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. At June 30, 2014, there were a total of 3.3 million shares available for future grants under the plans.

Stock Option Activity

The Company granted 381,509 stock options in the three months ended June 30, 2014. The per-share weighted-average fair value of the stock options granted during the three months ended June 30, 2014 was $8.14. 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 2.5%; expected option life of 4.4 years; expected volatility of 43% and a suboptimal exercise multiple of 1.4.

Option activity for the three months ended June 30, 2014 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, 2014	4,538,518		$	20.30
Granted	381,509		$	21.17
Exercised	(14,137	)	$	18.79		$	50
Forfeited or cancelled	(520,923	)	$	34.66
Outstanding at June 30, 2014	4,384,967		$	18.67	4.73	$	19,297
Exercisable at June 30, 2014	3,152,528		$	19.09	3.25	$	14,034

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 June 30, 2014. This amount changes based upon changes in the fair market value of Acxiom’s common stock.

Following is a summary of stock options outstanding and exercisable as of June 30, 2014:

	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 - $ 8.90	39,668	3.61 years	$	8.74	39,668	$	8.74
$ 11.08 - $ 14.42	1,728,984	6.01 years	$	13.21	1,115,733	$	13.04
$ 15.10 - $ 19.76	686,167	2.20 years	$	16.38	686,167	$	16.38
$ 20.44 - $ 25.00	1,590,000	5.15 years	$	22.32	990,364	$	22.95
$ 26.33 - $ 29.30	115,358	1.03 years	$	27.94	115,358	$	27.94
$ 32.85 - $ 35.16	91,812	2.76 years	$	34.45	72,260	$	34.88
$ 40.88 - $ 62.06	132,978	1.13 years	$	41.82	132,978	$	41.82
	4,384,967	4.73 years	$	18.67	3,152,528	$	19.09

Total expense related to stock options for the three months ended June 30, 2014 and 2013 was approximately $0.7 million and $0.5 million respectively. Future expense for these options is expected to be approximately $7.2 million over the next four years.

Stock Appreciation Right (SAR) Activity

During the three months ended June 30, 2014, the Company granted 245,404 performance-based SARs with a value at the date of grant of $0.5 million and having an exercise price of $40. All of the performance-based SARs 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 SARs up to 100% of the award, based on the attainment of certain revenue targets for the period from April 1, 2014 to March 31, 2017. At vesting, the SARs will be automatically exercised, and the award recipient may receive a number of common stock shares equal to the number of SARs that are being exercised multiplied by the quotient of (a) the final Company stock market value (up to a maximum share value of $70) minus the SAR exercise price, divided by (b) the SAR exercise price. The SARs contain an accelerated exercise provision if the closing market price of the Company’s stock exceeds the $70 maximum share value for 20 consecutive trading days during the performance period. The grant date value of the performance-based SARs is determined using a Monte Carlo simulation model.

Following is a summary of SAR activity for the three months ended June 30, 2014:

	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, 2014	—	$	—
Granted	245,404	$	40.00
Outstanding at June 30, 2014	245,404	$	40.00	2.76	$	—
Exercisable at June 30, 2014	—	$	—	—	$	—

Total expense related to SARs for the three months ended June 30, 2014 was not material. Future expense for these SARs is expected to be approximately $0.5 million over the next three years.

Restricted Stock Unit Activity

During the three months ended June 30, 2014, the Company granted time-vesting restricted stock units covering 395,902 shares of common stock with a value at the date of grant of $8.4 million. Of the restricted stock units granted in the current period, 387,872 vest in equal annual increments over four years and 8,030 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 three-month period ending June 30, 2014 was as follows:

	Number of shares		Weighted average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2014	1,078,029		$	18.46	2.17
Granted	395,902		$	21.17
Vested	(302,774	)	$	16.19
Forfeited or cancelled	(16,091	)	$	21.65
Outstanding at June 30, 2014	1,155,066		$	19.94	2.65

During the three months ended June 30, 2014, the Company granted performance-based restricted stock units covering 232,274 shares of common stock with a value at the date of grant of $4.5 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 2017, 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 compensation committee of the board of directors for the period from April 1, 2014 to March 31, 2017. The value of the performance units is determined using a Monte Carlo simulation model.

Non-vested performance-based restricted stock unit activity for the three-month period ending June 30, 2014 was as follows:

	Number of shares		Weighted average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2014	1,066,828		$	14.19	0.91
Granted	232,274		$	19.29
Vested	(115,086	)	$	14.38
Forfeited or cancelled	(4,474	)	$	26.00
Outstanding at June 30, 2014	1,179,542		$	15.13	1.16

Total expense related to all restricted stock units in the three months ended June 30, 2014 and 2013 was approximately $3.3 million and $2.7 million respectively. Future expense for these restricted stock units is expected to be approximately $28.9 million over the next four years.

Other Performance Unit Activity

During the three months ended June 30, 2014, the Company granted 201,464 performance-based units with a value at the date of grant of $1.0 million. All of the performance-based 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 units up to 100% of the award, based on the attainment of certain revenue targets for the period from April 1, 2014 to March 31, 2017. At vesting, the award recipient may receive a number of common stock shares equal to the number of units vested multiplied by a share price factor. The share price factor modifies the final number of common shares awarded based on the Company’s stock price having a range of 0% at a $40 Company stock price, or below, to 100% at a $70 Company stock price. The units also contain an accelerated exercise provision if the closing market price of the Company’s stock exceeds the $70 maximum share value for 20 consecutive trading days during the performance period. The grant date value of the performance-based units is determined using a Monte Carlo simulation model.

Following is a summary of other performance unit activity for the three months ended June 30, 2014:

	Number of shares	Weighted average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2014	—	$	—	—
Granted	201,464	$	5.18
Outstanding at June 30, 2014	201,464	$	5.18	2.76

Total expense related to other performance units for the three months ended June 30, 2014 was not material. Future expense for these performance units is expected to be approximately $1.0 million over the next three years.