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 March 31,
	2017		2016
Cost of revenues	$	5,350	$	3,644
Selling, general and administrative expenses - Acquisition related	4,574		3,010
Selling, general and administrative expenses - All other	5,852		4,310
Total	$	15,776	$	10,964

Equity Plans

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 awards 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 March 31, 2017, 547,560 shares remained available for issuance under the 2012 Directors Plan.

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 awards to company personnel. As of March 31, 2017, 5,681,902 shares remained available for issuance under the 2015 Plan. All of the stock option awards issued pursuant to the 2015 Plan expire 10 years from the date of grant.

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 Plan and that expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the stock option awards 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”) to grant stock 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 awards 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, 2017	6,637,239		$	37.20	$	179,936
Options granted	234,990		73.27		529
Options exercised	(486,524	)	27.92		(23,159		)
Options forfeited/cancelled	(75,456	)	57.87		(1,332		)
Options outstanding at March 31, 2017	6,310,249		$	39.06	$	230,072

Options vested and exercisable at March 31, 2017	4,302,714		$	30.84	$	192,245
Options expected to vest	1,891,705		$	56.33	$	36,302

As of March 31, 2017, total remaining unrecognized compensation expense related to unvested stock options, net of forfeitures was approximately $42,801. The expense is expected to be recognized over a weighted-average period of 1.6 years.

As of March 31, 2017, the weighted average remaining contractual term was 6.2 years for fully vested and exercisable outstanding options and 8.1 years for outstanding options expected to vest.

As of March 31, 2017, a total of 176,758 shares underlying options exercised through March 31, 2017, 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 three months ended March 31, 2017, 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, 2016.

Restricted Stock and Restricted Stock Units

Under the Company’s 2012 Directors Plan, the Company grants awards of restricted stock to non-employee directors until April 2017, and thereafter, restricted stock units (“RSUs”). Under the Company’s 2015 Plan (and prior to its approval, under the 2012 Plan), the Company grants awards of RSUs to Company personnel. 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. 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 with a typical vesting period of three years, with 33.3% of the awards granted vesting in equal installments on the first, second and third anniversaries of the grant.

Service-Based Awards

The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the three months ended March 31, 2017.



	Equity-Classified Restricted Stock				Equity-Classified Equity-Settled Restricted Stock Units				Liability-Classified Cash-Settled Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value Per Share		Number of Shares		Weighted Average Grant Date Fair Value Per Share		Number of Shares		Weighted Average Grant Date Fair Value Per Share
Unvested service-based awards outstanding at January 1, 2017	154,125		$	40.89	485,188		$	67.69	204,501		$	70.53
Awards granted	—		—		380,577		73.27		138,584		73.27
Awards modified	—		—		(2,570	)	48.49		2,570		73.27
Awards vested	(1,437	)	20.64		(116,183	)	65.32		(51,928	)	70.56
Awards forfeited/cancelled	—		—		(19,036	)	67.45		(616	)	70.52
Unvested service-based awards outstanding at March 31, 2017	152,688		$	41.08	727,976		$	71.06	293,111		$	71.84

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding service-based restricted stock was $1,783. This expense is expected to be recognized over the next 1.1 years using the weighted average method.

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding service-based equity-classified RSUs was $45,693. This expense is expected to be recognized over the next 2.2 years using the weighted average method.

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding service-based liability-classified RSUs was $19,842. This expense is expected to be recognized over the next 2.2 years using the weighted average method.

Performance -Based Awards

Summarized activity related to the Company’s performance-based awards for the three months ended March 31, 2017, was as follows:



	Equity-Classified Restricted Stock				Liability-Classified Restricted Stock			Equity-Classified Equity-Settled Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value Per Share		Number of Shares	Weighted Average Grant Date Fair Value Per Share		Number of Shares	Weighted Average Grant Date Fair Value Per Share
Unvested performance-based awards outstanding at January 1, 2017	5,573		$	33.47	105,602	$	38.86	4,667	$	70.22
Awards granted	—		—		—	—		—	—
Awards vested	(2,552	)	36.57		—	—		—	—
Awards forfeited/cancelled	—		—		—	—		—	—
Unvested performance-based awards outstanding at March 31, 2017	3,021		$	30.85	105,602	$	38.86	4,667	$	70.22

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding performance-based equity-classified restricted stock was $89. This expense is expected to be recognized over the next 1.0 year using the weighted average method.

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding performance-based liability-classified restricted stock was $1,221. This expense is expected to be recognized over the next 1.0 year using the weighted average method.

As of March 31, 2017, the aggregate unrecognized compensation expense for all outstanding performance-based equity-classified RSUs was $389. This expense is expected to be recognized over the next 1.2 years using the weighted average method.

Modifications

During the three months ended March 31, 2017, the Company modified certain awards held by a named executive officer of the Company in connection with the execution of a separation agreement on February 28, 2017. Fair value of the modified awards immediately before and after modification was $0 and $563, respectively. The Company also reclassified certain awards from equity to liability when it became probable that it would settle the awards in cash. As a result of these modifications, the Company recorded incremental share-based compensation expense for the three months ended March 31, 2017 of $167.