STOCK-BASED COMPENSATION

The following costs related to the Company’s stock compensation plans were included in the condensed consolidated statements of income and comprehensive income:



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of revenues	$	3,765	$	2,525	$	6,249	$	3,928
Selling, general and administrative expenses - Acquisition related	4,951		1,430		9,443		2,223
Selling, general and administrative expenses - All other	3,537		1,936		5,695		2,948
Total	$	12,253	$	5,891	$	21,387	$	9,099

Equity Plans

2015 Long-Term Incentive Plan — On June 11, 2015, the Company's stockholders approved the 2015 Long Term Incentive Plan (“2015 Plan”) to be used to issue equity grants to company personnel. As of June 30, 2015, 6,765,334 shares of common stock remained available for issuance under the 2015 Plan. This includes (i) 4 million shares authorized for issuance under 2015 Plan (ii) any shares that were available for issuance under the 2012 Plan and 2006 Plan (as defined below) as of their discontinuance date and that became available for issuance under the 2015 Plan and (iii) any shares that were subject to outstanding awards under the 2012 Plan and 2006 Plan and have expired or terminated or were canceled between the discontinuance date of the 2012 and 2006 Plan and June 30, 2015 and therefore became available for issuance under the 2015 Plan. In addition, up to 6,564,714 shares that are subject to outstanding awards as of June 30, 2015 under the 2012 Plan and up to 1,371,535 shares that are subject to outstanding awards as of June 30, 2015 under the 2006 Plan and that expire or terminate for any reason prior to exercise or that would otherwise have returned to the respective Plan’s share pool under the terms of the Plan will be available for awards to be granted under the 2015 Plan.

2012 Non-Employee Directors Compensation Plan — On January 11, 2012, the Company approved the 2012 Non-Employee Directors Compensation Plan (“2012 Directors Plan”) to be used to issue equity grants to its non-employee directors. The Company authorized 600,000 shares of common stock to be reserved for issuance under the plan. The 2012 Directors Plan will expire after 10 years and is administered by the Company’s Board of Directors. As of June 30, 2015, 554,070 shares of common stock remained available for issuance under the 2012 Directors Plan.

2012 Long-Term Incentive Plan — On January 11, 2012, the Company approved the 2012 Long-Term Incentive Plan (“2012 Plan”) to be used to issue equity grants to company personnel. In June 2015, the 2012 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2012 Plan and any shares that are subject to an award that was previously granted under the 2012 and modified 2006 Plan and that will expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the options issued pursuant to the 2012 Plan expire 10 years from the date of grant.

2006 Stock Option Plan — Effective May 31, 2006, the Board of Directors of the Company adopted the 2006 Stock Option Plan (the “2006 Plan”). The 2006 Plan permitted the granting of options to directors, employees, and certain independent contractors. In January 2012, the 2006 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2006 Plan and any shares that are subject to an option award that was previously granted under the 2006 Plan and that will expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the options issued pursuant to the 2006 Plan expire 10 years from the date of grant.

Stock Options

Stock option activity under the Company’s plans is set forth below:



	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at January 1, 2015	6,838,746		$	20.98	$	183,073
Options granted	2,083,700		61.43		20,420
Options exercised	(862,174	)	16.25		(47,402		)
Options forfeited/cancelled	(124,023	)	28.59		(5,288		)
Options outstanding at June 30, 2015	7,936,249		$	31.99	$	311,418

Options vested and exercisable at June 30, 2015	2,952,470		$	15.01	$	165,988
Options expected to vest	4,570,435		$	41.60	$	135,422

During the six months ended June 30, 2015, the Company issued grants consisting of 2,083,700 shares underlying stock options under the 2012 Plan with an aggregate grant-date fair value of $44,394. The options are generally scheduled to vest in equal 25% installments on each of the first four anniversaries of the grant date, subject to the terms of the 2012 Plan and applicable stock options award agreement, including the termination provisions. In the event of the participant’s termination of service for any reason, unvested options are forfeited as of the date of such termination without any payment to the participant.

As of June 30, 2015, total remaining unrecognized compensation cost related to unvested stock options, net of forfeitures, was approximately $74,727, and is expected to be recognized over a weighted-average period of 2.5 years. The weighted average remaining contractual term of the outstanding options as of June 30, 2015 was 5.8 years for fully vested and exercisable options and 8.9 years for options expected to vest, respectively.

As of June 30, 2015, a total of 9,325 shares underlying options exercised through June 30, 2015, were in transfer with the Company’s transfer agent.

There were no material changes with respect to the assumptions used in the Black-Scholes option valuation model during the six months ended June 30, 2015, as compared with the assumptions disclosed in Note 14 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Other Awards

Other awards include awards of restricted stock and restricted stock units (“RSUs”) under the Company’s 2012 Directors Plan, 2012 Plan and 2015 Plan after its adoption. In addition, the Company has issued in the past, and may issue in the future its equity securities to compensate employees of acquired businesses for future services. These issuances are on such terms and at such prices as the Company deems appropriate. Equity-based awards granted in connection with acquisitions of businesses are generally issued in the form of service-based awards dependent on continuing employment only and performance-based awards, which are granted and vest only if certain specified performance conditions are met. The awards issued in connection with acquisitions of businesses are subject to the terms and conditions contained in the applicable award agreement and acquisition documents.

Service-Based Awards

Summarized activity related to the Company’s service-based awards for the six months ended June 30, 2015, was as follows:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Unvested service-based awards outstanding at January 1, 2015	633,442		$	36.88
Awards granted	63,295		62.17
Awards vested	(144,230	)	39.46
Awards forfeited/cancelled	(11,372	)	32.13
Unvested service-based awards outstanding at June 30, 2015	541,135		$	39.25

As of June 30, 2015, aggregate unrecognized compensation expense under the 2012 Directors Plan was $492. This cost is expected to be recognized over the next 1.7 years using the weighted average method. The Company issued 5,295 shares of non-vested (“restricted”) common stock under the 2012 Directors Plan during the three and six months ended June 30, 2015.

Included in service-based awards are RSUs issued to certain key management personnel under the 2012 Plan. During the three months ended June 30, 2015 no service-based RSUs were issued. During the six months ended June 30, 2015, the Company issued 58,000 service-based RSUs with the fair value of $3,560. As of June 30, 2015, the aggregate unrecognized compensation expense related to unvested service-based RSUs under the 2012 Plan was $4,647. This cost is expected to be recognized over the next 2.7 years using the weighted average method. These RSUs are generally scheduled to vest in equal 25% installments on each annual anniversary of the grant date, subject to the terms of the 2012 Plan and applicable RSU award agreement, including the termination provisions. In the event of the participant’s termination of service for any reason, unvested RSUs are forfeited as of the date of such termination without any payment to the participant.

In connection with the Company’s acquisitions, a total of 427,293 shares underlying service-based awards with an aggregate fair value of $16,137 were unvested and outstanding as of June 30, 2015. As of June 30, 2015, unrecognized compensation cost related to unvested service-based awards granted in connection with acquisitions was $13,643. This cost is expected to be recognized over the next 1.9 years using the weighted average method.

Performance -Based Awards

In 2014, the Company granted performance-based awards in connection with the acquisitions completed during that year. The total number of the awards varies based on attainment of certain performance targets pursuant to the terms of the relevant transaction documents. Typically, the vesting period is three years, with one third of the awards granted vesting in equal installments on the first, second and third anniversaries of the grant. If an eligible employee leaves the Company prior to a vesting date, the unvested portion of the award generally will be forfeited. The Company periodically evaluates the achievement of the related performance conditions during the applicable performance measurement period and the number of shares expected to be delivered, and resulting compensation expense is adjusted accordingly. During the six months ended June 30, 2015, one-third of the performance-based awards for Netsoft, Jointech and GGA vested.

Summarized activity related to the Company’s performance-based awards for the six months ended June 30, 2015, was as follows:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Unvested performance-based awards outstanding at January 1, 2015	371,510		$	39.34
Awards granted	14,000		70.22
Awards vested	(114,105	)	68.18
Awards forfeited/cancelled	(1,360	)	36.57
Changes in the number of awards expected to be delivered	(19,105	)	65.64
Unvested performance-based awards outstanding at June 30, 2015	250,940		$	25.96

As of June 30, 2015, total unrecognized compensation cost related to all unvested performance-based awards was $16,061. This cost is expected to be recognized over the next 2.0 years using the weighted average method.

During the second quarter ended June 30, 2015, the Company issued a total of 14,000 RSUs with the fair value of $983 to certain new personnel. The vesting of these RSUs is contingent on achieving certain performance targets pursuant to the terms of the individual agreements. These RSUs have a vesting period of three years, with one third of the awards granted vesting in equal installments on the first, second and third anniversaries of the grant. In the event of the participant’s termination of service for any reason or failure to meet certain performance targets, unvested RSUs are forfeited as of the date of such event without any payment to the participant.