Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in August 2023. Refer to Note 19 – Capital Structure to the consolidated financial statements for further details.

On June 15, 2018, at the Company’s 2018 Annual Meeting of Stockholders, the Company's stockholders approved the 2018 Omnibus Incentive Plan, which among other things, reserves 15,875,000 shares of the Company’s common stock for grants of awards under the 2018 Omnibus Incentive Plan. As of December 31, 2023, the Company had 3,249,875 shares available for grant under the 2018 Omnibus Incentive Plan.

Under the 2018 Omnibus Incentive Plan, the Compensation and Talent Management Committee (the “Committee”) may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, performance-based compensation awards (including cash bonus awards and market condition based awards) or any combination of the foregoing.

The Committee determines which employees are eligible to receive the equity awards, the number of equity awards to be granted, the exercise price, the vesting period and the exercise period. The vesting period for the equity award issued is determined on the date of the grant and is non-transferable during the life of the equity award. Stock options have a contractual period of ten years from the date of grant and vest ratably over four years. Restricted stock units generally vest proportionally over a period of four years from the date of grant, unless specified otherwise.


	Year ended December 31,
	2023		2022		2021
Cost of revenues	$	14,686	$	11,535	$	7,871
General and administrative expenses	21,574		20,016		16,396
Selling and marketing expenses	22,177		17,815		14,354
Total	$	58,437	$	49,366	$	38,621

Income tax benefit related to stock-based compensation (1)	$	17,333	$	9,785	$	9,424

(1) Includes $15,055, $5,881 and $3,651 during the years ended December 31, 2023, 2022 and 2021, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.


	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Outstanding as of December 31, 2022	15,465		$	5.52	$	439	1.0
Granted	1,790,695		30.14		—		9.5
Exercised	(15,465)		5.52		384		—
Forfeited	—		—		—		—
Outstanding as of December 31, 2023	1,790,695		$	30.14	$	1,278	9.5
Vested and exercisable as of December 31, 2023	—		$	—	$	—	—
Weighted average grant date fair value of per unit of stock option granted during the period	$	12.03

Stock options granted under the 2018 Omnibus Incentive Plan during the year ended December 31, 2023, have a contractual period of ten years and vest ratably over four years.

The fair value of each stock option granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	Year ended December 31, 2023
Dividend yield	—
Expected life (years)	6.25
Risk free interest rate for expected life	3.8	%
Volatility for expected life	32.4	%

The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model.

Under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”), the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock. For purposes of the match, “newly acquired shares” includes the employee’s first quarter 2022 open market purchase of the common stock, and

crediting of equity awards vesting under any existing stock award plan of the Company as having been purchased by such employees, in an amount between $100 to $500 per such employee.

The matching restricted stock units granted under the SMP will vest in two installments, with one-third to vest on the second anniversary of the grant date and the remaining two-thirds to vest on the third anniversary of the grant date; the newly acquired shares for which the matching restricted stock units were granted must also be held by the employee until such vesting dates. The Company’s underlying common stock issued pursuant to the vesting of the matching restricted stock units will not be marketable or transferable for a period of two years following the vesting date. Certain forfeiture and other conditions apply.


	Restricted Stock Units (SMP)
	Number	Weighted Average Fair Value
Outstanding as of December 31, 2022	238,115	$	24.95
Granted	—	—
Vested	—	—
Forfeited	(20,885)	24.95
Outstanding as of December 31, 2023	217,230	$	24.95

The Committee is authorized to award restricted stock units to participants. The Committee establishes the terms, conditions and restrictions applicable to each award of restricted stock units, including the time or times at which restricted stock units will be granted or vested and the number of units to be covered by each award. The terms and conditions of each restricted stock award will be reflected in a restricted stock unit agreement.

Any cash or in-kind dividends paid with respect to unvested shares of restricted stock units are withheld by the Company and paid to the holder of such shares of restricted stock, without interest, only if and when such shares of restricted stock units vest. Any unvested shares of restricted stock units are immediately forfeited without consideration upon the termination of holder’s employment with the Company or its affiliates. Accordingly, the Company’s unvested restricted stock units do not include non-forfeitable rights to dividends or dividend equivalents and are therefore not considered as participating securities for purposes of earnings per share calculations pursuant to the two-class method.


	Restricted Stock Units
	Number	Weighted Average Fair Value
Outstanding as of December 31, 2022*	4,615,630	$	19.74
Granted	1,258,712	33.99
Vested*	(1,784,973)	18.52
Forfeited	(357,857)	21.60
Outstanding as of December 31, 2023*	3,731,512	$	24.96

* As of December 31, 2023 and 2022, restricted stock units vested for which the underlying common stock is yet to be issued are 324,125 and 872,450, respectively.

The fair value of restricted stock units is generally the market price of the Company’s shares on the date of grant. As of December 31, 2023, unrecognized compensation cost of $59,067 is expected to be expensed over a weighted average period of 2.4 years.

Under the 2018 Plan, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. During the year ended December 31, 2023, the Company granted 40% of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”). The remaining 60% of each award recipient’s equity grants are PRSUs that are based on market conditions contingent on the Company's meeting the total shareholder return relative to a group of peer companies specified under the 2018 Plan, and are measured over a three-year performance period (“MU”).

The fair value of each PU is determined based on the market price of one common share on a day prior to the date of grant, and the associated stock compensation expense is calculated on the basis that performance targets at 100% are probable of being achieved. The stock compensation expense for the PUs is recognized on a straight-line basis over the service period, which is through the end of the third year. Over this period, the number of shares that will be issued are adjusted upward or downward based upon the probability of achievement of the performance targets. The final number of shares issued and the related compensation cost recognized as an expense is based on a comparison of the final performance metrics to the specified targets.

The grant date fair value for each MU is determined using a Monte Carlo simulation model and the related stock compensation expense is expensed on a straight-line basis over the vesting period. The stock compensation expense related to the MUs is recognized once the requisite performance period is fulfilled regardless of the extent of the market condition achieved.

The Monte Carlo simulation model simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model also incorporates the following ranges of assumptions:

•Since the plan stipulates that the awards are based upon the TSR of the Company and the components of the peer group, it is assumed that the dividends get reinvested in the issuing entity on a continuous basis.

•The correlation coefficients are used to model the way in which each entity tends to move in relation to each other are based upon the price data used to calculate the historical volatilities.


	Year ended December 31,
	2023		2022		2021
Dividend yield	—		—		—
Expected life (years)	2.9		2.9		2.9
Risk free interest rate for expected life	4.3	%	1.7	%	0.5	%
Volatility for expected life	32.9	%	38.3	%	65.2	%


	Revenue-Based PRSUs			Market Condition-Based PRSUs
	Number	Weighted Average Fair Value		Number	Weighted Average Fair Value
Outstanding as of December 31, 2022	247,955	$	24.00	893,560	$	26.94
Granted	219,740	34.56		329,245	44.72
Adjustment upon final determination of level of performance goal achievement*	—	—		476,055	23.96
Vested	(245)	25.94		(952,475)	23.96
Forfeited	(29,450)	25.94		(89,935)	28.71
Outstanding as of December 31, 2023	438,000	$	29.16	656,450	$	37.78

* Represents adjustment of shares vested in respect of MUs granted in February 2021 upon achievement of the performance targets for such awards for which the underlying common stock was issued subsequent to December 31, 2023.

On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”).

The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15% of the participating employee’s compensation during the offering period, subject to a cap of $25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.


	Number	Total Proceeds Received
Shares available for issuance as of December 31, 2022	4,000,000
Issuance of common stock related to the:
First offering period	(38,180)	$	1,013
Second offering period	(130,495)	$	3,548
Shares available for issuance as of December 31, 2023	3,831,325
Issuance of common stock related to the third offering period made subsequent to December 31, 2023	71,645	$	1,948

The ESPP is compensatory and results in compensation expense. The fair value of common stock to be issued under the ESPP was determined using the Black-Scholes option pricing model with the following assumptions:


	Third offering period of July 1, 2023 to December 31, 2023		Second offering period of January 1, 2023 to June 30, 2023		First offering period of October 1, 2022 to December 31, 2022
Dividend yield	—		—		—
Expected life (years)	0.5		0.5		0.3
Risk free interest rate for expected life	5.4	%	4.7	%	3.3	%
Volatility for expected life	25.5	%	38.9	%	43.6	%
Discount for illiquidity	8.9	%	10.3	%	9.9	%