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 September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of revenues	$	3,622	$	2,463	$	9,871	$	6,391
Selling, general and administrative expenses - Acquisition related	4,542		2,905		13,985		5,128
Selling, general and administrative expenses - All other	3,799		2,057		9,494		5,005
Total	$	11,963	$	7,425	$	33,350	$	16,524

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 September 30, 2015, 6,669,713 shares of common stock remained available for issuance under the 2015 Plan. In addition, up to 6,390,069 shares that are subject to outstanding awards as of September 30, 2015 under the 2012 Plan and up to 1,275,089 shares that are subject to outstanding awards as of September 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 September 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 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 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	2,189,424		62.03		27,346
Options exercised	(1,086,066	)	16.28		(63,252		)
Options forfeited/cancelled	(171,222	)	33.32		(7,054		)
Options outstanding at September 30, 2015	7,770,882		$	32.93	$	323,191

Options vested and exercisable at September 30, 2015	2,753,236		$	15.08	$	163,652
Options expected to vest	4,634,538		$	42.26	$	149,510

During the nine months ended September 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 and 105,724 shares underlying stock options under the 2015 Plan with an aggregate grant-date fair value of $2,789. 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 2015 Plan and the applicable stock option agreement. In general, 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 September 30, 2015, total remaining unrecognized compensation cost related to unvested stock options, net of forfeitures, under the 2012 Plan was approximately $67,998 under the 2012 Plan and $2,677 under the 2015 Plan. The costs are expected to be recognized over a weighted-average period of 2.0 years and 2.4 years, respectively.

As of September 30, 2015 there are no fully vested and exercisable options under 2015 Plan. The weighted average remaining contractual term of the outstanding options expected to vest under 2015 Plan was 9.9 years. The weighted average remaining contractual term of the outstanding options under 2012 Plan as of September 30, 2015 was 7.4 years for fully vested and exercisable options and 8.6 years for options expected to vest, respectively. The weighted average remaining contractual term of the outstanding options under 2006 Plan as of September 30, 2015 was 5.2 years for fully vested and exercisable options. There were no options expected to vest under 2006 Plan as of September 30, 2015.

As of September 30, 2015, a total of 5,015 shares underlying options exercised through September 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 nine months ended September 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, the 2012 Plan and the 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 nine months ended September 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	100,391		39.20
Awards vested	(145,631	)	39.45
Awards forfeited/cancelled	(11,372	)	32.13
Unvested service-based awards outstanding at September 30, 2015	576,830		$	36.73

As of September 30, 2015, aggregate unrecognized compensation expense under the 2012 Directors Plan was $377. This cost is expected to be recognized over the next 1.2 years using the weighted average method. The Company issued 5,295 shares of unvested (“restricted”) common stock under the 2012 Directors Plan during the three and nine months ended September 30, 2015.

Included in service-based awards are RSUs issued to certain key management personnel under the 2012 and 2015 Plans.

During the nine months ended September 30, 2015 the Company issued 58,000 service-based RSUs under 2012 Plan with the fair value of $3,560. There were no service-based RSUs under 2012 Plan issued during the three months ended September 30, 2015. As of September 30, 2015, the aggregate unrecognized compensation expense related to unvested service-based RSUs under the 2012 Plan was $4,305. This cost is expected to be recognized over the next 2.2 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 2015 Plan and applicable RSU award agreement, including the termination provisions. In general, 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.

During the three and nine months ended September 30, 2015 the Company issued 25,000 service-based RSUs under 2015 Plan with the fair value of $1,853, respectively. As of September 30, 2015, the aggregate unrecognized compensation expense related to unvested service-based RSUs under the 2015 Plan was $1,771. This cost is expected to be recognized over the next 2.4 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 2015 Plan and applicable RSU award agreement, including the termination provisions. In general, 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, 427,293 shares underlying service-based awards with an aggregate fair value of $16,137 were unvested and outstanding as of September 30, 2015 under the 2012 Plan. As of September 30, 2015, unrecognized compensation cost related to unvested service-based awards granted under the 2012 Plan in connection with acquisitions was $11,542. This cost is expected to be recognized over the next 1.4 years using the weighted average method.

In connection with the Company’s acquisitions, 12,096 shares underlying service-based awards with an aggregate fair value of $905 were unvested and outstanding as of September 30, 2015 under the 2015 Plan. As of September 30, 2015, unrecognized compensation cost related to unvested service-based awards granted under the 2015 Plan in connection with acquisitions was $836. 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 nine months ended September 30, 2015, one-third of the performance-based awards, net of any forfeitures, for Netsoft, Jointech and GGA vested.

Summarized activity related to the Company’s performance-based awards for the nine months ended September 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	)	40.15
Awards forfeited/cancelled	(1,360	)	36.57
Changes in the number of awards expected to be delivered	(19,105	)	31.70
Unvested performance-based awards outstanding at September 30, 2015	250,940		$	41.29

As of September 30, 2015, total unrecognized compensation cost related to all unvested performance-based awards was $14,384. This cost is expected to be recognized over the next 1.4 years using the weighted average method.

During the nine months ended September 30, 2015, the Company issued 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 general, 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.