Total Expense Recorded for Stock Based Compensation

The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands):

	Nine months ended
	September 30,
	2014		2013
Service condition stock based compensation expense	$	5,612	$	5,687
Performance condition stock based compensation expense		4,202		2,653
Stock based compensation expense under the Plan		9,814		8,340
Canada EB Plan stock based compensation expense		289		172
Total stock based compensation expense	$	10,103	$	8,512

Status and Changes in Restricted Stock Grants that are Subject to a Service Condition

We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period.

				Weighted Average
				Grant Date Fair
Restricted shares subject only to a service condition:	Shares			Value

Non-vested, January 1, 2014		511,060		$	40.49
Granted		182,990			58.78
Vested		(186,680	)		38.76
Forfeited		(31,291	)		47.87
Non-vested, September 30, 2014		476,079			47.72

Status and Changes in Restricted Stock Grants that are Subject to a Service Condition

Under the Plan, certain key employees were provided agreements for grants of restricted shares that vest over a five year period provided that annual performance goals established by the Compensation Committee of Westwood’s board of directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income, which is derived from the Company’s audited financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In February 2014, the Compensation Committee established the 2014 goal as adjusted pre-tax income of at least $34.0 million, representing a five-year compound annual growth rate in excess of 10% over annual adjusted pre-tax income recorded in 2009. Our adjusted pre-tax income is determined based on our audited financial statements and is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees and (ii) performance-based restricted stock awards, excluding start up, non-recurring and similar expense items. In the first quarter of 2014, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed.

				Weighted Average
				Grant Date Fair
Restricted shares subject to service and performance conditions:	Shares			Value

Non-vested, January 1, 2014		93,000		$	44.55
Granted		101,313			58.59
Vested		(93,000	)		44.55
Forfeited		—			—
Non-vested, September 30, 2014		101,313			58.59