6. 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, 2016 and 2015 totaled 50,876 and 46,651, 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, 2015		5,799,076		$	14.37
Granted		2,284,500			17.92
Exercised		(15,885	)		11.14
Forfeited		(86,680	)		19.10

Outstanding as of March 31, 2016		7,981,011		$	15.34		7.07	$	43,551,458

Exercisable as of March 31, 2016		4,254,017		$	12.59		5.03	$	34,890,634

As of March 31, 2016, the Company expects that 93.1% 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, 2016 and 2015 was $5.54 and $6.49, respectively. The Company issued treasury shares for the exercise of stock options during the three months ended March 31, 2016 and 2015. The total intrinsic value of stock options exercised during the three months ended March 31, 2016 and 2015 was $0.2 million and $6.4 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, 2016 and 2015 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, 2016			March 31, 2015
Expected life (years)		5.93			5.93
Interest rate		1.2	%		1.4	%
Volatility		29.7	%		32.1	%
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, 2016, the Company granted supplemental stock options with three tranches at a grant date fair value of $7.46, $7.06 and $6.50, respectively, per share. These options 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			Three Months Ended
	March 31, 2016			March 31, 2015
Expected life (years)		7.50			7.50
Interest rate		1.6	%		1.7	%
Volatility		41.6	%		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, 2015		21,036		$	29.76
Exercised		(4,299	)		13.92
Cancelled		(726	)		13.92

Outstanding as of March 31, 2016		16,011		$	34.73		1.90	$	—

Exercisable as of March 31, 2016		16,011		$	34.73		1.90	$	—

A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) outstanding as of March 31, 2016 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, 2015		889,295		$	19.13
Granted		1,059,428			17.92
Forfeited		(44,696	)		18.93

Nonvested as of March 31, 2016		1,904,027		$	18.44

A summary of nonvested restricted share awards (“RSAs”) as of March 31, 2016 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, 2015		149,262		$	22.62
Vested		(5,638	)		20.55
Forfeited		(756	)		20.51

Nonvested as of March 31, 2016		142,868		$	22.71

During the three months ended March 31, 2016, 5,638 shares of the RSAs vested. The Company withheld 2,039 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

A summary of nonvested Performance-Based Restricted Share Awards (“PBRSAs”) as of March 31, 2016 and changes during the period are as follows:


Nonvested Performance-Based Restricted Share Awards	Number of Performance-Based Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2015		938,863		$	23.42
Forfeited		(21,790	)		22.64
Change in attainment for 2015 grants		(17,115	)		24.41

Nonvested as of March 31, 2016		899,958		$	23.42

During the three months ended March 31, 2016, the Company changed the expected attainment on the PBRSAs vesting in June 2016 from 100% to 91% based upon actual results of the related performance targets.

Retention Restricted Share Awards

During the three months ended March 31, 2016, pursuant to the Company’s 2005 Incentive Plan, the Company granted Retention Restricted Share Awards (“Retention RSAs”). The Retention RSA awards granted to named executive officers have requisite service period (vesting period) of 1.3 years and vest 50% on July 1, 2016 and 50% on July 1, 2017. Retention RSA awards granted to employees other than named executive officers have a vesting period of 0.8 years and vest 50% on July 1, 2016 and 50% on January 1, 2017. Under each agreement, stock is issued without direct cost to the employee. The Company estimates the fair value of the Retention RSAs based upon the market price of the Company’s stock at the date of grant. The Retention RSA grants provide for the payment of dividends on the Company’s common stock, if any, to the participant during the requisite service period and the participant has voting rotes for each share of common stock. The Company recognizes compensation expense for Retention RSAs on a straight-line basis over the requisite service period.

A summary of nonvested Retention RSAs as of March 31, 2016 and changes during the period are as follows:


Nonvested Retention Restricted Share Awards	Number of Retention Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2015		—		$	—
Granted		473,069			17.89
Forfeited		(8,900	)		17.89

Nonvested as of March 31, 2016		464,169		$	17.89

There were 476,750 nonvested PAY.ON RSAs as of March 31, 2016 and December 31, 2015, with a grant date fair value of $23.60.

As of March 31, 2016, there were unrecognized compensation expenses of $19.0 million related to nonvested stock options, $1.1 million related to the nonvested RSAs, $26.3 million related to the LTIP performance shares, $10.5 million related to nonvested PBRSAs, $6.5 million related to nonvested Retention RSAs and which the Company expects to recognize over weighted-average periods of 2.5 years, 1.3 years, 2.7 years, 1.3 years, and 0.9 years, respectively.

The Company recorded stock-based compensation expenses for the three months ended March 31, 2016 and 2015 related to stock options, LTIP performance shares, RSAs, PBRSAs, Retention RSAs, and the ESPP of $9.5 million and $3.9 million, respectively, with corresponding tax benefits of $3.6 million and $1.5 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, 2016 and 2015 was $0.2 million and $6.9 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $0.1 million and $2.4 million for the three months ended March 31, 2016 and 2015, respectively.