STOCK-BASED COMPENSATION

Incentive Compensation Plan

The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated 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. Vesting accelerates upon the occurrence of events that involve or may result in a change of control. The Company grants primarily restricted stock to its employees, although the Company has recently also granted restricted stock units to certain of its employees. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock of the Company issued under the ISAP.

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 June 30, 2015, there were 1,045,167 shares of the Company’s common stock available for future issuance under the ISAP.

The Company’s stock plan agreements provide that a change in control of the Company will occur if, among other things, individuals who were directors as of the date of the agreement and any new director whose appointment or election was approved or recommended by a vote of at least two-thirds of the directors then in office who were either directors on the date of the agreement or whose appointment or election was previously so approved or recommended (each, a “continuing director”) cease to constitute a majority of the Company’s directors. A change in control occurred as of the Company's 2015 annual meeting of stockholders on June 15, 2015 under these agreements because continuing directors ceased to constitute a majority of the Company's directors. As a result, certain equity awards vested resulting in an accelerated stock-based compensation expense of $2,541 for the three and six months ended June 30, 2015.

A summary of the quantity and vesting conditions for stock-based awards granted to the Company's employees for the six months ended June 30, 2015 was as follows:



Vesting conditions	Number of Shares of Restricted Stock Granted	Number of Restricted Stock Units Granted	Total
Performance and service conditions (1)	590,100	105,400	695,500
Vest 100% 18 months after the grant date with service conditions only	150,000	—	150,000
Vest 100% 18 months after the grant date with market and service conditions (2)	350,000	—	350,000
Total shares of stock award granted	1,090,100	105,400	1,195,500


(1)	As a result of the June 15, 2015 change in control event all unvested grants of restricted stock and restricted stock units became fully vested.

(2)

At the end of the Performance Period, the restricted stock subject to market condition may vest, in whole or in part, based on the Company's maximum 30-trading-day volume-weighted average common stock price during the period from May 18, 2015 to November 13, 2016 (the "Average Share Price") as compared to specified share price targets. If the Company's Average Share Price is less than $3.50, none of the restricted stock shall vest. Twenty-five percent of the restricted stock shall vest if the Company's Average Share Price equals $3.50. Fifty percent of the restricted stock shall vest if the Company's Average Share Price equals $4.25. Seventy-five percent of the restricted stock shall vest if the Company's Average Share Price equals $5.00. One hundred percent of the restricted stock shall vest if the Company's Average Share Price is greater than or equal to $6.00. For Average Share Price results between two share price targets, the percent of Restricted Stock vested shall be determined using linear interpolation.

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 six months ended June 30, 2015, the Company granted 214,721 restricted stock units to its non-employee directors pursuant to the Director Plan.

For the three and six months ended June 30, 2015 and 2014, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Stock options	$	—	$	27	$	—	$	85
Restricted stock	2,475		93		2,860		502
Restricted stock units	750		213		898		242
Total	$	3,225	$	333	$	3,758	$	829

Stock Options

As of June 30, 2015, the Company had no unrecognized stock-based compensation expense related to outstanding unvested stock options.

Changes in the Company’s stock options for the six months ended June 30, 2015 and 2014 were as follows:



	Six Months Ended June 30,
	2015				2014
	Number of Options		Weighted Average Exercise Price per Share		Number of Options		Weighted Average Exercise Price per Share
Options outstanding at January 1,	756,800		$	8.78	800,350		$	9.15
Expired/forfeited	(128,300	)	13.66		(18,550	)	14.13
Options outstanding at June 30,	628,500		7.79		781,800		9.03
Options exercisable at June 30,	628,500		$	7.79	781,800		$	9.03

Restricted Stock

As of June 30, 2015, the Company had approximately $585 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 1.38 years.

Changes in the Company’s restricted stock for the six months ended June 30, 2015 and 2014 were as follows:



	Six Months Ended June 30,
	2015				2014
	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,	803,999		$	3.00	997,802		$	3.00
Granted	1,090,100		2.12		5,000		3.87
Vested	(1,204,398	)	2.90		(168,574	)	5.32
Forfeited	(189,701	)	3.14		(445,416	)	2.31
Unvested restricted stock at June 30,	500,000		$	1.27	388,812		$	2.80

Restricted Stock Units

As of June 30, 2015, the Company had no unrecognized stock-based compensation expense related to outstanding unvested restricted stock units.

Changes in the Company’s restricted stock units for the six months ended June 30, 2015 and 2014 were as follows:



	Six Months Ended June 30,
	2015				2014
	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,	119,940		$	3.57	115,869		$	3.65
Granted	320,122		2.50		50,259		3.88
Vested	(397,562	)	2.75		(82,022	)	4.18
Forfeited	(42,500	)	3.21		(48,160	)	2.42
Unvested restricted stock units at June 30,	—		$	—	35,946		$	4.40

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 six months ended June 30, 2015 and 2014, 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				Six Months Ended
	June 30,				June 30,
($ in thousands, except otherwise stated)	2015		2014		2015		2014
Expense recognized for the 401(k) plan	$	55	$	155	$	127	$	319
Contributions to satisfy prior years' employer-matching liability
Number of shares of the Company's common stock issued (in thousands)	116		118		116		118
Market value per share of the Company's common stock on contribution date (in dollars)	$	2.71	$	3.65	$	2.71	$	3.65
Non-cash contribution made for employer matching liability	$	314	$	430	$	314	$	430