3. SHARE-BASED COMPENSATION:

Share-based Compensation Plans

The Company has stock option and equity compensation plans for which a total of 26.4 million shares of the Company’s common stock have been reserved for issuance since inception of the plans. These plans provide that the exercise prices of qualified options will be at or above the fair market value of the common stock at the time of the grant. Board policy requires that nonqualified options also be priced at or above the fair market value of the common stock at the time of grant. On May 13, 2013 the Company’s compensation committee, acting on behalf of the full board of directors, approved an amendment to one of the Company’s equity compensation plans which would permit the issuance of an additional 4,000,000 shares under the plan. That amendment received shareholder approval at the August 6, 2013 annual shareholders’ meeting. On May 23, 2013, the board terminated one of the Company’s equity compensation plans under which 1.7 million shares remained available for future grant. This plan termination did not require shareholder approval. At December 31, 2013, there were a total of 5.9 million shares available for future grants under the plans.

Stock Option Activity

The Company granted 321,060 stock options in the nine months ended December 31, 2013. The per-share weighted-average fair value of the stock options granted during the nine months ended December 31, 2013 was $6.99. This valuation was determined using a customized binomial lattice approach with the following weighted-average assumptions: dividend yield of 0.0%; risk-free interest rate of 2.0%; expected option life of 4.3 years; expected volatility of 35% and a suboptimal exercise multiple of 1.3.

Option activity for the nine months ended December 31, 2013 was as follows:

	Number of shares		Weighted-average exercise price per share		Weighted-average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at March 31, 2013	8,193,248		$	20.85
Granted	321,060		$	22.15
Exercised	(3,248,762	)	$	20.51		$	53,505
Forfeited or cancelled	(191,019	)	$	35.83
Outstanding at December 31, 2013	5,074,527		$	20.59	3.99	$	84,680

Exercisable at December 31, 2013	3,901,170		$	22.02	2.66	$	59,857

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Acxiom’s closing stock price on the last trading day of the quarter and the exercise price for each in-the-money option) that would have been realized by the option holders had option holders exercised their options on December 31, 2013. This amount changes based upon changes in the fair market value of Acxiom’s stock.

Following is a summary of stock options outstanding and exercisable as of December 31, 2013:

	Options outstanding				Options exercisable
Range of exercise price per share	Options outstanding	Weighted- average remaining contractual life	Weighted-average exercise price per share		Options exercisable	Weighted-average exercise price per share

$ 6.32 - $ 9.62	43,321	4.04 years	$	8.72	43,321	$	8.72
$ 11.08 - $ 15.00	1,797,500	6.39 years	$	13.17	944,310	$	12.89
$ 15.10 - $ 19.82	830,068	2.66 years	$	16.41	820,286	$	16.40
$ 20.12 - $ 25.00	1,342,504	3.98 years	$	22.71	1,051,671	$	23.06
$ 25.98 - $ 29.30	357,691	0.85 years	$	27.41	357,691	$	27.41
$ 30.93 - $ 39.12	544,472	0.90 years	$	36.15	524,920	$	36.27
$ 40.88 - $ 62.06	158,971	1.41 years	$	42.77	158,971	$	42.77
	5,074,527	3.99 years	$	20.59	3,901,170	$	22.02

Total expense related to stock options for the nine months ended December 31, 2013 and 2012 was approximately $1.7 million and $1.4 million respectively. Future expense for these options is expected to be approximately $5.3 million over the next four years.

Restricted Stock Unit Activity

During the nine months ended December 31, 2013, the Company granted time-vesting restricted stock units covering 488,231 shares of common stock with a value at the date of grant of $11.2 million. Of the restricted stock units granted in the current period, 420,084 vest in equal annual increments over four years, 12,250 vest in equal annual increments over two years, and 55,897 vest in one year. Valuation of these units is equal to the quoted market price for the shares on the date of grant.

Non-vested time-vesting restricted stock unit activity for the nine-month period ending December 31, 2013 was as follows:

	Number of shares		Weighted average fair value per share at grant date (in thousands)		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2013	1,212,286		$	13.99	2.24
Granted	488,231		$	23.03
Vested	(470,548	)	$	13.81
Forfeited or cancelled	(133,565	)	$	16.32
Outstanding at December 31, 2013	1,096,404		$	17.81	2.38

During the nine months ended December 31, 2013, the Company granted performance-based restricted stock units covering 225,515 shares of common stock with a value at the date of grant of $5.3 million. All of the performance-based restricted stock units granted in the current period vest subject to attainment of performance criteria established by the compensation committee of the board of directors. The units granted in the current period may vest in a number of shares from zero to 200% of the award, based on the attainment of an earnings-per-share target for fiscal 2016, with a modifier based on the total shareholder return of Acxiom stock compared to total shareholder return of a group of peer companies established by the committee for the period from April 1, 2013 to March 31, 2016. The value of the performance units is determined using a Monte Carlo simulation model.

Non-vested performance-based restricted stock unit activity for the nine-month period ending December 31, 2013 was as follows:

	Number of shares		Weighted average fair value per share at grant date (in thousands)		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2013	863,721		$	11.52	1.63
Granted	225,515		$	23.63
Forfeited or cancelled	(32,774	)	$	18.67
Outstanding at December 31, 2013	1,056,462		$	13.88	1.15

Total expense related to all restricted stock units in the nine months ended December 31, 2013 and 2012 was approximately $8.6 million and $7.5 million respectively. Future expense for these restricted stock units is expected to be approximately $21.9 million over the next four years.