SHARE-BASED COMPENSATION:

Share-based Compensation Plans

The Company has stock option and equity compensation plans for which a total of 34.5 million shares of the Company’s common stock have been reserved for issuance since the 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 December 31, 2017, there were a total of 6.2 million shares available for future grants under the plans.

During the quarter ended June 30, 2017, the Board voted to amend the Amended and Restated 2005 Equity Compensation Plan to increase the number of shares available under the plan from 28.4 million shares to 32.9 million shares, bringing the total number of shares reserved for issuance since inception of the plans from 30.0 million shares at March 31, 2017 to 34.5 million shares at December 31, 2017. That amendment received shareholder approval at the August 8, 2017 annual shareholders' meeting.

Stock Option Activity

Stock option activity for the nine months ended December 31, 2017 was:



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number of		exercise price		contractual term	Intrinsic value
	shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	3,033,071		$	13.14
Performance units converted to options	299,641		$	21.32
Exercised	(526,842	)	$	15.05		$	6,044
Forfeited or canceled	(88,870	)	$	20.08
Outstanding at December 31, 2017	2,717,000		$	13.45	5.7	$	38,448
Exercisable at December 31, 2017	2,109,993		$	13.53	5.1	$	29,701

The aggregate intrinsic value at period end represents the total pre-tax intrinsic value (the difference between Acxiom’s closing stock price on the last trading day of the period and the exercise price for each in-the-money option) that would have been received by the option holders had option holders exercised their options on December 31, 2017. This amount changes based upon changes in the fair market value of Acxiom’s common stock.

A summary of stock options outstanding and exercisable as of December 31, 2017 was:



					Options outstanding				Options exercisable
Range of						Weighted-average	Weighted-average			Weighted-average
exercise price					Options	remaining	exercise price		Options	exercise price
per share					outstanding	contractual life	per share		exercisable	per share
$	0.61	—	$	9.99	690,169	6.4 years	$	1.68	474,434	$	1.77
$	10.00	—	$	19.99	1,262,595	4.9 years	$	14.94	1,076,909	$	14.47
$	20.00	—	$	24.99	744,684	6.6 years	$	21.31	539,098	$	21.33
$	25.00	—	$	32.85	19,552	5.9 years	$	32.85	19,552	$	32.85
					2,717,000	5.7 years	$	13.45	2,109,993	$	13.53

Total expense related to stock options for the nine months ended December 31, 2017 and 2016 was approximately $4.1 million and $5.4 million, respectively. Future expense for these options is expected to be approximately $7.1 million in total over the next four years.

Performance Stock Option Unit Activity

Performance stock option unit activity for the nine months ended December 31, 2017 was:



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number		exercise price		contractual term	intrinsic value
	of shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	555,123		$	21.41
Performance units converted to options	(183,322	)	$	21.41
Forfeited or canceled	(25,201	)	$	21.32
Outstanding at December 31, 2017	346,600		$	21.41	1.9	$	2,131
Exercisable at December 31, 2017	—		$	—	—	$	—

Of the performance stock option units outstanding at March 31, 2017, 183,322 reached maturity of the relevant performance period at March 31, 2017. During the quarter ended June 30, 2017, the units vested at an approximate 163% attainment level resulting in issuance of 299,641 stock options having a weighted average exercise price of $21.32.

Total expense related to performance stock option units for the nine months ended December 31, 2017 and 2016 was $0.9 million and $1.0 million, respectively. Future expense for these performance stock option units is expected to be approximately $2.1 million in total over the next four years.

Stock Appreciation Right ("SAR") Activity

SAR activity for the nine months ended December 31, 2017 was:



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number		exercise price		contractual term	intrinsic value
	of shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	245,404		$	40.00
Forfeited or canceled	(245,404	)	$	40.00
Outstanding at December 31, 2017	—		$	—	—	$	—

All of the SAR units outstanding at March 31, 2017 reached maturity of the relevant performance period on March 31, 2017. The units achieved a 100% performance attainment level. However, application of the vesting multiplier resulted in zero shares granted and cancellation of all the units during the quarter ended June 30, 2017.

Restricted Stock Unit Activity

During the nine months ended December 31, 2017, the Company granted time-vesting restricted stock units covering 1,687,416 shares of common stock with a fair value at the date of grant of $44.2 million. Of the restricted stock units granted in the current period, 358,812 vest in equal annual increments over four years, 106,571 vest in equal annual increments over three years, 1,008,851 vest 25% at the one-year anniversary and 75% in equal quarterly increments over the subsequent three years, 174,368 vest 50% at the one-year anniversary and 50% in equal quarterly increments over the following year, and 38,814 vest in one year. Grant date fair value 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 months ended December 31, 2017 was:



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	3,307,577		$	22.57	2.45
Granted	1,687,416		$	26.17
Vested	(1,067,370	)	$	22.30
Forfeited or canceled	(345,581	)	$	23.36
Outstanding at December 31, 2017	3,582,042		$	24.27	2.48

During the nine months ended December 31, 2017, the Company granted performance-based restricted stock units covering 425,880 shares of common stock having a fair value at the date of grant of $11.2 million. Of the performance-based restricted stock units granted in the current period, 221,746 units - having a fair value at the date of grant of $6.2 million, determined using a Monte Carlo simulation model - vest subject to attainment of performance criteria established by the compensation committee of the board of directors (“compensation committee”) and continuous employment through the vesting date. The 221,746 units may vest in a number of shares from zero to 200% of the award, based on the total shareholder return of Acxiom common stock compared to total shareholder return of a group of peer companies (“TSR”) established by the compensation committee for the period from April 1, 2017 to March 31, 2020.

Of the performance-based restricted stock units granted in the current period, 87,184 units - having a fair value at the date of grant of $2.1 million, based on the quoted market price for the shares on the date of grant - vest over two periods, each being subject to attainment of performance criteria established by the compensation committee and continuous employment through the vesting date. At the end of the first year, the performance units may vest in a number of shares, from zero to 75% of the initial award. At the end of the second year, the performance units may vest in a number of shares, from zero to 150% of the initial award, less the number of shares awarded at completion of year one. The units will vest based on the attainment of certain revenue growth initiatives for the period from October 1, 2017 to September 30, 2019.

The remaining 116,950 performance-based restricted stock units granted in the current period - having a fair value at the date of grant of $2.9 million, based on the quoted market price for the shares on the date of grant - vest in three equal tranches, each being subject to attainment of performance criteria established by the compensation committee and continuous employment through the vesting date. Each of the three tranches may vest in a number of shares, from zero to 300% of the initial award, based on the attainment of certain revenue growth and operating margin targets for the years ending March 31, 2018, 2019, and 2020, respectively.

Non-vested performance-based restricted stock unit activity for the nine months ended December 31, 2017 was:



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	732,711		$	20.89	1.13
Granted	425,880		$	26.22
Additional earned performance shares	94,775		$	19.46
Vested	(252,760	)	$	19.46
Forfeited or canceled	(48,422	)	$	22.00
Outstanding at December 31, 2017	952,184		$	23.45	1.37

Of the performance-based restricted stock units outstanding at March 31, 2017, 157,985 related to a performance period ended March 31, 2017. During the quarter ended June 30, 2017, the units vested at a 160% attainment level based on performance results approved by the compensation committee, resulting in issuance of 252,760 shares of common stock, of which 94,775 were the additional earned performance shares referenced in the table above.

Of the performance-based restricted stock units outstanding at December 31, 2017, 251,399 will reach maturity of the relevant performance period at March 31, 2018. The units are expected to vest at an approximate 200% attainment level, resulting in issuance of approximately 502,798 shares of common stock, before consideration of the TSR multiplier, in the first quarter of fiscal 2019.

Total expense related to restricted stock for the nine months ended December 31, 2017 and 2016 was approximately $29.5 million and $24.4 million, respectively. Future expense for restricted stock units is expected to be approximately $11.8 million for the three months ending March 31, 2018, $36.0 million in fiscal 2019, $24.6 million in fiscal 2020, $11.7 million in fiscal 2021, and $2.0 million in fiscal 2022.

Other Performance Unit Activity

Other performance-based stock unit activity for the nine months ended December 31, 2017 was:



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	597,193		$	4.14	0.30
Vested	(24,573	)	$	2.94
Forfeited or canceled	(461,509	)	$	3.92
Outstanding at December 31, 2017	111,111		$	5.33	0.25

Of the other performance-based stock units outstanding at March 31, 2017, 201,464 reached maturity of the relevant performance period on March 31, 2017. The units achieved a 100% performance attainment level. However, application of the share price adjustment factor resulted in zero shares granted and cancellation of all the units during the quarter ended June 30, 2017.

Of the other performance-based stock units outstanding at March 31, 2017, 284,618 reached maturity of the relevant performance period on June 30, 2017. The units achieved an approximate 9% performance attainment level, resulting in issuance of 24,573 shares of common stock during the quarter ended September 30, 2017.

The remaining 111,111 performance-based units outstanding at December 31, 2017 will reach maturity of the relevant performance period on March 31, 2018. The units are expected to achieve a 100% performance attainment level. However, application of the share price adjustment factor is expected to result in an approximate 75% reduction in shares granted, in the first quarter of fiscal 2019.

Total expense related to other performance units for the nine months ended December 31, 2017 and 2016 was $0.1 million and $0.7 million, respectively. Future expense for these performance units is expected to be approximately $0.1 million over the next three months ending March 31, 2018.

Consideration Holdback

As part of the Company’s acquisition of Arbor in fiscal 2017, $38.3 million of the acquisition consideration otherwise payable with respect to shares of restricted Arbor common stock held by certain key employees was subject to holdback by the Company pursuant to agreements with those employees (each, a “Holdback Agreement”). The consideration holdback vests in 30 equal monthly increments following the date of close, subject to the Arbor key employees' continued employment through each monthly vesting date. At each vesting date, 1/30th of the $38.3 million holdback consideration vests and is settled in shares of Company common stock. The number of shares is based on the then-current market price of the Company common stock.

Total expense related to the Holdback Agreement for the nine months ended December 31, 2017 was approximately $11.5 million.