, end of period		1,888		$	13.76		2.74	$	6,346

Additional information regarding stock option exercises appears in the table below (in millions):

	As of December 31,
	2014		2013		2012
Intrinsic value of stock options exercised	$	3.7	$	8.7	$	2.2
Cash received from option exercises	$	12.5	$	3.0	$	0.9
Tax benefit realized from options exercised during the annual period	$	1.6	$	6.7	$	2.6

Nonvested Share Awards

Summary restricted stock activity is presented in the table below (shares in thousands):

	Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2013		364		$	12.48
Granted		1,109			15.05
Vested		(670	)		13.49
Forfeited/Canceled		(225	)		15.01

Non-vested at December 31, 2014		578		$	15.23

The fair value of nonvested share awards is based on the closing market price of our common stock on the date of grant. Nonvested share awards entitle the holder to shares of common stock when the award vests.

During the year ended December 31, 2014, we granted 450,000 nonvested stock awards which can only vest upon certification by the compensation committee of the Company's Board of the achievement of certain Company financial performance criteria for the calendar year ending December 31, 2014 (the "2014 Performance-Based Share Award"). During the year ended December 31, 2014, 225,000 shares of the 2014 Performance-Based Share Awards were forfeited by two former executives in conjunction with their resignation from the Company in March 2014 and June 2014, respectively. The Company did not recognize any expense during 2014 for these forfeited awards. On February 20, 2015, the Compensation Committee of the Company's Board of Directors certified that the performance condition with respect to the remaining 225,000 shares was achieved and the restricted stock awards vested as of that date.

Also granted during 2014 were 62,069 shares which vested in April 2014 upon the achievement of financial performance criteria. An additional 219,730 shares were granted in connection with the achievement of certain financial performance criteria for the year 2013 for executive performance-based annual incentive compensation awards, which vested upon issuance and the related expense was recognized in the Consolidated Statements of Income for the year ended December 31, 2013. In connection with the appointment of an executive officer, 100,000 shares were granted, of which 25,000 shares vested upon issuance and the remaining 75,000 shares vest over three years. The remaining 277,500 nonvested stock awards granted will vest one to three years from the grant date.

During the year ended December 31, 2013, we granted 527,600 nonvested share awards of which 330,000 shares vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2013, 164,100 shares vested upon issuance and the remaining 33,500 nonvested stock awards vested one year from the grant date.

During the year ended December 31, 2012, we granted 430,000 nonvested share awards. These awards vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2012.

The weighted-average grant date fair value of nonvested share awards granted during 2014, 2013 and 2012 was $15.05, $12.90 and $11.85, respectively.