Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

4. Stock-Based Compensation

     The Company recorded $5.0 million and $4.3 million of stock-based compensation expense for the three months ended September 30, 2011 and 2010, respectively, and $14.2 million and $13.9 million for the nine months ended September 30, 2011 and 2010, respectively. Project personnel expenses, selling and marketing expenses and general and administrative expenses appearing in the consolidated and condensed statements of operations include the following stock-based compensation amounts (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
Project personnel expenses	$	3,741	$	2,844		$	9,773	$	7,948
Selling and marketing expenses		190		(7	)		804		844
General and administrative expenses		1,087		1,452			3,660		5,132
Total stock-based compensation	$	5,018	$	4,289		$	14,237	$	13,924

     Stock-based compensation costs capitalized relating to individuals working on internally developed software were immaterial during all periods presented. The Company values restricted stock units (“RSUs”) based on performance conditions and RSUs contingent on employment based on the fair market value on the date of grant, which is equal to the quoted market price of the Company’s common stock on the date of grant.

     The Company recognizes stock-based compensation expense net of an estimated forfeiture rate and recognizes expense for only those awards expected to vest on a straight-line basis over the requisite service period of the award, when the only condition to vesting is continued employment. If vesting is subject to a market or performance condition, vesting is based on the derived service period. The Company estimates its forfeiture rate based on its historical experience.

     During the first quarter of 2010, the Company granted a special dividend equivalent payment of $0.35 per RSU for each RSU award outstanding as of March 1, 2010, to be paid in shares when the underlying award vests. If the underlying RSU does not vest, the dividend equivalent is forfeited. Under the terms of the Company’s RSU awards, RSUs were not entitled to dividends. As a result, the special dividend declared on outstanding RSUs was accounted for as a modification of the original awards, and the cost of the dividend equivalent is being recognized as stock-based compensation in the same manner in which the Company recognizes stock-based compensation for RSUs. The Company estimated the total additional stock-based compensation expense related to the special dividend equivalent on RSUs, net of forfeitures, to be approximately $2.0 million. This expense is being recognized through March 1, 2014, with the amounts recorded in each period to be commensurate with the vesting of the underlying awards.

     Effective June 1, 2010, the Company amended its standard RSU agreements such that, if the Company declares a cash dividend on common stock, RSU awards are entitled to dividend equivalent payments. Dividend equivalents may be paid either in cash or in shares of common stock, at the Company’s discretion, if and when the underlying award vests. As a result of these amendments, for any dividend equivalents granted on or after June 1, 2010, the Company does not record any stock-based compensation expense.

     During the third quarter of 2011, the Company granted a special dividend equivalent payment of $0.35 per RSU for each RSU award outstanding as of August 15, 2011, to be paid in shares when the underlying award vests. If the underlying RSU award does not vest, the dividend equivalent is forfeited.

     During the second quarter of 2010, the Company granted RSUs with service and performance conditions to its Chief Executive Officer (“CEO”). Up to 100,000 units will vest on March 1, 2013 if the performance conditions are met for the three year period ending December 31, 2012. The CEO was also granted an additional 50,000 RSUs that will vest based on the achievement of strategic objectives that will be determined by the Company’s Board of Directors.

     During the second quarter of 2011, the Company granted an aggregate of 294,000 RSUs with service and performance conditions to six members of its leadership team. Up to 294,000 units will vest on April 1, 2014 if the performance conditions are met for the years ending December 31, 2011, 2012, and 2013 (98,000 units for each year). Any units which become eligible for vesting as a result of fulfillment of the performance conditions will vest only if the recipient remains continuously employed with the Company through April 1, 2014.

     The following table presents a summary of activity relating to stock options under all stock option plans for the nine months ended September 30, 2011 (in thousands, except prices):

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding as of December 31, 2010		3,246		$	5.89
Options exercised		(1,134	)	$	7.39
Options forfeited/cancelled		(76	)	$	10.42
Outstanding as of September 30, 2011		2,036		$	4.89
Vested and expected to vest as of September 30, 2011		2,036		$	4.89
Options exercisable as of September 30, 2011		2,035		$	4.89
Aggregate intrinsic value of outstanding	$	10,692
Aggregate intrinsic value of vested and expected to vest	$	10,691
Aggregate intrinsic value of exercisable	$	10,688

     The aggregate intrinsic value of stock options exercised in the nine months ended September 30, 2011 and 2010 was $6.0 million and $6.1 million, respectively, determined at the date of exercise. As of September 30, 2011, the weighted average remaining contractual term for stock options outstanding, vested and expected to vest, and exercisable was 1.9 years. As of September 30, 2011, unrecognized compensation expense related to non-vested stock options was less than $0.1 million, net of estimated forfeitures, which is expected to be recognized over a weighted average period of less than one year.

     The following table presents a summary of activity relating to RSUs for the nine months ended September 30, 2011 (in thousands, except prices):

	Number of Shares			Weighted
	Underlying			Average Grant
	Restricted Units			Date Fair Value
Unvested as of December 31, 2010		6,188		$	6.23
Restricted units granted		2,439		$	11.88
Restricted units vested		(2,113	)	$	12.89
Restricted units forfeited/cancelled		(427	)	$	9.05
Unvested as of September 30, 2011		6,087		$	5.98
Expected to vest as of September 30, 2011		5,623		$	5.98

     The weighted average grant date fair value of RSUs granted during the nine months ended September 30, 2011 and 2010 was $11.88 and $9.40 per RSU, respectively. The aggregate intrinsic value of RSUs vested during the nine months ended September 30, 2011 and 2010 was $27.2 million and $26.8 million, respectively. As of September 30, 2011, the aggregate intrinsic value of non-vested RSUs, net of estimated forfeitures, was $61.7 million. As of September 30, 2011, unrecognized compensation expense related to non-vested RSUs was approximately $42.3 million, net of estimated forfeitures, which is expected to be recognized over a weighted average period of approximately 2.5 years.