10. STOCK-BASED COMPENSATION

The Company’s equity awards consist of SARs and RSUs. For a description of the Company’s stock-based compensation plans, see Note 5 “Stock-Based Compensation” in Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended January 31, 2016.

Stock-Based Compensation

The following table sets forth reported stock-based compensation expense for the three and nine months ended October 31, 2016:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
	(in thousands)				(in thousands)
Cost of subscription	$	32	$	21	$	81	$	55
Cost of maintenance and other revenue		80		69		219		202
Cost of professional services		232		189		618		542
Sales and marketing		306		350		904		1,040
Research and development		262		227		748		665
General and administrative		908		1,025		2,951		3,114
Total stock-based compensation expense	$	1,820	$	1,881	$	5,521	$	5,618

SAR Information

The weighted average assumptions used to value SARs granted in the nine months ended October 31, 2016 and 2015 are shown in the following table:

	Nine Months Ended October 31,
	2016			2015
Expected life in years (1)		5.25			5.00
Risk free interest rate (2)		1.16	%		1.64	%
Volatility (3)		36	%		41	%
Dividend rate (4)		1.51	%		1.10	%

____________________________

(1)	The expected life of SARs granted under the stock-based compensation plans is based on historical vested SAR exercise and post-vest forfeiture patterns and includes an estimate of the expected term for SARs that were fully vested and outstanding.

(2)	The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of SARs in effect at the time of grant.

(3)	The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of the Company’s common stock for a period equivalent to the expected life of the SARs, which it believes is representative of the expected volatility over the expected life of the SARs.

(4)	The Company expects to continue paying quarterly dividends at the same rate as the nine months ending on October 31, 2016.

The following table summarizes the activity for outstanding SARs for the nine months ended October 31, 2016:

	SARs (in thousands)			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 31, 2016		2,596		$	14.74
Granted		380			18.64
Exercised		(97	)		10.94
Expired		(17	)		12.56
Forfeited		(6	)		12.16
Outstanding at October 31, 2016		2,856			15.41		4.6	$	24,198
Vested and exercisable at October 31, 2016		1,863			12.86		3.6	$	20,304

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the aggregate difference between the closing stock price of the Company’s common stock based on the last trading day as of October 31, 2016, and the exercise price for in-the-money SARs) that would have been received by the holders if all SARs had been exercised on October 31, 2016. The total intrinsic value of SARs exercised in the nine months ended October 31, 2016 was $0.9 million.

The number of SARs exercised includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the three months ended October 31, 2016, the Company withheld 4,200 shares for payment of these taxes at a value of $96,000. During the nine months ended October 31, 2016, the Company withheld 13,000 shares for payment of these taxes at a value of $266,000.

At October 31, 2016, there was approximately $5.6 million of total unrecognized compensation cost related to unvested SARs. This cost is expected to be recognized over a weighted-average period of approximately 2.6 years.

RSU Information

The estimated fair value of RSUs was calculated based on the closing price of the Company’s common stock on the date of grant, reduced by the present value of dividends foregone during the vesting period.

The following table summarizes the activity for RSUs for the nine months ended October 31, 2016:

	RSUs			Weighted Average Grant Date Fair Value
	(in thousands)

Restricted stock at January 31, 2016		617		$	20.91
Granted		307			18.54
Released (1)		(258	)		18.95
Forfeited		(35	)		20.79
Restricted stock at October 31, 2016		631		$	20.56

_________________________

(1)	The number of RSUs released includes shares withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

The Company withholds, at the employee’s election, a portion of the released shares as consideration for the Company’s payment of applicable employee income taxes. During the three months ended October 31, 2016, the Company withheld 2,200 shares for payment of these taxes at a value of $46,000. During the nine months ended October 31, 2016, the Company withheld 74,700 shares for payment of these taxes at a value of $1.5 million.

Total unrecognized compensation cost related to RSUs was approximately $11.2 million as of October 31, 2016. This cost is expected to be recognized over a weighted-average period of approximately 2.8 years.