6. Share-Based Compensation

Share-Based Incentive Compensation Plans

Under the Company’s 2009 Omnibus Incentive Compensation Plan (“2009 Omnibus Plan”), we are authorized to issue up to 6,000,000 shares of common stock, of which no more than 5,400,000 shares of common stock may be issued in the form of restricted or unrestricted shares or other share-based awards. At December 31, 2014, 445,861 shares of common stock were available for grant under our 2009 Omnibus Plan, all of which may be granted as share-based awards.

On July 30, 2014, the Company issued 148,944 option and 41,624 restricted share awards as a material inducement to certain executives to accept offers of employment. These awards are being made outside of the Company’s shareholder approved equity compensation plans but are generally subject to the same terms and conditions as apply to awards granted under the 2009 Omnibus Plan.

On April 1, 2014, certain executive officers of the Company were granted 234,536 cash-settled awards under the Company’s 2014 executive officer long-term incentive program. These awards include 97,752 cash-settled stock appreciation rights (the “Executive SARs”) and 36,851 cash-settled units, which vest pro rata on the first through third anniversaries of the date of grant, and 99,933 cash-settled performance units. The cash-settled performance units are subject to performance conditions based on the adjusted total shareholder return of the Company as compared to the adjusted total shareholder return of the adjusted S&P 500 for the three-year period ending March 31, 2017. As these awards will be settled in cash, they have been recorded as liabilities and are included in “Other Liabilities” on the Company’s Condensed Consolidated Balance Sheet at fair value. Subsequent changes in the fair value of these awards will be included in the related share-based compensation expense recorded over the vesting period. During the year ended December 31, 2014, 49,360 Executive SARs, 18,607 cash-settled units and 50,461 cash-settled performance units were forfeited prior to the completion of the vesting requirements. As of December 31, 2014, the liability for these awards was $0.7 million and there was $2.0 million of unrecognized compensation cost related to the 2014 executive officer long-term incentive program.

For the years ended December 31, 2014 and 2013, respectively, a total of 18,496 and 49,740 cash-settled awards were made to employees in certain foreign countries. As of December 31, 2014, there was $2.2 million of unrecognized compensation cost related to unvested cash-based awards to foreign employees.

For the years ended December 31, 2013 and 2012, respectively, a total of 111,000 and 67,596 restricted stock units were awarded, subject to performance conditions that include return on equity targets and total shareholder return of the Company as compared to the adjusted shareholder return of the adjusted S&P 500. As of December 31, 2014, these awards have either been forfeited or are not expected to vest based on the performance conditions.

Share-Based Compensation Expense

The table below reflects the total share-based compensation expense recognized in our Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014, 2013 and 2012:


	2014						2013				2012
Income Statement Classification	Options⁽¹⁾			Restricted Shares⁽²⁾⁽³⁾			Options⁽¹⁾		Restricted Shares⁽²⁾⁽³⁾		Options⁽¹⁾		Restricted Shares⁽²⁾⁽³⁾
Direct cost of revenues	$	5,404		$	8,951		$	6,807	$	9,181	$	6,012	$	10,000
Selling, general and administrative expense		1,783			8,508			1,849		10,053		1,836		10,347
Special charges ⁽⁴⁾		(126	)		(990	)		1,482		5,938		584		230

Share-based compensation expense before income taxes		7,061			16,469			10,138		25,172		8,432		20,577
Income tax benefit		2,698			6,490			4,101		9,094		3,104		6,870

Share-based compensation, net of income taxes	$	4,363		$	9,979		$	6,037	$	16,078	$	5,328	$	13,707

⁽¹⁾	Includes options and cash-settled stock appreciation rights.

⁽²⁾	Includes restricted share awards and performance and market condition restricted share units.

⁽³⁾	Includes cash-settled restricted stock units.

⁽⁴⁾

Special charges of $0.2 million equity award expense acceleration and $0.1 million option expense acceleration are net of forfeitures of $1.2 million and $0.2 million, respectively, for the year ended December 31, 2014. (See Note 4 to the Consolidated Financial Statements for information related to the special charges).

Stock Options

We use the Black-Scholes option-pricing model to value our option grants using the assumptions in the following table:


	Year Ended December 31,
	2014	2013	2012
Assumptions
Risk-free interest rate	0.99% – 1.94%	0.77% – 1.71%	0.54% – 1.11%
Dividend yield	0%	0%	0%
Expected term	3 – 6 years	5 – 6 years	4 – 6 years
Stock price volatility	31.05% – 37.60%	37.30% – 38.27%	37.94% – 40.04%

The following table summarizes the option activity under our Equity Compensation Plans as of and for the year ended December 31, 2014. The aggregate intrinsic value in the table below represents the total pre-tax intrinsic value (the difference between the closing price of our common stock on the last trading day of 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2014. The aggregate intrinsic value changes based on fluctuations in the fair market value per share of our common stock.


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Options outstanding, December 31, 2013		4,357		$	37.68
Options granted		611		$	32.94
Options exercised		(470	)	$	27.95
Options forfeited		(158	)	$	38.61

Options outstanding, December 31, 2014		4,340		$	38.03		5.4	$	17,979

Options exercisable, December 31, 2014		2,496		$	39.95		3.7	$	10,915

Cash received from option exercises for the years ended December 31, 2014, 2013 and 2012 was $11.3 million, $35.7 million and $7.9 million, respectively. The actual tax benefit realized from stock options exercised totaled $1.9 million, $5.5 million and $1.4 million, respectively, for the years ended December 31, 2014, 2013 and 2012.

The intrinsic value of stock options exercised is the amount by which the market value of our common stock on the exercise date exceeds the exercise price. The total intrinsic value of stock options exercised for the years ended December 31, 2014, 2013 and 2012 was $4.4 million, $15.1 million and $3.1 million, respectively.

The table below reflects the weighted-average grant date fair value per share of stock options and restricted shares and stock units awarded during the years ended December 31, 2014, 2013 and 2012:


	Year Ended December 31,
	2014		2013		2012
Weighted average fair value of grants
Stock options	$	10.77	$	13.15	$	12.99
Restricted shares	$	32.87	$	36.31	$	36.55

Following is a summary of the status of stock options outstanding and exercisable at December 31, 2014:


	Options Outstanding						Options Exercisable
Exercise Price Range	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Shares		Weighted- Average Exercise Price
$19.00 – $29.19		901	$	27.06		2.3		811	$	26.92
$29.75 – $34.62		908	$	32.28		8.2		147	$	33.22
$35.18 – $37.83		919	$	36.73		6.6		329	$	36.81
$37.95 – $43.27		913	$	40.61		5.9		533	$	40.53
$44.47 – $70.55		699	$	57.99		3.2		676	$	58.13

		4,340						2,496

As of December 31, 2014, there was $11.1 million of unrecognized compensation cost related to unvested stock options. That cost is expected to be recognized ratably over a weighted-average period of 2.6 years.

Restricted Share Awards

A summary of our unvested restricted share activity during the year ended December 31, 2014 is presented below. The fair value of unvested restricted share awards is determined based on the closing market price per share of our common stock on the grant date.


	Shares			Weighted- Average Grant- Date Fair Value
Unvested restricted share awards outstanding, December 31, 2013		1,244		$	37.14
Restricted share awards granted		422		$	33.31
Restricted share awards vested		(598	)	$	36.61
Restricted share awards forfeited		(36	)	$	34.84

Unvested restricted share awards outstanding, December 31, 2014		1,032		$	35.96

As of December 31, 2014, there was $17.2 million of unrecognized compensation cost related to unvested restricted share awards. That cost is expected to be recognized ratably over a weighted-average period of 3.2 years. The total fair value of restricted share awards that vested during the years ended December 31, 2014, 2013 and 2012 was $20.5 million, $17.9 million, and $16.9 million, respectively.

Restricted Stock Units

A summary of our Restricted Stock Units activity during the year ended December 31, 2014 is presented below. The aggregate intrinsic value in the table below represents the total pre-tax intrinsic value based on the closing price of our common stock on the last trading day of 2014. The fair value of Restricted Stock Units is determined based on the closing market price per share of our common stock on the grant date.


	Shares			Weighted- Average Grant- Date Fair Value		Intrinsic Value
Restricted Stock Units outstanding, December 31, 2013		980		$	37.54
Restricted Stock Units granted		86		$	30.71
Restricted Stock Units released		(47	)	$	37.78
Restricted Stock Units forfeited		(243	)	$	36.75

Restricted Stock Units outstanding, December 31, 2014		776		$	37.00	$	29,965

The intrinsic value of Restricted Stock Units released reflects the market value of our common stock on the date of release. The total intrinsic value of Restricted Stock Units released was $1.7 million, $4.7 million and $3.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.

As of December 31, 2014, there was $1.1 million of unrecognized compensation cost related to unvested Restricted Stock Units. That cost is expected to be recognized ratably over a weighted-average period of 1.7 years. The total fair value of Restricted Stock Units that vested during the years ended December 31, 2014, 2013 and 2012 was $2.7 million, $4.6 million, and $4.0 million, respectively.