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, 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 recorded in salaries and related in the consolidated statements of operations as follows:


	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Non-vested stock, included in salaries and related	$	9,063	$	5,470	$	17,236	$	12,264

During the first six months of 2014, the Company granted an aggregate of 191,115 service-based RSUs. The RSUs vest in various increments on the anniversaries of the individual grant dates, through June 4, 2018, subject to the recipient’s continued employment or service through each applicable vesting date. The Company also granted 35,000 RSUs subject to certain specified performance-based conditions.

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


	Six months ended June 30
	2014					2013
	Shares			Weighted Average Fair Value at Grant Date		Shares			Weighted Average Fair Value at Grant Date
Non-vested at beginning of period		13,142		$	5.58		7,639		$	10.01
Granted RSAs		—		$	—		1,165		$	4.68
Granted RSUs		226		$	5.84		267		$	4.38
Forfeited		(259	)	$	5.77		(629	)	$	9.32
Vested		(1,762	)	$	10.35		(2,516	)	$	10.59

Non-vested at end of period		11,347		$	4.77		5,926		$	8.43

As of June 30, 2014, the unrecognized compensation expense related to non-vested stock was $35,445 which is expected to be recognized over a weighted-average period of 1.3 years.

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


	Six months ended June 30,
	2014					2013
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding as of the beginning of the period		928		$	29.68		1,029		$	29.04
Exercised		—		$	—		—			—
Forfeited/expired/cancelled		(371	)	$	24.32		(69	)	$	20.23

Outstanding at end of the period		557		$	33.09		960		$	29.68

Options exercisable at end of period		557		$	33.09		960		$	29.68

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

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