NOTE 5: SHARE-BASED COMPENSATION

The fair value of the share-based awards is measured at grant date and the resulting compensation expense is recognized on a straight-line basis over the requisite service period. The following table presents share-based compensation expense, which is a non-cash charge, included in the below noted captions within the Condensed Consolidated Statements of Income:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013

Direct cost of services	$	28		$	601		$	47		$	620
Selling, general and administrative	709			2,224			4,229			3,744
Share-based compensation expense	737			2,825			4,276			4,364
Income tax benefit	(321		)	(1,229		)	(1,860		)	(1,651		)
Total share-based compensation expense, net of tax	$	416		$	1,596		$	2,416		$	2,713

We grant stock options, stock appreciation rights, and restricted stock awards under our 2004 Equity Incentive Plan, as amended and restated (the “2004 Plan”), which allows for the issuance of up to 7,500,000 shares. We settle stock option exercises and the vesting of restricted stock awards with newly issued authorized shares or the reissuance of treasury stock. Awards granted under the 2004 Plan that expire, terminate or are forfeited are then available for reissuance as future awards. At June 30, 2014, there were approximately 972,000 shares available for future grants under the 2004 Plan, not considering the estimated number of shares reserved for the executive and other performance-based annual incentive compensation award as discussed below.

During the six months ended June 30, 2014, we granted 756,799 restricted stock awards at a weighted-average grant date price of $14.94 per share of which 450,000 shares granted will vest upon certification by the compensation committee of the Company’s board of directors (the “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 six months ended June 30, 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 the six months ended June 30, 2014 for these forfeited awards. As of June 30, 2014, we have assessed the likelihood that the performance condition related to the remaining 225,000 shares of the 2014 Performance-Based Share Award will be met and accordingly have recorded the related expense based on the estimated outcome.

Also granted during the six months of 2014 were 62,069 shares which vested in April 2014 upon the achievement of financial performance criteria. An additional 219,730 shares, were granted related to 2013 financial performance criteria 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. The remaining 25,000 restricted stock awards will vest one year from the grant date.

Included in share-based compensation expense for the three and six months ended June 30, 2014 is $0.3 million and $0.9 million, respectively, of expense recognized with respect to executive and other performance-based annual incentive compensation awards which, based on our June 30, 2014 share price is equal to approximately 122,000 shares for the annual awards. The accrual is recorded in “Accrued compensation” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2014. As of June 30, 2014, we have assessed the likelihood that the performance conditions related to these awards will be met and have accrued the related expense based on the estimated outcome.

During the six months ended June 30, 2014 we granted 77,500 stock options with weighted-average exercise price of $13.39 per share which vest over five years.

The fair value of each stock option grant was estimated at the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used and the weighted-average fair value per option granted.

	Six months ended June 30,
	2014
Expected life of stock option (years)	7.0
Expected volatility	33		%
Risk-free interest rate	2.2		%
Dividend yield	2.6		%
Weighted-average grant-date fair value	$	3.67
Expected forfeiture rate	6.0		%

As of June 30, 2014 there was $4.2 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based awards, which will be recognized over a weighted-average period of approximately 1.9 years.