Stock-Based and Other Incentive Compensation

We offer stock-based compensation through the use of stock options and restricted stock units ("RSUs"). We also offer an Employee Stock Purchase Plan ("ESPP").

We grant stock options to employees and directors under our equity-based compensation plans with exercise prices that are not less than the fair market value of our common stock on the date of grant. The terms of the stock option and RSU awards, including the vesting schedule of such awards, are determined at our discretion subject to the terms of the applicable equity-based compensation plan. Options granted over the last several years have generally been exercisable in four or five equal installments beginning on the first anniversary of the date of grant with a maximum term of ten years. RSUs typically vest in four or five equal installments beginning on the first anniversary of the date of grant or when certain performance targets are determined to have been met. There are 13,500 shares of common stock authorized for awards under our 2003 Incentive Compensation Plan (the "Plan") plus available shares from a pre-existing equity-based compensation plan, which plans were approved by our stockholders. We also have outstanding stock options granted as part of inducement stock option awards that were not approved by stockholders as permitted by applicable stock exchange rules. We record compensation cost for all stock options and RSUs based on the fair value at the grant date.

Our ESPP allows for a total of up to 1,000 shares of Class A common stock to be purchased by eligible employees under offerings made each January 1 and July 1. Employees participate through payroll deductions up to a maximum of 15% of

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eligible compensation. The term of each offering period is six months and shares are purchased on the last day of the offering period at a discount to the stock's market value. Under an amendment to the ESPP adopted in 2006, the purchase price for offering periods beginning in 2007 represents a 15% discount on the closing price of the stock on the last day of the offering period (rather than a 15% discount on the lower of (a) the closing price of the stock on the first day of the offering period and (b) the closing price of the stock on the last day of the offering period). For offering periods held in 2012, 2011 and 2010, we issued a total of 85, 72 and 81 shares, respectively, of common stock at an average price of $7.32, $8.50 and $8.25 per share, respectively. As of December 31, 2012, we had approximately 357 shares of the 1,000 authorized shares of common stock available to be granted under the ESPP.

The Company may grant certain awards the vesting of which is contingent upon the Company achieving certain performance targets. Upon determining that the performance target is probable, the fair value of the award is recognized over the service period, subject to potential adjustment.

In connection with A. Lorne Weil becoming our Chief Executive Officer in 2010, the Company awarded to Mr. Weil performance-conditioned awards consisting of 1,000 stock options with an exercise price of $8.06 per share (representing the market value of our common stock on the date of grant) and 1,000 RSUs, which awards have a five-year vesting schedule, with 20% of such options and RSUs scheduled to vest each year if specified performance targets are met (subject to certain "carryover" vesting provisions as described in the employment agreement amendment) (such performance-conditioned stock options and RSUs, the "performance-conditioned equity awards"). Delivery of shares in respect of any vested performance-vesting RSUs will occur on March 15, 2016. The performance-conditioned stock options will expire, and the performance-conditioned RSUs will be forfeited, on March 15, 2016 to the extent that such awards remain unvested on such date. Any performance-conditioned stock options that have vested by March 15, 2016 will expire ten years from the date of grant.

On February 22, 2012, the Company granted approximately 494 RSUs to certain executives, which awards have a four-year vesting schedule, with 25% scheduled to vest each year if specified performance targets are met subject to certain "carryover" vesting provisions. The specified performance targets and the carryover vesting provisions are substantially identical to those applicable to Mr. Weil's performance-conditioned equity awards. The performance-conditioned RSUs will be forfeited on March 15, 2016 to the extent that such awards remain unvested on such date.

We had approximately 814 shares available for grants of equity awards under our equity-based compensation plans (excluding 357 shares available under our ESPP) as of December 31, 2012. Under the share counting rules of the equity compensation plans, awards may be outstanding relating to a greater number of shares than the aggregate remaining available under our plans so long as awards will not result in delivery and vesting of shares in excess of the number then available under the plans. Shares available for future issuance do not include shares expected to be withheld in connection with outstanding awards to satisfy tax withholding obligations, which may be deemed to be available for awards under the plans as permitted under the applicable share counting rules of the plans.

Stock Options

A summary of the changes in stock options outstanding under our equity-based compensation plans during 2012 is presented below:

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	Number of Options		Weighted Average Remaining Contract Term (Years)	Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding as of December 31, 2011	3,868		8.3	$	9.67	$	3,876
Granted	30			$	8.86	—
Exercised	(302	)		$	6.76	$	479
Cancelled	(135	)		$	24.33	—
Options outstanding as of December 31, 2012	3,461		7.8	$	9.34	$	659
Options exercisable as of December 31, 2012	964		7.4	$	10.65	$	9
Options expected to vest after December 31, 2012	2,495		8.0	$	8.83	$	650

The weighted-average grant date fair value of options granted during 2012, 2011 and 2010 was $4.65, $4.10 and $3.63, respectively. The aggregate intrinsic value of the options exercised during the years ended December 31, 2011 and 2010 was approximately $344 and $1,276, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average assumptions used in the model are outlined in the following table:



	2012		2011		2010
Assumptions:
Expected volatility	56	%	52	%	51	%
Risk-free interest rate	1.3	%	1.9	%	2.6	%
Dividend yield	—		—		—
Expected life (in years)	6		6		6

The computation of the expected volatility is based on historical daily stock prices over a period commensurate with the expected life of the option. Expected life is based on annual historical employee exercise behavior of option grants with similar vesting periods and option expiration data. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. We do not anticipate paying dividends in the foreseeable future.

For the years ended December 31, 2012, 2011 and 2010, we recognized stock-based compensation expense of approximately $4,300, $6,300 and $7,300, respectively, and the related tax benefit of approximately $1,700, $2,400 and $2,700, respectively, related to the vesting of stock options. At December 31, 2012, we had approximately $7,500 of unrecognized stock-based compensation expense relating to unvested stock options that will be amortized over a weighted-average period of approximately two years. During the year ended December 31, 2012, we received approximately $1,300 in cash from the exercise of stock options. The actual tax benefit realized for the tax deductions from the exercise of stock options totaled approximately $179 for the year ended December 31, 2012.

Restricted Stock Units

A summary of the changes in RSUs outstanding under our equity-based compensation plans during 2012 is presented below:

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	Number of Restricted Stock Units		Weighted Average Grant Date Fair Value
Unvested RSUs as of December 31, 2011	4,771		$	10.49
Granted	1,697		$	12.23
Vested	(1,538	)	$	11.24
Cancelled	(115	)	$	12.10
Unvested RSUs as of December 31, 2012	4,815		$	10.53

The weighted-average grant date fair value of RSUs granted during 2011 and 2010 was $8.52 and $12.74, respectively. The fair value of each RSU grant is based on the market value of our common stock at the time of grant. During the years ended December 31, 2012, 2011 and 2010, we recognized stock-based compensation expense of approximately $19,700, $15,200 and $15,400, respectively, and the related tax benefits of approximately $7,400, $5,700 and $5,800, respectively, related to the vesting of RSUs. At December 31, 2012, we had approximately $37,200 of unrecognized stock-based compensation relating to unvested RSUs that will be amortized over a weighted-average period of approximately two years. The fair value at vesting date of RSUs vested during the years ended December 31, 2012, 2011 and 2010 was approximately $14,300, $8,600 and $7,000, respectively.

Other Incentive Compensation

In December 2010, the Company adopted a performance-based incentive compensation plan relating to our Asia-Pacific business (the "Asia-Pacific Plan"). The purpose of the Asia-Pacific Plan is to provide an equitable and competitive compensation opportunity to certain key employees and consultants of the Company who are involved in the Company's

operations in China (and potentially other jurisdictions in the Asia-Pacific region) (the "Asia-Pacific Business") and to promote the creation of long-term value for our stockholders by directly linking Asia-Pacific Plan participants' compensation under the plan to the appreciation in value of such business. Each participant will be eligible to receive a cash payment following the end of 2014 equal to a pre-determined share of an Asia-Pacific Business incentive compensation pool. The incentive compensation pool will equal a certain percentage of the growth in the value of the Asia-Pacific Business over four years, calculated in the manner provided under the Asia-Pacific Plan and subject to a cap of (1) $35,000, in the event an Asia-Pacific Business liquidity event does not occur by December 31, 2014 or (2) $50,000, in the event an Asia-Pacific Business liquidity event occurs by December 31, 2014. An "Asia-Pacific Business liquidity event" means an initial public offering of at least 20% of the Asia-Pacific Business or a strategic investment by a third-party to acquire at least 20% of the Asia-Pacific Business, in each case, that is approved by the Company. Our accrual recorded in other long-term liabilities related to the Asia-Pacific Plan was $1,900 and $4,300 as of December 31, 2012 and 2011, respectively.