STOCK-BASED COMPENSATION

Incentive Compensation Plan

The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated on April 26, 2012 (the “ISAP”), pursuant to which it can issue equity-based compensation incentives to eligible participants. The ISAP permits the granting of stock options, restricted stock, restricted stock units, and other types of equity-based awards. The Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) will establish such conditions as it deems appropriate on the granting or vesting of stock options, restricted stock, restricted stock units and other types of equity-based awards.

The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or other employee of the Company or its affiliates or individuals engaged to become an officer or employee; consultants or other independent contractors who provide services to the Company or its affiliates, and non-employee directors of the Company. As of September 30, 2014, there were 2,610,414 shares of the Company’s common stock available for future issuance under the ISAP.

A summary of the quantity and vesting conditions for stock-based awards granted to the Company's employees for the nine months ended September 30, 2014 was as follows:



Vesting conditions		Number of Shares of Restricted Stock Granted
Vest 100% on the third anniversary of the grant date with service conditions only		5,000
Immediately vested		1,400
Total shares of stock award granted		6,400

The Company also maintains the Director Deferred Share Plan (the “Director Plan”) pursuant to which it can issue restricted stock units to its non-employee directors. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock issued under the ISAP upon a director ceasing service as a member of the Board of Directors of the Company. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director's retirement accounts under the Director Plan. During the nine months ended September 30, 2014, the Company granted 50,259 restricted stock units to its non-employee directors pursuant to the Director Plan.

For the three and nine months ended September 30, 2014 and 2013, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Stock options	$	—	$	59	$	85	$	296
Restricted stock	93		328		567		1,226
Restricted stock units	12		34		255		431
Total	$	105	$	421	$	907	$	1,953

Stock Options

There was no unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2014.

Changes in the Company’s stock options for the nine months ended September 30, 2014 and 2013 were as follows:



	Nine Months Ended September 30,
	2014				2013
	Number of Options		Weighted Average Exercise Price per Share		Number of Options		Weighted Average Exercise Price per Share
Options outstanding at January 1,	800,350		$	9.15	1,238,650		$	11.21
Expired/forfeited	(43,550	)	15.50		(200,200	)	8.13
Options outstanding at September 30,	756,800		8.78		1,038,450		11.81
Options exercisable at September 30,	756,800		$	8.78	838,450		$	13.39

Restricted Stock

As of September 30, 2014, the Company had approximately $465 of unrecognized stock-based compensation expense related to outstanding unvested restricted stock. The Company expects to recognize that cost over a weighted average service period of 1.5 years.

Changes in the Company’s restricted stock for the nine months ended September 30, 2014 and 2013 were as follows:



	Nine Months Ended September 30,
	2014				2013
	Number of Shares of Restricted Stock		Weighted Average Grant Date Fair Value		Number of Shares of Restricted Stock		Weighted Average Grant Date Fair Value
Unvested restricted stock at January 1,	997,802		$	3.00	1,028,916		$	4.87
Granted	6,400		3.80		843,321		2.40
Vested	(172,284	)	5.27		(387,825	)	5.10
Forfeited	(448,687	)	2.31		(442,214	)	4.20
Unvested restricted stock at September 30,	383,231		$	2.80	1,042,198		$	3.06

Restricted Stock Units

As of September 30, 2014, the Company had approximately $30 of unrecognized stock-based compensation expense related to outstanding unvested restricted stock units. The Company expects to recognize that cost over a weighted average service period of 0.8 years.

Changes in the Company’s restricted stock units for the nine months ended September 30, 2014 and 2013 were as follows:



	Nine Months Ended September 30,
	2014				2013
	Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value		Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value
Unvested restricted stock units at January 1,	115,869		$	3.65	100,000		$	5.18
Granted	50,259		3.88		167,400		2.88
Vested	(82,022	)	4.18		(152,200	)	3.84
Forfeited	(48,160	)	2.42		(5,000	)	2.42
Unvested restricted stock units at September 30,	35,946		$	4.40	110,200		$	3.67

Defined Contribution Plan and Employer-matching contributions

The Company maintains the Hudson Global, Inc. 401(k) Savings Plan (the “401(k) plan”). The 401(k) plan allows eligible employees to contribute up to 15% of their earnings to the 401(k) plan. The Company has the discretion to match employees’ contributions up to 3% of the employees' earnings through a contribution of the Company’s common stock to the 401(k) plan. Vesting of the Company’s contribution occurs over a five-year period. For the three and nine months ended September 30, 2014 and 2013, the Company’s current year expenses and contributions to satisfy the prior years’ employer-matching liability for the 401(k) plan were as follows:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
($ in thousands, except otherwise stated)	2014		2013		2014		2013
Expense recognized for the 401(k) plan	$	112	$	110	$	431	$	452
Contributions to satisfy prior years' employer-matching liability
Number of shares of the Company's common stock issued (in thousands)	—		—		118		—
Market value per share of the Company's common stock on contribution date (in dollars)	$	—	$	—	$	3.65	$	—
Non-cash contribution made for employer matching liability	$	—	$	—	$	430	$	—
Additional cash contribution made for employer-matching liability	$	—	$	—	$	—	$	651
Total contribution made for employer-matching liability	$	—	$	—	$	430	$	651