STOCK-BASED COMPENSATION

Equity Compensation Plans

The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan (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, and restricted stock units as well as 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 or restricted stock. While the Company historically granted both stock options and restricted stock to its employees, since 2008 the Company has primarily granted restricted stock to its employees.

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 December 31, 2015, there were 792,326 shares of the Company’s common stock available for future issuance.

All share issuances related to stock compensation plans are issued from the aforementioned stock available for future issuance under stockholder approved compensation plans.

The Company’s stock plan agreements provided that a change in control of the Company will occur if, among other things, individuals who were directors as of the date of the agreement and any new director whose appointment or election was approved or recommended by a vote of at least two-thirds of the directors then in office who were either directors on the date of the agreement or whose appointment or election was previously so approved or recommended (each, a “continuing director”) cease to constitute a majority of the Company’s directors. A change in control occurred as of the Company's 2015 annual meeting of stockholders on June 15, 2015 under these agreements because continuing directors ceased to constitute a majority of the Company's directors. As a result, certain equity awards vested resulting in an accelerated stock-based compensation expense of $2,541 for the year ended December 31, 2015.

A summary of the quantity and vesting conditions for stock-based awards granted to the Company's employees for the year ended December 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)	590,100	105,400	695,500
Vest 100% 18 months after the grant date with service conditions only	150,000	—	150,000
Vest 100% 18 months after the grant date with market and service conditions (2)	350,000	—	350,000
Vest 100% 9 months after the grant date with service conditions only	180,000	—	180,000
Immediately vested	400	100	500
Total shares of stock award granted	1,270,500	105,500	1,376,000


(1)	As a result of the June 15, 2015 change in control event all unvested grants of restricted stock and restricted stock units became fully vested.

(2)

At the end of the performance period, the restricted stock subject to market condition may vest, in whole or in part, based on the Company's maximum 30-trading-day volume-weighted average common stock price during the period from May 18, 2015 to November 13, 2016 (the "Average Share Price") as compared to specified share price targets. If the Company's Average Share Price is less than $3.50, none of the restricted stock shall vest. 25% of the restricted stock shall vest if the Company's Average Share Price equals $3.50. 50% of the restricted stock shall vest if the Company's Average Share Price equals $4.25. 75% percent of the restricted stock shall vest if the Company's Average Share Price equals $5.00. 100% of the restricted stock shall vest if the Company's Average Share Price is greater than or equal to $6.00. For Average Share Price results between two share price targets, the percent of Restricted Stock vested shall be determined using linear interpolation.

In accordance with the Company's policy on compensation for non-employee directors, in 2015 the Company granted to a non-employee director 50,000 options to purchase shares of the Company’s common stock under the terms of the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated. The exercise price of the options is the fair market value of a share of common stock on the date of grant. Options have a term of five years and become exercisable 50% immediately on the date of grant and 100% upon the first anniversary of the grant date (provided that if the Company’s Board of Directors does not designate such individual as a director nominee for election as a director at the Company’s first annual meeting of stockholders following the grant date, then the remainder of such option that has not yet vested will immediately vest).

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 year ended December 31, 2015, the Company granted 267,239 restricted stock units to its non-employee directors pursuant to the Director Plan.

For the years ended December 31, 2015, 2014 and 2013, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units, which are included in the accompanying Consolidated Statements of Operations, were as follows:



	For The Year Ended December 31,
	2015		2014		2013
Stock options	$	23	$	85	$	354
Restricted stock	3,188		798		1,274
Restricted stock units	1,020		442		462
Total	$	4,231	$	1,325	$	2,090
Tax benefits recognized in jurisdictions where the Company has taxable income	$	362	$	98	$	130

As of December 31, 2015 and 2014, unrecognized compensation expense and weighted average period over which the compensation expense is expected to be recognized relating to the unvested portion of the Company's stock options, restricted stock, and restricted stock unit awards, in each case, based on the Company's historical valuation treatment, were as follows:



	As of December 31,
	2015			2014
	Unrecognized Expense		Weighted Average Period in Years	Unrecognized Expense		Weighted Average Period in Years
Stock options	$	17	0.85	$	—	0.00
Restricted stock	$	701	0.75	$	1,561	1.32
Restricted stock units	$	—	0.00	$	239	1.26

Stock Options

Stock options granted by the Company generally expire between five and ten years after the date of grant and have an exercise price of at least 100% of the fair market value of the underlying share of common stock on the date of grant and generally vest ratably over a four-year period.

The following were the weighted average assumptions used to determine the fair value of stock options granted by the Company and the details of option activity as of and for the respective periods:



	As of December 31,
	2015			2014	2013
Volatility	48.9		%	(a)	(a)
Risk free interest rate	1.1		%	(a)	(a)
Dividends	$	—		(a)	(a)
Expected life (years)	2.75			(a)	(a)
Weighted average fair value of options granted during the period	$	0.81		(a)	(a)


(a)	Stock option assumptions are not provided above because there were no options granted during the years ended December 31, 2014 and 2013.

Changes in the Company’s stock options for the years ended December 31, 2015, 2014 and 2013 were as follows:



	For The Year Ended December 31,
	2015				2014				2013
	Number of Options		Weighted Average Exercise Price per Share		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	1,238,650		$	11.21
Granted	50,000		2.49		—		—		—		—
Forfeited	(485,000	)	7.32		—		—		—		—
Expired	(115,800	)	13.35		(43,550	)	15.50		(438,300	)	14.99
Options outstanding at December 31,	206,000		$	8.13	756,800		$	8.78	800,350		$	9.15
Options exercisable at December 31,	181,000		$	8.91	756,800		$	8.78	600,350		$	10.47

The cash proceeds from the exercise of stock options, associated income tax benefits, and total intrinsic value for stock options exercised based on the closing price of the Company's common stock were nil for the years ended December 31, 2015, 2014 and 2013.

The weighted average remaining contractual term and the aggregated intrinsic value for stock options outstanding and exercisable as of December 31, 2015 and 2014 were as follows:



	As of December 31,
	2015			2014
	Remaining Contractual Term in Years	Aggregated Intrinsic Value		Remaining Contractual Term in Years	Aggregated Intrinsic Value
Stock options outstanding	2.22	$	22	4.04	$	—
Stock options exercisable	1.86	$	11	4.04	$	—

Restricted Stock

Changes in the Company’s restricted stock for the years ended December 31, 2015, 2014 and 2013 were as follows:



	For The Year Ended December 31,
	2015				2014				2013
	Number of Shares of Restricted Stock		Weighted Average Grant Date Fair Value		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	1,028,916		$	4.87
Granted	1,270,500		2.17		482,900		3.22		883,321		2.44
Vested	(1,204,798	)	2.90		(182,251	)	5.21		(406,158	)	5.09
Forfeited	(189,701	)	3.14		(494,452	)	2.39		(508,277	)	4.16
Unvested restricted stock at December 31,	680,000		$	1.60	803,999		$	3.00	997,802		$	3.00

The total fair value of restricted stock vested during the years ended December 31, 2015, 2014 and 2013 were as follows:



	For The Year Ended December 31,
	2015		2014		2013
Fair value of restricted stock vested	$	2,675	$	669	$	1,596

Restricted Stock Units

Changes in the Company’s restricted stock units arising from grants to certain employees and non-employee directors for the years ended December 31, 2015, 2014 and 2013 were as follows:



	For The Year Ended December 31,
	2015				2014				2013
	Number of Shares of Restricted Stock Unit		Weighted Average Grant-Date Fair Value		Number of Shares of Restricted Stock Unit		Weighted Average Grant-Date Fair Value		Number of Shares of Restricted Stock Unit		Weighted Average Grant-Date Fair Value
Unvested restricted stock units at January 1,	119,940		$	3.57	115,869		$	3.65	100,000		$	5.18
Granted	372,739		2.47		175,759		3.40		175,860		2.90
Vested	(450,179	)	2.70		(122,522	)	3.86		(154,991	)	3.81
Forfeited	(42,500	)	3.21		(49,166	)	2.42		(5,000	)	2.42
Unvested restricted stock units at December 31,	—		$	—	119,940		$	3.57	115,869		$	3.65

The total fair value of restricted stock units vested during the years ended December 31, 2015, 2014 and 2013 were as follows:



	For The Year Ended December 31,
	2015		2014		2013
Fair value of restricted stock units vested	$	1,022	$	436	$	461

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. Vesting of the Company’s contribution occurs over a five-year period. For the years ended December 31, 2015, 2014 and 2013, the Company’s expenses and contributions to satisfy the prior years’ employer-matching liability for the 401(k) plan were as follows:



	For The Year Ended December 31,
($ in thousands, except otherwise stated)	2015		2014		2013
Expense recognized for the 401(k) plan	$	193	$	385	$	483
Contributions to satisfy prior years' employer-matching liability
Number of shares of the Company's common stock issued (in thousands)	116		118		—
Market value per share of the Company's common stock on contribution date (in dollars)	$	2.71	$	3.65	$	—
Non-cash contribution made for employer matching liability	$	314	$	430	$	—
Additional cash contribution made for employer-matching liability	—		—		651
Total contribution made for employer-matching liability	$	314	$	430	$	651