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Equity Incentive Schemes and Stock Compensation Charges | 12 Months Ended
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Dec. 31, 2013
Equity Incentive Schemes and Stock Compensation Charges | 10. Equity Incentive Schemes and Stock Compensation Charges Share Options On July 21, 2008 the Company adopted the Employee Share Option Plan 2008 (the “2008 Employee Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may grant options to any employee, or any director holding a salaried office or employment with the Company or a Subsidiary for the purchase of ordinary shares. On the same date, the Company also adopted the Consultants Share Option Plan 2008 (the “2008 Consultants Plan”), pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may grant options to any consultant, adviser or non-executive director retained by the Company or any Subsidiary for the purchase of ordinary shares. Each option granted under the 2008 Employee Plan or the 2008 Consultants Plan (together the “2008 Option Plans”) will be an employee stock option, or NSO, as described in Section 422 or 423 of the Internal Revenue Code. Each grant of an option under the 2008 Options Plans will be evidenced by a Stock Option Agreement between the optionee and the Company. The exercise price will be specified in each Stock Option Agreement, however option prices will not be less than 100% of the fair market value of an ordinary share on the date the option is granted. An aggregate of 6.0 million ordinary shares have been reserved under the 2008 Employee Plan, as reduced by any shares issued or to be issued pursuant to options granted under the 2008 Consultants Plan, under which a limit of 400,000 shares applies. Further, the maximum number of ordinary shares with respect to which options may be granted under the 2008 Employee Option Plan, during any calendar year to any employee shall be 400,000 ordinary shares. There is no individual limit under the 2008 Consultants Plan. No options may be granted under the 2008 Option Plans after July 21, 2018. On January 17, 2003 the Company adopted the Share Option Plan 2003 (the “2003 Share Option Plan”) pursuant to which the Compensation and Organization Committee of the Board could grant options to officers and other employees of the Company or its subsidiaries for the purchase of ordinary shares. An aggregate of 6.0 million ordinary shares were reserved under the 2003 Share Option Plan; and, in no event could the number of ordinary shares issued pursuant to options awarded under this plan exceed 10% of the outstanding shares, as defined in the 2003 Share Option Plan, at the time of the grant, unless the Board expressly determined otherwise. Further, the maximum number of ordinary shares with respect to which options could be granted under the 2003 Share Option Plan during any calendar year to any employee was 400,000 ordinary shares. The 2003 Share Option Plan expired on January 17, 2013. No new options may be granted under this plan. Share option awards are granted with an exercise price equal to the market price of the Company’s shares at date of grant. Share options typically vest over a period of five years from date of grant and expire eight years from date of grant. The maximum contractual term of options outstanding at December 31, 2013 is eight years. The following table summarizes the transactions for the Company’s share option plans for the years ended December 31, 2013, December 31, 2012 and December 31, 2011:
|  | Options Granted Under Plans |  |  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Grant Date Fair Value |
Outstanding at December 31, 2010 |  |  | 4,798,677 |  |  |  | 4,798,677 |  |  | $ | 21.71 |  |  | $ | 8.47 |
Granted |  |  | 989,449 |  |  |  | 989,449 |  |  | $ | 19.66 |  |  | $ | 8.20 |
Exercised |  |  | (430,340 | ) |  |  | (430,340 | ) |  | $ | 10.84 |  |  | $ | 4.80 |
Cancelled |  |  | (454,968 | ) |  |  | (454,968 | ) |  | $ | 25.77 |  |  | $ | 9.87 |
Outstanding at December 31, 2011 |  |  | 4,902,818 |  |  |  | 4,902,818 |  |  | $ | 21.87 |  |  | $ | 8.61 |
Granted |  |  | 842,273 |  |  |  | 842,273 |  |  | $ | 22.01 |  |  | $ | 9.59 |
Exercised |  |  | (890,236 | ) |  |  | (890,236 | ) |  | $ | 14.62 |  |  | $ | 6.16 |
Cancelled |  |  | (504,224 | ) |  |  | (504,224 | ) |  | $ | 25.14 |  |  | $ | 9.76 |
Outstanding at December 31, 2012 |  |  | 4,350,631 |  |  |  | 4,350,631 |  |  | $ | 23.01 |  |  | $ | 9.17 |
Granted |  |  | 264,950 |  |  |  | 264,950 |  |  | $ | 33.09 |  |  | $ | 12.05 |
Exercised |  |  | (1,249,759 | ) |  |  | (1,249,759 | ) |  | $ | 21.60 |  |  | $ | 8.58 |
Cancelled |  |  | (392,034 | ) |  |  | (392,034 | ) |  | $ | 25.27 |  |  | $ | 10.02 |
Outstanding at December 31, 2013 |  |  | 2,973,788 |  |  |  | 2,973,788 |  |  | $ | 24.20 |  |  | $ | 9.57 |
Vested and exercisable at December 31, 2013 |  |  | 1,505,707 |  |  |  | 1,505,707 |  |  | $ | 24.92 |  |  | $ | 8.64 |
The weighted average remaining contractual life of options outstanding and options exercisable at December 31, 2013, was 4.52 years and 3.29 years respectively. 655,224 options are expected to vest during the year ended December 31, 2014. The intrinsic value of options exercised during the year ended December 31, 2013 amounted to $18.3 million. The intrinsic value of options outstanding and options exercisable at December 31, 2013 amounted to $48.2 million and $23.3 million respectively. Intrinsic value is calculated based on the market value of the Company’s shares at the date of exercise. Non vested shares outstanding as at December 31, 2013 are as follows:
|  | Options Outstanding Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Fair Value |
Non vested outstanding at December 31, 2012 |  |  | 2,094,533 |  |  | $ | 22.43 |  |  | $ | 9.17 |
Granted |  |  | 264,950 |  |  |  | 33.09 |  |  |  | 12.05 |
Vested |  |  | (641,773 | ) |  |  | 24.29 |  |  |  | 9.60 |
Forfeited |  |  | (249,629 | ) |  |  | 22.97 |  |  |  | 9.46 |
Non vested outstanding at December 31, 2013 |  |  | 1,468,081 |  |  | $ | 23.45 |  |  | $ | 9.45 |
Outstanding and exercisable share options: The following table summarizes information concerning outstanding and exercisable share options as of December 31, 2013:
| Options Outstanding |  |  |  |  |  | Options Exercisable |
| Range Exercise Price |  |  | Number of Shares |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price |  |  | Number of Shares |  |  | Weighted Average Exercise Price |
| $ | 11.00 |  |  | 24,140 |  |  | 0.09 |  |  | $ | 11.00 |  |  | 24,140 |  |  | $ | 11.00 |
| $ | 15.47 |  |  | 180 |  |  | 3.33 |  |  | $ | 15.47 |  |  | - |  |  | $ | 15.47 |
| $ | 15.84 |  |  | 50,000 |  |  | 3.33 |  |  | $ | 15.84 |  |  | 40,000 |  |  | $ | 15.84 |
| $ | 16.80 |  |  | 150,000 |  |  | 5.83 |  |  | $ | 16.80 |  |  | 60,000 |  |  | $ | 16.80 |
| $ | 17.17 |  |  | 30,000 |  |  | 5.85 |  |  | $ | 17.17 |  |  | 12,000 |  |  | $ | 17.17 |
| $ | 18.00 |  |  | 24,000 |  |  | 0.83 |  |  | $ | 18.00 |  |  | 24,000 |  |  | $ | 18.00 |
| $ | 18.98 |  |  | 6,600 |  |  | 2.87 |  |  | $ | 18.98 |  |  | 6,600 |  |  | $ | 18.98 |
| $ | 19.45 |  |  | 15,000 |  |  | 4.82 |  |  | $ | 19.45 |  |  | 1,800 |  |  | $ | 19.45 |
| $ | 20.16 |  |  | 2,000 |  |  | 4.87 |  |  | $ | 20.16 |  |  | 1,200 |  |  | $ | 20.16 |
| $ | 20.28 |  |  | 457,871 |  |  | 5.17 |  |  | $ | 20.28 |  |  | 177,987 |  |  | $ | 20.28 |
| $ | 20.59 |  |  | 162,000 |  |  | 6.14 |  |  | $ | 20.59 |  |  | 20,400 |  |  | $ | 20.59 |
| $ | 21.25 |  |  | 231,751 |  |  | 1.12 |  |  | $ | 21.25 |  |  | 231,751 |  |  | $ | 21.25 |
| $ | 22.10 |  |  | 400 |  |  | 3.56 |  |  | $ | 22.10 |  |  | - |  |  | $ | 22.10 |
| $ | 22.26 |  |  | 233,927 |  |  | 3.15 |  |  | $ | 22.26 |  |  | 155,161 |  |  | $ | 22.26 |
| $ | 22.30 |  |  | 475,333 |  |  | 6.32 |  |  | $ | 22.30 |  |  | 82,326 |  |  | $ | 22.30 |
| $ | 23.66 |  |  | 8,900 |  |  | 6.57 |  |  | $ | 23.66 |  |  | 1,780 |  |  | $ | 23.66 |
| $ | 24.25 |  |  | 100,000 |  |  | 4.18 |  |  | $ | 24.25 |  |  | 100,000 |  |  | $ | 24.25 |
| $ | 24.46 |  |  | 343,677 |  |  | 4.17 |  |  | $ | 24.46 |  |  | 172,209 |  |  | $ | 24.46 |
| $ | 26.20 |  |  | 2,400 |  |  | 4.38 |  |  | $ | 26.20 |  |  | 1,440 |  |  | $ | 26.20 |
| $ | 26.71 |  |  | 7,650 |  |  | 6.70 |  |  | $ | 26.71 |  |  | 4,090 |  |  | $ | 26.71 |
| $ | 29.45 |  |  | 3,000 |  |  | 4.32 |  |  | $ | 29.45 |  |  | 1,800 |  |  | $ | 29.45 |
| $ | 31.49 |  |  | 12,450 |  |  | 7.16 |  |  | $ | 31.49 |  |  | - |  |  | $ | 31.49 |
| $ | 32.37 |  |  | 200,203 |  |  | 7.33 |  |  | $ | 32.37 |  |  | 2,500 |  |  | $ | 32.37 |
| $ | 35.33 |  |  | 377,523 |  |  | 2.15 |  |  | $ | 35.33 |  |  | 377,523 |  |  | $ | 35.33 |
| $ | 36.05 |  |  | 6,000 |  |  | 2.40 |  |  | $ | 36.05 |  |  | 6,000 |  |  | $ | 36.05 |
| $ | 36.22 |  |  | 37,483 |  |  | 7.46 |  |  | $ | 36.22 |  |  | - |  |  | $ | 36.22 |
| $ | 37.90 |  |  | 10,300 |  |  | 7.93 |  |  | $ | 37.90 |  |  | - |  |  | $ | 37.90 |
| $ | 41.25 |  |  | 1,000 |  |  | 2.67 |  |  | $ | 41.25 |  |  | 1,000 |  |  | $ | 41.25 |
| $ | 11.00 - $41.25 |  |  | 2,973,788 |  |  | 4.52 |  |  | $ | 24.20 |  |  | 1,505,707 |  |  | $ | 24.92 |
Options outstanding include both vested and unvested options as at December 31, 2013. Options excercisable represent options which have vested at December 31, 2013. From the date of grant, substantially all options vest over a five year period at 20% per annum. Fair value of Stock Options Assumptions The weighted average fair value of options granted during the years ended December 31, 2013, December 31, 2012 and December 31, 2011 was calculated using the Black-Scholes option pricing model. The weighted average fair values and assumptions were as follows:
|  | Year Ended |
|  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Weighted average fair value |  | $ | 12.05 |  |  | $ | 9.59 |  |  | $ | 8.20 |
Assumptions: |  |  |  |  |  |  |  |  |  |  |  |
Expected volatility |  |  | 40 | % |  |  | 50 | % |  |  | 45 | %
Dividend yield |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
Risk-free interest rate |  |  | 0.76 | % |  |  | 0.83 | % |  |  | 1.4 | %
Expected life |  | 5.0 years |  |  | 5.0 years |  |  | 5.0 years |
Expected volatility is based on the historical volatility of our common stock over a period equal to the expected term of the options; the expected life represents the weighted average period of time that options granted are expected to be outstanding given consideration to vesting schedules, and our historical experience of past vesting and termination patterns. The risk-free rate is based on the U.S. government zero-coupon bonds yield curve in effect at time of the grant for periods corresponding with the expected life of the option. Restricted Share Units and Performance Share Units On July 21, 2008 the Company adopted the 2008 Employees Restricted Share Unit Plan (the “2008 RSU Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may select any employee, or any director holding a salaried office or employment with the Company, or a Subsidiary to receive an award under the plan. An aggregate of 1.0 million ordinary shares have been reserved for issuance under the 2008 RSU Plan. On April 23, 2013 the Company adopted the 2013 Employees Restricted Share Unit and Performance Share Unit Plan (the “2013 RSU Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may select any employee, or any director holding a salaried office or employment with the Company, or a Subsidiary to receive an award under the plan. An aggregate of 1.6 million ordinary shares have been reserved for issuance under the 2013 RSU Plan. The shares are awarded at zero cost and vest over a service period. Awards under the 2013 RSU Plan may be settled in cash or shares at the option of the Company. The Company has awarded RSU’s and PSU’s to certain key individuals of the Group. The following table summarizes RSU and PSU activity for the year ended December 31, 2013:
|  | PSU Outstanding Number of Shares |  |  | PSU Weighted Average Fair Value |  | PSU Weighted Average Remaining Contractual Life |  | RSU Outstanding Number of Shares |  |  | RSU Weighted Average Fair Value |  | RSU Weighted Average Remaining Contractual Life
Outstanding at December 31, 2012 |  |  | - |  |  |  | - |  |  |  |  | 496,000 |  |  | $ | 20.26 |  |
Granted |  |  | 359,570 |  |  | $ | 33.09 |  |  |  |  | 409,492 |  |  | $ | 34.62 |  |
Shares vested |  |  | - |  |  |  | - |  |  |  |  | (50,000 | ) |  | $ | 22.30 |  |
Forfeited |  |  | (6,326 | ) |  | $ | 36.22 |  |  |  |  | (9,033 | ) |  | $ | 25.53 |  |
Outstanding at December 31, 2013 |  |  | 353,244 |  |  | $ | 33.04 |  | 2.35 |  |  | 846,459 |  |  | $ | 27.05 |  | 1.77
The fair value of RSU’s vested for the year ended December 31, 2013 totaled $1.1 million. (No RSU’s vested during 2012). No PSU’s vested during 2013 or during 2012. The PSU’s vest based on service and specified EPS targets. The maximum number of PSU’s that could vest based on PSU’s outstanding is 353,244, based on attaining cumulative EPS targets over the period 2013 – 2015. Non-cash stock compensation expense Income from operations for the year ended December 31, 2013 is stated after charging $14.2 million in respect of non-cash stock compensation expense. Non-cash stock compensation expense for the year ended December 31, 2013 has been allocated as follows:
|  | Year ended |
|  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Direct costs |  | $ | 7,835 |  |  | $ | 6,007 |  |  | $ | 5,155 |
Selling, general and administrative |  | $ | 6,385 |  |  | $ | 4,894 |  |  | $ | 4,200 |
Restructuring and other non-recurring items (note 14) |  |  | - |  |  | $ | 620 |  |  |  | - |
Total compensation costs |  | $ | 14,220 |  |  | $ | 11,521 |  |  | $ | 9,355 |
Total non-cash stock compensation expense not yet recognized at December 31, 2013 amounted to $34.3 million. The weighted average period over which this is expected to be recognized is 2.51 years. Total tax benefit recognized in additional paid in capital related to the non-cash compensation expense amounted to $1.7 million for the year ended December 31, 2013 (2012: $1.3 million, 2011: $0.7 million).

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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