3.SHARE-BASED COMPENSATION:

Share-based Compensation Plans

The Company has stock option and equity compensation plans for which a total of 24.8 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 8, 2015, 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 4.1 million shares under the plan. That amendment received shareholder approval at the August 18, 2015 annual shareholders’ meeting. The amendment brings the total number of shares of the Company’s common stock available for issuance under its stock option and equity compensation plans to 28.9 million shares. At September 30, 2015, there were a total of 5.7 million shares available for future grants under the plans.

Stock Option Activity

The Company granted 445,785 stock options, having a per-share weighted-average fair value of $6.48, in the six months ended September 30, 2015. 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 2.2%; expected option life of 4.5 years; expected volatility of 40% and a suboptimal exercise multiple of 1.4. The dividend yield was determined to be 0.0% since Acxiom is currently not paying dividends and there are no plans to pay dividends. The risk-free rate was determined by reference to the U.S. Treasury securities with a term equal to the life of the options. The expected option life is an output of the lattice model. The expected volatility was determined by considering both the historical volatility of Acxiom common stock, as well as the implied volatility of traded Acxiom options. The suboptimal exercise multiple was determined using actual historical exercise activity of Acxiom options.

Option activity for the six months ended September 30, 2015 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, 2015	4,870,219		$	15.10
Granted	445,785		$	17.84
Exercised	(438,979	)	$	10.16		$	3,012
Forfeited or cancelled	(693,809	)	$	25.71

Outstanding at September 30, 2015	4,183,216		$	14.15	5.21	$	27,586

Exercisable at September 30, 2015	2,858,695		$	14.72	3.72	$	17,874

The ending balances 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 September 30, 2015. 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 September 30, 2015:

	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

$ 0.63 - $ 8.90	953,132	6.35 years	$	1.69	502,923	$	1.71
$ 11.08 - $ 14.42	1,229,467	4.56 years	$	13.17	1,116,140	$	13.16
$ 15.10 - $ 19.76	866,027	5.77 years	$	17.14	442,448	$	16.52
$ 20.44 - $ 25.00	1,039,737	4.77 years	$	21.88	716,996	$	22.18
$ 26.33 - $ 62.06	94,853	1.73 years	$	40.00	80,188	$	41.31

	4,183,216	5.21 years	$	14.15	2,858,695	$	14.72

Total expense related to stock options for the six months ended September 30, 2015 and 2014 was approximately $5.9 million and $3.9 million, respectively. Future expense for these options is expected to be approximately $13.6 million over the next four years.

Stock Appreciation Right (SAR) Activity

Following is a summary of SAR activity for the six months ended September 30, 2015:

	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, 2015	245,404	$	40.00
Outstanding at September 30, 2015	245,404	$	40.00	1.50	$	—

Exercisable at September 30, 2015	—	$	—	—	$	—

Total expense related to SARs for the six months ended September 30, 2015 and 2014 was $0.1 million in both periods. Future expense for these SARs is expected to be approximately $0.3 million over the next two years.

Restricted Stock Unit Activity

During the six months ended September 30, 2015, the Company granted time-vesting restricted stock units covering 1,057,236 shares of common stock with a value at the date of grant of $19.2 million. Of the restricted stock units granted in the current period, 730,379 vest in equal annual increments over four years, 36,934 vest in equal annual increments over two years, 47,383 vest in one year, and 242,540 vest in equal quarterly increments starting 15 months after grant date. 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 six-month period ending September 30, 2015 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, 2015	2,053,179		$	20.40	1.95
Granted	1,057,236		$	18.17
Vested	(879,557	)	$	20.10
Forfeited or cancelled	(121,444	)	$	19.63

Outstanding at September 30, 2015	2,109,414		$	19.45	2.40

During the six months ended September 30, 2015, the Company granted performance-based restricted stock units covering 340,219 shares of common stock with a value at the date of grant of $6.2 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 2018, with a modifier based on the total shareholder return of Acxiom common 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, 2015 to March 31, 2018. The value of the performance-based restricted stock units is determined using a Monte Carlo simulation model.

Non-vested performance-based restricted stock unit activity for the six-month period ending September 30, 2015 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, 2015	389,310		$	21.12	1.57
Granted	340,219		$	18.23
Forfeited or cancelled	(66,204	)	$	20.32

Outstanding at September 30, 2015	663,325		$	19.72	1.78

Total expense related to all restricted stock units in the six months ended September 30, 2015 and 2014 was approximately $8.5 million and $7.6 million, respectively. Future expense for these restricted stock units is expected to be approximately $42.0 million over the next four years.

Other Performance Unit Activity

Following is a summary of other performance-based unit activity for the six months ended September 30, 2015:

	Number of shares	Weighted-average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2015	312,575	$	5.23
Granted	323,080	$	2.94

Outstanding at September 30, 2015	635,655	$	4.07	1.81

During the six months ended September 30, 2015, the Company granted 323,080 performance-based units with a value at the date of grant of $0.9 million. All of the performance-based units granted 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 Company common stock share price targets for the period from July 1, 2015 to June 30, 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 on the date of vesting and ranges from 0% at a $25 Company stock price, or below, to 100% at a $55 Company stock price. The grant date value of the performance-based units is determined using a Monte Carlo simulation model.

Total expense related to other performance units for the six months ended September 30, 2015 and 2014 was $0.4 million and $0.1 million, respectively. Future expense for these performance units is expected to be approximately $1.9 million over the next three years.

Share-based Compensation Plan Activity Related to Discontinued Operations

The share-based compensation plan activity related to the ITO discontinued operations was not material. On the July 31, 2015 closing date of the ITO disposition, the Company accelerated the vesting of all 71,914 restricted stock units held by associates of the discontinued operations. At September 30, 2015, associates of the discontinued operations held 15,886 stock options to purchase the Company’s common stock. Total share-based compensation expense related to discontinued operations for the six months ended September 30, 2015 and 2014 was $1.0 million and $0.3 million, respectively.