STOCK-BASED COMPENSATION

Incentive Compensation Plan

The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated April 26, 2012 (the “ISAP”), pursuant to which it can issue equity-based compensation incentives to eligible participants. The ISAP permits the granting of stock options, restricted stock, restricted stock units, and other types of equity-based awards. The Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) will establish such conditions as it deems appropriate on the granting or vesting of stock options, restricted stock, restricted stock units and other types of equity-based awards. The Company grants primarily restricted stock to its employees, although the Company has recently also granted restricted stock units to certain of its employees. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock of the Company issued under the ISAP.

The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or other employee of the Company or its affiliates or individuals engaged to become an officer or employee; consultants or other independent contractors who provide services to the Company or its affiliates; and non-employee directors of the Company. As of March 31, 2015, there were 1,694,613 shares of the Company’s common stock available for future issuance under the ISAP.

A summary of the quantity and vesting conditions for stock-based awards granted to the Company's employees for the three months ended March 31, 2015 was as follows:



Vesting conditions	Number of Shares of Restricted Stock Granted	Number of Restricted Stock Units Granted	Total
Performance and service conditions (1) (2)	590,100	105,400	695,500


(1)	The performance conditions with respect to restricted stock may be satisfied as follows:


(a)	For employees from North America 50% of the shares of restricted stock may be earned on the basis of performance as measured by a “EBITDA Ratio,” and 50% of the shares of restricted stock may be earned on the basis of performance as measured by a “Gross Margin Ratio”;


(b)	For employees from APAC and Europe 80% of the shares of restricted stock may be earned on the basis of performance as measured by a “EBITDA Ratio,” and 20% of the shares of restricted stock may be earned on the basis of performance as measured by a “Gross Margin Ratio”; and


(c)	For employees from Corporate office 80% of the shares of restricted stock may be earned on the basis of performance as measured by a “EBITDA Ratio,” and 20% of the shares of restricted stock may be earned on the basis of performance as measured by a “Corporate Costs Ratio.”


(2)	To the extent shares are earned on the basis of performance, such shares will vest on the basis of service as follows:


(a)	One-third of the shares vest on first anniversary;


(b)	One-third of the shares vest on second anniversary; and


(c)	One-third of the shares vest on third anniversary; provided that, in each case, the employee remains employed by the Company from the grant date through the applicable service vesting date.

The Company also maintains the Director Deferred Share Plan (the “Director Plan”) pursuant to which it can issue restricted stock units to its non-employee directors. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock issued under the ISAP upon a director ceasing service as a member of the Board of Directors of the Company. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director's retirement accounts under the Director Plan. During the three months ended March 31, 2015, the Company granted 39,264 restricted stock units to its non-employee directors pursuant to the Director Plan.

For the three months ended March 31, 2015 and 2014, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units was as follows:



	Three Months Ended March 31,
	2015		2014
Stock options	$	—	$	57
Restricted stock	385		409
Restricted stock units	148		30
Total	$	533	$	496

Stock Options

As of March 31, 2015, the Company had no unrecognized stock-based compensation expense related to outstanding unvested stock options.

Changes in the Company’s stock options for the three months ended March 31, 2015 and 2014 were as follows:



	Three Months Ended March 31,
	2015				2014
	Number of Options		Weighted Average Exercise Price per Share		Number of Options		Weighted Average Exercise Price per Share
Options outstanding at January 1,	756,800		$	8.78	800,350		$	9.15
Expired/forfeited	(109,000	)	13.25		(14,050	)	13.64
Options outstanding at March 31,	647,800		8.03		786,300		9.07
Options exercisable at March 31,	647,800		$	8.03	586,300		$	10.40

Restricted Stock

As of March 31, 2015, the Company had approximately $2,365 of unrecognized stock-based compensation expense related to outstanding unvested restricted stock. The Company expects to recognize that cost over a weighted average service period of 1.76 years.

Changes in the Company’s restricted stock for the three months ended March 31, 2015 and 2014 were as follows:



	Three Months Ended March 31,
	2015				2014
	Number of Shares of Restricted Stock		Weighted Average Grant Date Fair Value		Number of Shares of Restricted Stock		Weighted Average Grant Date Fair Value
Unvested restricted stock at January 1,	803,999		$	3.00	997,802		$	3.00
Granted	590,100		2.84		5,000		3.87
Vested	(132,775	)	3.50		(143,645	)	5.75
Forfeited	(171,622	)	3.17		(435,896	)	2.30
Unvested restricted stock at March 31,	1,089,702		$	2.82	423,261		$	2.80

Restricted Stock Units

As of March 31, 2015, the Company had approximately $364 of unrecognized stock-based compensation expense related to outstanding unvested restricted stock units. The Company expects to recognize that cost over a weighted average service period of 1.8 years.

Changes in the Company’s restricted stock units for the three months ended March 31, 2015 and 2014 were as follows:



	Three Months Ended March 31,
	2015				2014
	Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value		Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value
Unvested restricted stock units at January 1,	119,940		$	3.57	115,869		$	3.65
Granted	144,664		2.84		—		—
Vested	(56,310	)	2.95		(2,792	)	3.16
Forfeited	(42,500	)	3.21		(48,160	)	2.42
Unvested restricted stock units at March 31,	165,794		$	3.24	64,917		$	4.58

Defined Contribution Plan and Employer-matching contributions

The Company maintains the Hudson Global, Inc. 401(k) Savings Plan (the “401(k) plan”). The 401(k) plan allows eligible employees to contribute up to 15% of their earnings to the 401(k) plan. The Company has the discretion to match employees’ contributions up to 3% of the employees' earnings through a contribution of the Company’s common stock to the 401(k) plan. Vesting of the Company’s contribution occurs over a five-year period. For the three months ended March 31, 2015 and 2014, the Company’s current year expenses and contributions to satisfy the prior years’ employer-matching liability for the 401(k) plan were as follows:



	Three Months Ended
	March 31,
($ in thousands, except otherwise stated)	2015		2014
Expense recognized for the 401(k) plan	$	75	$	162
Contributions to satisfy prior years' employer-matching liability
Number of shares of the Company's common stock issued (in thousands)	116		—
Market value per share of the Company's common stock on contribution date (in dollars)	$	2.71	$	—
Non-cash contribution made for employer matching liability	$	314	$	—
Additional cash contribution made for employer-matching liability	$	—	$	—
Total contribution made for employer-matching liability	$	314	$	—