5. Stock-Based Compensation Plans

Employee Stock Purchase Plan

Under the Company’s 1999 Employee Stock Purchase Plan, as amended (the “ESPP”), a total of 4,500,000 shares of the Company’s common stock have been reserved for issuance to eligible employees. Participating employees are permitted to designate up to the lesser of $25,000 or 10% of their annual base compensation for the purchase of common stock under the ESPP. Purchases under the ESPP are made one calendar month after the end of each fiscal quarter. The price for shares of common stock purchased under the ESPP is 85% of the stock’s fair market value on the last business day of the three-month participation period. Shares issued under the ESPP during the three months ended March 31, 2015 and 2014 totaled 46,651 and 32,346, respectively.

Stock-Based Payments

A summary of stock options issued pursuant to the Company’s stock incentive plans is as follows:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In- the-Money Options
Outstanding as of December 31, 2014		5,282,693		$	12.06
Granted		2,055,514			19.12
Exercised		(664,229	)		10.41
Forfeited		(2,575	)		17.15

Outstanding as of March 31, 2015		6,671,403		$	14.40		7.05	$	48,465,441

Exercisable as of March 31, 2015		3,689,027		$	10.76		5.18	$	40,228,828

As of March 31, 2015, the Company expects that 93.0 % of the options will vest over the vesting period.

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2015 and 2014 was $6.49 and $9.02, respectively. The Company issued treasury shares for the exercise of stock options during the three months ended March 31, 2015 and 2014. The total intrinsic value of stock options exercised during the three months ended March 31, 2015 and 2014 was $6.4 million and $4.7 million, respectively.

The fair value of options that do not vest based on the achievement of certain market conditions granted during the three months ended March 31, 2015 and 2014 were estimated on the date of grant using the Black-Scholes option-pricing model, a pricing model acceptable under U.S. GAAP, with the following weighted-average assumptions:


	Three Months Ended			Three Months Ended
	March 31, 2015			March 31, 2014
Expected life (years)		5.93			5.93
Interest rate		1.4	%		1.8	%
Volatility		32.1	%		45.2	%
Dividend yield		—			—

Expected volatilities are based on the Company’s historical common stock volatility derived from historical stock price data for historical periods commensurate with the options’ expected life. The expected life is the average number of years that the Company estimated that the options will be outstanding, based primarily on historical employee option exercise behavior. The risk-free interest rate is based on the implied yield currently available on United States Treasury zero coupon issues with a term equal to the expected term at the date of grant of the options. The expected dividend yield is zero as the Company has historically paid no dividends and does not anticipate dividends to be paid in the future.

During the three months ended March 31, 2015, the Company granted supplemental stock options with three tranches at a grant date fair value of $8.01, $7.56 and $7.00, respectively, per share that vest, if at all, based upon (i) tranche one—any time after the third anniversary date if the stock has traded at 133% of the exercise price for at least 20 consecutive trading days, (ii) tranche two—any time after the fourth anniversary date if the stock has traded at 167% of the exercise price for at least 20 consecutive trading days, and (iii) tranche three—any time after the fifth anniversary date if the stock has traded at 200% of the exercise price for at least 20 consecutive trading days. The employees must also remain employed with the Company as of the anniversary date in order for the options to vest. The exercise price of the supplemental stock options is the closing market price on the date the awards were granted. In order to determine the grant date fair value of the supplemental stock options, a Monte Carlo simulation model was used. With respect to options granted that vest based on the achievement of certain market conditions, the grant date fair value of such options was estimated using the following weighted-average assumptions:


	Three Months Ended
	March 31, 2015
Expected life (years)		7.50
Interest rate		1.7	%
Volatility		41.9	%
Dividend yield		—

Stock Incentive Plan – Online Resources Corporation (“ORCC”) Stock Incentive Plan, as amended and restated

A summary of transaction stock options issued pursuant to the Company’s stock incentive plans is as follows:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the-Money Options
Outstanding as of December 31, 2014		46,512		$	36.73
Exercised		(240	)		13.92
Cancelled		(6,366	)		46.80

Outstanding as of March 31, 2015		39,906		$	35.27		1.62	$	51,493

Exercisable as of March 31, 2015		39,906		$	35.27		1.62	$	51,943

A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) outstanding as of March 31, 2015 and changes during the period are as follows:


Nonvested LTIP Performance Shares	Number of Shares at Expected Attainment			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2014		1,145,916		$	14.84
Granted		1,025,863			19.12
Forfeited		(4,643	)		12.14
Vested		(548,671	)		9.75
Change in expected attainment for 2011 grants		(54,305	)		9.75

Nonvested as of March 31, 2015		1,564,160		$	19.62

During the three months ended March 31, 2015, 548,671 shares of the LTIPs vested. The Company withheld 196,169 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

A summary of nonvested restricted share awards (“RSAs”) as of March 31, 2015 and changes during the period are as follows:


Nonvested Restricted Share Awards	Number of Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2014		183,209		$	17.11
Granted		13,915			21.56
Vested		(999	)		15.88

Nonvested as of March 31, 2015		196,125		$	17.43

During the three months ended March 31, 2015, 999 shares of the RSAs vested. The Company withheld 376 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Stock Incentive Plan – S1 Corporation 2003 Stock Incentive Plan, as amended and restated

A summary of nonvested Transaction RSAs issued under the S1 Corporation 2003 Stock Incentive Plan as of March 31, 2015 and changes during the period are as follows:


Nonvested Transaction Restricted Share Awards	Number of Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2014		17,565		$	11.80
Forfeited		(2,910	)		11.80

Nonvested as of March 31, 2015		14,655		$	11.80

As of March 31, 2015, there were unrecognized compensation costs of $17.3 million related to nonvested stock options, $1.4 million related to the nonvested RSAs, and $23.1 million related to the LTIP performance shares, which the Company expects to recognize over weighted-average periods of 2.5 years, 1.2 years, and 2.7 years, respectively.

The Company recorded stock-based compensation expenses for the three months ended March 31, 2015 and 2014 related to stock options, LTIP performance shares, RSAs, and the ESPP of $3.9 million and $4.8 million, respectively, with corresponding tax benefits of $1.5 million and $1.8 million, respectively. Tax benefits in excess of the option’s grant date fair value are classified as financing cash flows. Estimated forfeiture rates, stratified by employee classification, have been included as part of the Company’s calculations of compensation costs. The Company recognizes compensation costs for stock option awards that vest with the passage of time with only service conditions on a straight-line basis over the requisite service period. The Company recognizes compensation costs for stock option awards that vest with service and market-based conditions on a straight-line basis over the longer of the requisite service period or the estimated period to meet the defined market-based condition.

Cash received from option exercises for the three months ended March 31, 2015 and 2014 was $6.9 million and $2.9 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $2.4 million and $1.8 million for the three months ended March 31, 2015 and 2014, respectively.