STOCK-BASED COMPENSATION

Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the vesting period, net of estimated forfeitures.

The Company awards non-vested stock to employees, directors and executive officers in the form of Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”), market-based RSAs and RSUs, performance-based RSAs and RSUs and stock options. The Compensation Committee of the Company’s Board of Directors approves stock-based compensation awards for all employees and executive officers of the Company. The Corporate Governance and Nominating Committee of the Company’s Board of Directors approves stock-based compensation awards for all non-employee directors of the Company. The Company uses the fair-market value of the Company’s common stock on the date the award is approved to measure fair value for service-based and performance-based awards, a Monte Carlo simulation model to determine both the fair value and requisite service period of market-based awards and the Black-Scholes option-pricing model to determine the fair value of stock option awards. The Company presents as a financing activity in the consolidated statement of cash flows the benefits of tax deductions in excess of the tax-effected compensation of the related stock-based awards for the options exercised and vested RSAs and RSUs.

Compensation expense for stock option awards and service-based awards is recognized ratably over the requisite service period. For market-based awards, compensation expense is recognized over the requisite service period as derived using a Monte Carlo simulation model. If an award includes both a market and performance or service condition, the requisite service period is adjusted in the event the market condition is satisfied prior to the end of the derived service period. For performance-based awards, compensation expense is recognized based on the probability of achieving the performance conditions associated with the respective shares, as determined by management.

The Company recognized pre-tax compensation expense in the consolidated statements of operations related to stock-based compensation as follows, excluding discontinued operations:



	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Non-vested stock, included in salaries and related	$	3,368	$	6,612	$	11,386	$	23,548

Market-Based Awards -During the first nine months of 2015, the Company granted an aggregate of 350,000 market-based RSUs that will vest contingent on meeting certain stock price targets within three years of the grant date. The market-based RSUs vest in four tranches, with each tranche equaling 25% of the award, if, and when, certain stock price targets are achieved and maintained for 30 consecutive trading days, subject to the recipient’s continued employment and service through the one year anniversary of the target stock price being achieved.

Performance-Based Awards -During the first nine months of 2015, the Company granted 350,000 RSUs subject to certain specified performance-based conditions.

Service-Based Awards - During the first nine months of 2015, the Company granted an aggregate of 614,384 service-based RSUs. The RSUs vest in various increments on the anniversaries of the individual grant dates, through September 16, 2019, subject to the recipient's continued employment or service through each applicable vesting date.

The Company’s non-vested stock activity is as follows (shares in thousands):



	Nine months ended September 30,
	2015				2014
	Shares		Weighted Average Fair Value at Grant Date		Shares		Weighted Average Fair Value at Grant Date
Non-vested at beginning of period	8,554		$	4.85	13,142		$	5.58
Granted RSUs	1,314		$	5.03	550		$	5.75
Forfeited	(1,003	)	$	4.90	(372	)	$	5.52
Vested	(4,136	)	$	4.92	(2,280	)	$	9.53
Non-vested at end of period	4,729		$	4.82	11,040		$	4.71

As of September 30, 2015, the unrecognized compensation expense related to non-vested stock was $12,645 which is expected to be recognized over a weighted-average period of 1.5 years.

The Company’s stock option activity is as follows (shares in thousands):



	Nine months ended September 30,
	2015					2014
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding as of the beginning of the period	146			$	32.32	928			$	29.68
Exercised	—			$	—	—			—
Forfeited/expired/cancelled	(39		)	$	30.75	(379		)	$	24.62
Outstanding at end of the period	107			$	32.89	549			$	32.99
Options exercisable at end of period	107			$	32.89	549			$	32.99
Aggregate intrinsic value of options exercised during the period	$	—				$	—

All stock options granted were fully expensed prior to January 1, 2014.

On May 15, 2015, the Company issued a total of 82,257 shares of our common stock to an employee and a consultant in consideration for services under an employment agreement and a consulting agreement entered into as part of a prior business combination. The securities were issued pursuant to the exemption contained in Section 4(a)(2) of the Securities Act of 1933, as amended.