15. STOCK-BASED COMPENSATION

The Company has granted options and stock appreciation rights ("SAR") to its employees, consultants and members of its Board of Directors pursuant to its 1997 Stock Option/Stock Issuance Plan and its 2009 Stock Option Plan, as well as pursuant to individual option agreements that are described in more detail below.

The 2009 Stock Incentive Plan

In April 2009, the Company's stockholders approved the 2009 Stock Incentive Plan (the "2009 Plan"). The 2009 Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, performance share awards and restricted stock awards ("Awards"). The 2009 Plan provides for the authorization of Awards covering an aggregate of 7,800,000 shares of common stock.

Except as the Company's Board of Directors may otherwise determine or provide in an option, and subject to the conditions described in the following sentence, each option will become exercisable ("Vest") as to 25% of the original number of shares of common stock on the first anniversary of its date of grant and as to an additional 6.25% of the original number of shares of common stock at the end of each successive three-month period following the first anniversary of the date of grant until the fourth anniversary of the date of grant. Except as the Board may otherwise determine or provide in an option, in addition to satisfying the time-based vesting condition set forth in the immediately preceding sentence, at least 50% of the original number of shares of common stock underlying an option shall only become exercisable upon the achievement of performance-based objectives to be approved by the Company's Board of Directors. No option shall be exercisable after the tenth anniversary of its grant date.

In October and December 2009, the Compensation Committee approved the grant of options to purchase up to 4,440,000 and 555,000 shares of common stock, respectively, to Company executives and employees. The exercise prices per share were $16.80 and $15.21, respectively. In addition, in April 2010, February 2011, October 2011 and January 2012, the Compensation Committee approved an additional grant of options to purchase up to 120,000, 580,000, 150,000, and 560,000 shares of common stock to employees of the Company, at an exercise price of $17.45, $22.32, $11.70 and $9.07, respectively. The exercise price per share was established equal to or greater than the fair market value of common stock on the date of grant as determined pursuant to the terms of the Company's 2009 Stock Incentive Plan.

These options are divided equally into two tranches: options that vest over four years and are subject only to passage of time (with 25% of options vesting on the first anniversary and the remainder vesting on a quarterly basis over the following three years) (the "Time-based Tranche") and options that are subdivided in four equal sub-tranches that vest upon the achievement of certain performance criteria set by the board of directors annually for each year (the "Performance-based Tranche"). The grant dates of the Time-based Tranches discussed above were the dates when these grants were approved by the Compensation Committee.

In April 2010, February 2011 and February 2012, the Compensation Committee of the Company's Board approved performance criteria for the 2010, 2011 and 2012 Performance-based sub-tranches in respect of options to purchase an aggregate of 614,375, 643,125 and 619,375 shares of common stock, respectively, under the 2009 Stock Insentive Plan. The grant dates for Performance-based sub-tranches are the dates when performance criteria for the relevant year are set. See also Note 20.

In addition, on October 22, 2009, an option to purchase up to an aggregate of 1,000,000 shares was granted to one senior executive, with one-third vesting on the grant date and one-third vesting on each of the second and third anniversaries of the grant date. The exercise price per share for this grant was $16.80 (which represented the average of the closing prices for the 20 trading days ending on the date prior to grant), which represented the fair market value of one share of common stock on the grant date.

Equity-based incentive awards

At the end of 2009, the Company's board of directors approved the terms of the Company's 2009 Equity-Based Incentive Program (the "Program"). Pursuant to the original terms of the Program, the Company was authorized to grant cash bonuses to certain of its employees, including the Company's principal financial officer and certain named executives. On February 24, 2010, the Compensation Committee amended the Program. As amended, each recipient of an option granted in October 2009 (including both Time-based and Performance-based tranches) will have the right to receive potential cash payments in respect of any appreciation of the Company's share price above $14.00 per share, capped at $16.80 per share, and tied to both the vesting and exercise of the corresponding stock options. The Company's board of directors has the authority to permit the separate exercise of such right at its discretion.

The Company remeasures these awards at each reporting date at their fair value until settlement, to the extent that this value does not exceed the maximum benefit available to option holders. The fair value of unsettled awards is recognized in liabilities. The following table summarizes the assumptions used for valuation of fair value as of December 31, 2012.

		December 31, 2012

Risk free interest rate			0.72%
Expected option life (years)			5.0
Expected dividend yield			6.50%
Volatility factor			73.54%
Weighted-average grant date fair value (per share)			2.061
Equity-based incentive awards vested and exercisable			1,880,864
Liability as of December 31, 2012 (in thousands)			3,876

Former CEO Stock Options

In 2008, Anton Kudryashov joined the Company in the role of Chief Executive Officer ("CEO"). The Company's Board of Directors agreed to grant Mr. Kudryashov an inducement option to purchase up to 3,042,482 shares of the Company's common stock in three tranches ("CEO Stock Options"). The options had a ten-year contractual term measured from Mr. Kudryashov's first day of employment, August 4, 2008. The first tranche was granted on August 4, 2008, and represented options to purchase an aggregate of 1,521,241 shares of the Company's common stock (the "Time-Based Option"). Under the original terms, one third of these options vested on the first anniversary of the employment start date and the remaining options vested in equal installments at the end of each of the immediately following eight quarters. The exercise price for shares underlying the Time-Based Option was $22.07 per share at the date of original grant.

The second and third tranches under the CEO Stock Options were granted on January 2, 2009, and represented options to purchase up to 760,621 shares and 760,620 shares of the Company's common stock for each of the second tranche (the "Revenue Objective Option") and the third tranche (the "Cost Objective Option", amended in 2010 to "Return on equity Employed Option"), respectively, and vested depending on the Company's achievement of certain performance criteria for 2009, 2010 and 2011. The exercise prices for shares underlying both tranches were $5.49 per share, which was the closing sales price per share of the Company's common stock on January 2, 2009.

On December 15, 2011, Anton Kudryashov resigned from the Company. The Company and Mr. Kudryashov have entered into a separation agreement in connection with such resignation, and the Company has agreed that as of the separation date an aggregate of 2,364,890 of unexercised option shares with a weighted-average exercise price $16.17 shall be vested, but no further options would vest. Mr.Kudryashov's options to acquire 2,364,890 shares of common stock were exercisable until March 15, 2012. In March 2012, Mr.Kudryashov exercised 840,649 options at an exercise price of $5.49 per share. On March 15, 2012, the remaining options lapsed.

Fair value of Option Awards

Under the provisions of ASC 718, the fair value of stock options that are expected to vest is estimated on the grant date using the Black-Scholes option-pricing model and recognized ratably over the requisite service period. The calculation of compensation cost requires the use of several significant assumptions which are calculated as follows:

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Expected forfeitures.  ASC 718 requires that compensation cost only be calculated on those instruments that are expected to vest in the future. The number of options that actually vest will usually differ from the total number issued because employees forfeit options when they do not meet the service or performance conditions stipulated in the agreement. For the forfeitures resulting from failure to meet service conditions, we have calculated the forfeiture rate by reference to the historical employee turnover rate. For the forfeitures resulting from failure to meet performance conditions, we have calculated the forfeiture rate by reference to the proportion of performance conditions not met.

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Expected volatilities.  Expected volatilities are based on historical volatility of the Company's stock and by considering the volatility of the stock of other public companies in the media industry.

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Expected term.  The expected option life has been calculated using the "shortcut" method (in cases when the Company's options meet the definition of "plain vanilla") or the "lattice" model.

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Risk-free interest rate.  The risk-free interest rates for the periods within the expected term of these options are based on the US Treasury yield curve in effect at the grant date.

The assumptions used in the option-pricing models for grants made in the years ending December 31, 2010, 2011 and 2012 were as follows:

	2010	2011	2012

Risk free interest rate	1.1%–2.11%	0.02%–2.37%	0.38%–1.20%
Expected option life (years)	2.0–4.0	0.25–5.0	2.5–5.5
Expected dividend yield	1.3%–1.5%	2.87%–7.15%	5.4%–6.28%
Volatility factor	80%–81%	39.37%–87.88%	51.44%–84.69%
Weighted-average grant date fair value (per share)	$9.68	$7.88	$2.24

The following table summarizes common stock options and equity-based incentive awards activity for the Company:

	Common Stock Options					Equity-based incentive awards

	Quantity			Weighted Average Exercise Price		Quantity			Weighted Average Exercise Price
Outstanding as of December 31, 2011		6,441,310			17.96		2,838,139			14.00

Granted		861,873			13.85		405,833			14.00
Exercised		(840,649	)		5.49		(12,500	)		14.00
Forfeited		(890,624	)		16.56		(632,397	)		14.00
Expired		(1,993,203	)		20.97		(398,523	)		14.00

Outstanding as of December 31, 2012		3,578,707			18.58		2,200,552			14.00

The following table summarizes information about nonvested common stock options and equity-based incentive awards:

	Common stock options					Equity-based incentive awards

	Quantity			Weighted Average Grant-date Fair Value		Quantity			Weighted Average Grant-date Fair Value
Nonvested as of December 31, 2011		1,357,191			10.13		943,438			2.80

Granted		861,873			2.24		405,833			2.80
Vested		(545,938	)		10.27		(397,186	)		2.80
Forfeited		(890,624	)		4.69		(632,397	)		2.80

Nonvested as of December 31, 2012		782,502			7.53		319,688			2.80

The following table summarizes information about vested common stock options and equity-based incentive awards:

	Common Stock Options						Equity-based incentive awards

	Quantity		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Quantity		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
December 31, 2012		2,796,205		19.74		6.3		1,880,864		14.00		6.8

As of December 31, 2012, all vested options and equity-based incentive awards were exercisable.

The intrinsic value of the Company's common stock options and equity-based incentive awards outstanding and exercisable as of December 31, 2012 amounted to nil.

The following table summarizes information about the intrinsic value of Company's common stock options, SAR and equity-based incentive awards exercised during 2010, 2011 and 2012:

	2010		2011		2012

Total intrinsic value of options exercised	$	11,651	$	2,575	$	4,624
Total intrinsic value of equity-based incentive awards exercised	$	857	$	598	$	35

The Company recognized stock-based compensation expenses of $34,005, $18,318 and $4,779 for the years ended December 31, 2010, 2011 and 2012, respectively. As of December 31, 2012, the total compensation expense related to unvested granted awards not yet recognized was $6,186 to be recognized over a weighted average period of 2.8 years.