4.	STOCK-BASED COMPENSATION

Stock-based compensation cost 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, stock options and performance-based RSAs and RSUs. 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 RSAs and RSUs vested.

The Company recognized pre-tax compensation expense recorded in salaries and related in the consolidated statements of operations as follows:


	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Non-vested stock, included in salaries and related	$	4,901	$	5,683	$	17,165	$	21,138
Stock options, included in salaries and related		—		—		—		51

Total	$	4,901	$	5,683	$	17,165	$	21,189

Service-Based Awards–During 2013, the Company granted an aggregate of 1,212,848 and 266,500 service-based RSAs and RSUs, respectively, to approximately 75 employees, executive officers and directors of the Company. The RSAs and RSUs vest in various increments on the anniversaries of the individual grant dates, through September 17, 2017, subject to the recipient’s continued employment or service through each applicable vesting date. Compensation expense for service-based awards is recognized ratably over the requisite service period.

Market-Based Awards–During 2013, the Company granted 5,323,790 market-based RSUs to approximately 450 employees that will vest contingent on meeting certain stock price targets within five 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 15 trading days in a consecutive 30-day trading period, subject to the recipient’s continued employment and service through the one year anniversary of the target stock price being achieved. Compensation expense for market-based awards is recognized over the requisite service period as derived using a Monte Carlo simulation model.

Performance-Based Awards–During 2013, the Company granted 2,688,900 RSUs to approximately 800 employees, subject to certain specified performance-based conditions. Compensation expense is recognized based on the probability of achieving the performance conditions associated with the respective shares, as determined by management.

As of September 30, 2013, the unrecognized compensation expense related to non-vested stock was $53,266 which is expected to be recognized over a weighted-average period of 1.9 years.

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


	Nine months ended September 30,
	2013					2012
	Shares			Weighted Average Fair Value at Grant Date		Shares			Weighted Average Fair Value at Grant Date
Non-vested at beginning of period		7,639		$	10.01		7,432		$	13.85
Granted RSAs		1,213		$	4.72		3,147		$	6.88
Granted RSUs		8,279		$	3.98		1,222		$	6.89
Forfeited		(718	)	$	10.09		(692	)	$	13.65
Vested		(2,963	)	$	10.15		(3,000	)	$	14.00

Non-vested at end of period		13,450		$	5.79		8,109		$	10.06

In connection with the Company’s corporate restructuring programs, the Company accelerated the vesting of 418,333 RSAs and RSUs to two former executives in the second quarter of 2013, the expense of which is recorded in restructuring and discontinued operations.

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


	Nine months ended September 30,
	2013					2012
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding as of the beginning of the period		1,029		$	29.04		1,560		$	24.10
Exercised		—		$	—		(3	)	$	9.11
Forfeited/expired/cancelled		(98	)	$	23.17		(522	)	$	14.63

Outstanding at the end of the period		931		$	29.66		1,035		$	29.01

Options exercisable at September 30, 2013		931		$	29.66		1,035		$	29.01

Aggregate intrinsic value of options exercised during the period	$	—				$	—

Aggregate intrinsic value is calculated as the difference between the closing market price of the Company’s common stock as of each exercise date and the exercise price of the underlying options. As of September 30, 2013, all stock options granted have been fully expensed.