STOCK-BASED COMPENSATION

Incentive Compensation Plan

The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated May 24, 2016 (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. As determined by the Compensation Committee, equity awards also may be subject to immediate vesting upon the occurrence of certain events following a change in control of the Company. The Company primarily grants restricted stock and restricted stock units to 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. On May 24, 2016, the Company's stockholders approved an amendment and restatement of the ISAP to, among other things, increase the number of shares of the Company's common stock that are reserved for issuance by 2,400,000 shares. As of September 30, 2017, there were 1,814,807 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 units granted to the Company's employees for the nine months ended September 30, 2017 was as follows:



Vesting conditions		Number of Restricted Stock Units Granted
Performance and service conditions (1) (2)		990,000


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


(a)	For employees from the Americas, Asia Pacific and Europe 80% of the restricted stock units may be earned on the basis of performance as measured by a "regional adjusted EBITDA," and 20% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA"; and


(b)	For employees from the Corporate office 100% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA."


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


(a)	33% of the restricted stock units will vest on the first anniversary of the grant date;


(b)	33% of the restricted stock units will vest on the second anniversary of the grant date; and


(c)	34% of the restricted stock units will vest on the third anniversary of the grant date; 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. Restricted stock units issued under the Director Plan contain the right to a dividend equivalent award in the form of additional restricted stock units. The dividend equivalent award is calculated using the same rate as the cash dividend paid on a share of the Company's common stock, and then divided by the closing price of the Company’s common stock on the date the dividend is paid to determine the number of additional restricted stock units to grant. Dividend equivalent awards have the same vesting terms as the underlying awards. During the nine months ended September 30, 2017, the Company granted 366,828 restricted stock units to its non-employee directors pursuant to the Director Plan. As of September 30, 2017, non-employee directors held a total of 826,484 deferred restricted stock units.

For the three and nine months ended September 30, 2017 and 2016, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units were as follows:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
Stock options	$	—	$	5		$	—	$	15
Restricted stock	—		172			—		632
Restricted stock units	229		(25		)	937		631
Total	$	229	$	152		$	937	$	1,278

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.

As of September 30, 2017, the Company had no unrecognized stock-based compensation expense related to outstanding unvested stock options.

Changes in the Company’s stock options for the nine months ended September 30, 2017 and 2016 were as follows:



	Nine Months Ended September 30,
	2017				2016
	Number of Options		Weighted Average Exercise Price per Share		Number of Options		Weighted Average Exercise Price per Share
Options outstanding at January 1,	123,500		$	6.16	206,000		$	8.13
Expired/forfeited	(23,500	)	15.97		(82,500	)	11.09
Options outstanding at September 30,	100,000		$	3.86	123,500		$	6.16
Options exercisable at September 30,	100,000		$	3.86	98,500		$	7.09

Restricted Stock

As of September 30, 2017, the Company had no unrecognized stock-based compensation expense related to outstanding unvested restricted stock. Restricted stock awards have voting and dividend rights as of the grant date.

Changes in the Company’s restricted stock for the nine months ended September 30, 2017 and 2016 were as follows:



	Nine Months Ended September 30,
	2017			2016
	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,	—	$	—	680,000		$	1.60
Granted	—	—		—		—
Vested	—	—		(180,000	)	2.49
Forfeited	—	—		(51,800	)	0.79
Unvested restricted stock at September 30,	—	$	—	448,200		$	1.38

Restricted Stock Units

As of September 30, 2017, the Company had approximately $748 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 1.57 years. Restricted stock units have no voting or dividend rights until the awards are vested.

Changes in the Company’s restricted stock units for the nine months ended September 30, 2017 and 2016 were as follows:



	Nine Months Ended September 30,
	2017				2016
	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,	480,000		$	2.79	—		$	—
Granted	1,356,828		1.08		712,440		2.64
Vested	(415,555	)	1.47		(212,440	)	2.28
Forfeited	(332,340	)	2.79		—		—
Unvested restricted stock units at September 30,	1,088,933		$	1.16	500,000		$	2.79