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Stock-based compensation | 3 Months Ended
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Mar. 31, 2016
Stock-based compensation | 15. Stock-based compensation The Company has issued options under the Genpact Global Holdings 2005 Plan (the “2005 Plan”), Genpact Global Holdings 2006 Plan (the “2006 Plan”), Genpact Global Holdings 2007 Plan (the “2007 Plan”) and Genpact Limited 2007 Omnibus Incentive Compensation Plan (the “2007 Omnibus Plan”) to eligible persons, including employees, directors and certain other persons associated with the Company. With respect to options granted under the 2005, 2006 and 2007 Plans before the date of adoption of the 2007 Omnibus Plan, if an award granted under any such plan is forfeited or otherwise expires, terminates, or is cancelled without the delivery of shares, then the shares covered by the forfeited, expired, terminated, or cancelled award will be added to the number of shares otherwise available for grant under the respective plans. Beginning on July 13, 2007, the date of adoption of the 2007 Omnibus Plan, shares underlying options forfeited, expired, terminated, or cancelled under any of the plans are added to the number of shares otherwise available for grant under the 2007 Omnibus Plan. The 2007 Omnibus Plan was amended and restated on April 11, 2012 to increase the number of common shares authorized for issuance by 5,593,200 shares to 15,000,000 shares. During the year ended December 31, 2012, the number of common shares authorized for issuance under the 2007 Omnibus Plan and the 2005 Plan was increased by 8,858,823 and 495,915 shares, respectively, as a result of an adjustment to outstanding unvested share awards. Stock-based compensation costs relating to the foregoing plans during the three months ended March 31, 2015 and 2016 were $4,579 and $5,250, respectively. These costs have been allocated to cost of revenue and selling, general, and administrative expenses. Stock options All options granted under the 2007 Omnibus Plan or any prior plans are exercisable into common shares of the Company, have a contractual period of ten years and vest over four to five years unless specified otherwise in the applicable award agreement. The Company recognizes compensation cost over the vesting period of the option. Compensation cost is determined on the date of grant by estimating the fair value of an option using the Black-Scholes option-pricing model. The following table shows the significant assumptions used in connection with the determination of the fair value of options granted in the three months ended March 31, 2015. No options were granted in the three months ended March 31, 2016.
|  | Three months ended March 31, 2015 |
Dividend yield |  |  | — |
Expected life (in months) |  |  | 84 |
Risk free rate of interest |  |  | 1.99 | %
Volatility |  |  | 34.97 | %
A summary of stock option activity during the three months ended March 31, 2016 is set out below:
|  | Three months ended March 31, 2016 |
|  | Shares arising out of options |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual life (years) |  |  | Aggregate intrinsic value |
Outstanding as of January 1, 2016 |  |  | 5,986,845 |  |  | $ | 16.99 |  |  |  | 5.8 |  |  | $ | — |
Granted |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | (25,000 | ) |  |  | 19.35 |  |  |  | — |  |  |  | — |
Expired |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Exercised |  |  | (248,316 | ) |  |  | 16.96 |  |  |  | — |  |  |  | 2,539 |
Outstanding as of March 31, 2016 |  |  | 5,713,529 |  |  | $ | 16.98 |  |  |  | 5.5 |  |  | $ | 59,157 |
Vested as of March 31, 2016 and expected to vest thereafter (Note a) |  |  | 5,541,849 |  |  | $ | 16.76 |  |  |  | 5.5 |  |  | $ | 57,790 |
Vested and exercisable as of March 31, 2016 |  |  | 3,492,030 |  |  | $ | 15.34 |  |  |  | 4.3 |  |  | $ | 41,382 |
Weighted average grant date fair value of grants during the period |  | $ | — |  |  |  |  |  |  |  |  |  |  |  |  |
a) | Options expected to vest reflect an estimated forfeiture rate.
As of March 31, 2016, the total remaining unrecognized stock-based compensation cost for options expected to vest amounted to $12,484, which will be recognized over the weighted average remaining requisite vesting period of 2.2 years. Restricted Share Units The Company has granted restricted share units, or RSUs, under the 2007 Omnibus Plan. Each RSU represents the right to receive one Company common share at a future date. The fair value of each RSU is the market price of one common share of the Company on the date of the grant. RSUs granted to date have graded vesting schedules of three months to four years. The compensation expense is recognized on a straight-line basis over the vesting term. A summary of RSUs granted during the three months ended March 31, 2016 is set out below:
|  | Three months ended March 31, 2016 |
|  | Number of Restricted Share Units |  |  | Weighted Average Grant Date Fair Value |
Outstanding as of January 1, 2016 |  |  | 157,390 |  |  | $ | 17.67 |
Granted |  |  | — |  |  |  | — |
Vested (Note a) |  |  | (5,256 | ) |  |  | 14.87 |
Forfeited |  |  | (1,135 | ) |  |  | 14.18 |
Outstanding as of March 31, 2016 |  |  | 150,999 |  |  | $ | 17.80 |
Expected to vest (Note b) |  |  | 143,800 |  |  |  |  |
(a) | RSUs that vested during the period covered were net settled upon vesting by issuing 3,228 shares (net of minimum statutory tax withholding).
(b) | The number of RSUs expected to vest reflects an estimated forfeiture rate.
92,692 RSUs vested in the year ended December 31, 2014, in respect of which 91,963 shares were issued in January 2016 after withholding shares to the extent of the minimum statutory withholding taxes. 53,546 RSUs vested in the year ended December 31, 2015, shares in respect of which will be issuable on December 31, 2016 after withholding shares to the extent of minimum statutory withholding taxes. As of March 31, 2016, the total remaining unrecognized stock-based compensation cost related to RSUs amounted to $1,298, which will be recognized over the weighted average remaining requisite vesting period of 2.0 years. Performance Units The Company also grants stock awards in the form of performance units, or PUs, under the 2007 Omnibus Plan. Each PU represents the right to receive one Company common share at a future date based on the Company’s performance against specified targets. PUs granted to date have vesting schedules of six months to three years. The fair value of each PU is the market price of one common share of the Company on the date of grant and assumes that performance targets will be achieved. PUs granted under the plan are subject to cliff vesting. The compensation expense for such awards is recognized on a straight-line basis over the vesting terms. During the performance period, the Company’s estimate of the number of shares to be issued is adjusted upward or downward based upon the probability of achievement of the performance targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets. A summary of PU activity during the three months ended March 31, 2016 is set out below:
|  | Three months ended March 31, 2016 |
|  | Number of Performance Units |  |  | Weighted Average Grant Date Fair Value |  |  | Maximum Shares Eligible to Receive |
Outstanding as of January 1, 2016 |  |  | 2,499,322 |  |  | $ | 19.95 |  |  |  | 2,499,322 |
Granted |  |  | — |  |  |  | — |  |  |  | — |
Vested |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | (62,411 | ) |  |  | 19.56 |  |  |  | (62,411 | )
Adjustment upon final determination of level of performance goal achievement (Note a) |  |  | 7,274 |  |  |  | 22.72 |  |  |  |  |
Adjustment upon final determination of level of performance goal achievement (Note a) |  |  |  |  |  |  |  |  |  |  | 7,274 |
Outstanding as of March 31, 2016 |  |  | 2,444,185 |  |  | $ | 19.96 |  |  |  | 2,444,185 |
Expected to vest (Note b) |  |  | 2,211,468 |  |  |  |  |  |  |  |  |
(a) | Represents an adjustment made in March 2016 to the number of shares subject to the PUs granted in 2015 upon certification of the level of achievement of the performance targets underlying such awards.
(b) | The number of PUs expected to vest has been adjusted by an estimated forfeiture rate.
As of March 31, 2016, the total remaining unrecognized stock-based compensation costs related to PUs amounted to $20,591, which will be recognized over the weighted average remaining requisite vesting period of 1.5 years. Employee Stock Purchase Plan (ESPP) On May 1, 2008, the Company adopted the Genpact Limited U.S. Employee Stock Purchase Plan and the Genpact Limited International Employee Stock Purchase Plan (together, the “ESPP”). The ESPP allows eligible employees to purchase the Company’s common shares through payroll deductions at 90% of the closing price of the Company’s common shares on the last business day of each purchase interval. The dollar amount of common shares purchased under the ESPP must not exceed 15% of the participating employee’s base salary, subject to a cap of $25 per employee per calendar year. With effect from September 1, 2009, the offering periods commence on the first business day in March, June, September and December of each year and end on the last business day in the subsequent May, August, November and February of each year. 4,200,000 common shares have been reserved for issuance in the aggregate over the term of the ESPP. During the three months ended March 31, 2015 and 2016, 34,162 and 30,487 common shares, respectively, were issued under ESPP. The ESPP is considered compensatory under the FASB guidance on Compensation-Stock Compensation. The compensation expense for the ESPP is recognized in accordance with the FASB guidance on Compensation-Stock Compensation. The compensation expense for the ESPP during the three months ended March 31, 2015 and 2016 was $81 and $86, respectively, and has been allocated to cost of revenue and selling, general, and administrative expenses.

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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 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: 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=51659978&loc=d3e25284-112666 Reference 3: 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 4: 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 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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