15. STOCK-BASED COMPENSATION

During 2011, 2012 and 2013 the Company granted options, stock appreciation rights ("SAR") and restricted stock units ("RSUs") to its employees pursuant to its 2009 Stock Incentive Plan/Equity-Based Incentive Program (the "2009 Plan") and 2013 Equity Incentive Plan (the "2013 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 Stock Incentive Plan provided for the authorization of awards covering an aggregate of 7,800,000 shares of common stock.

In 2009, the Compensation Committee approved the grant of options to purchase up to 5,995,000 shares of common stock to Company executives and employees. In addition, in 2010, 2011 and 2012, the Compensation Committee approved an additional grant of options to purchase up to 734,375, 1,373,125 and 1,179,375 shares of common stock to employees of the Company. The exercise price per share was 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 were divided equally into two tranches: options that vested over four years and were 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 were 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. The grant dates for Performance-based sub-tranches were the dates when performance criteria for the relevant year were set.

In March 2013, the Company's Board of Directors approved the Company's 2013 Equity Incentive Plan, described below. As a condition to the receipt of an award under the 2013 Equity Incentive Plan, any employee that held an outstanding option award under the Company's 2009 Stock Incentive Plan was required to forfeit the unvested portion of such award; the vested portion of outstanding option awards remained unaffected by the new program.

The 2009 Equity-Based Incentive Program

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 ("SARs") 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 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, 2013.



Risk free interest rate	1.27	%
Expected option life (years)	3.4
Expected dividend yield	4.62	%
Volatility factor	41.19	%
Weighted-average grant date fair value (per share)	2.32
Equity-based incentive awards vested and exercisable	1,571,319
Liability as of December 31, 2013 (in thousands)	3,652

Former CEO Stock Options

On July 29, 2013, Boris Podolsky, the Company's former CEO, resigned from the Company. The Company and Mr. Podolsky entered into a separation agreement in connection with such resignation, and the Company agreed that as of the separation date an aggregate of 650,000 shares that were vested and unexercised would remain exercisable pursuant to the terms of the option agreement until December 31, 2014, notwithstanding any provision of the option agreement to the contrary, after which the option to purchase any vested shares that then remain unexercised will terminate and lapse.

The 2013 Equity Incentive Plan

On March 4, 2013, the Company's Board of Directors approved the Company's 2013 Equity Incentive Plan, which was approved by the Company's stockholders on April 30, 2013 at the 2013 Annual Meeting of Stockholders. The Plan provides for the grant of a variety of forms of awards to acquire up to an aggregate of 2.5 million shares of common stock. The Compensation Committee of the Board has approved an initial round of awards to the Company's employees in the form of restricted stock units ("RSUs") to acquire up to 2.0 million shares of common stock. Such awards will entitle the grantees to receive shares of common stock, at no cost, upon the satisfaction of 2013, 2014 and 2015 performance-based vesting conditions and will become exercisable on a staggered basis over a period of four years from grant. Performance criteria are to be set by the Board of Directors for each of 2013, 2014 and 2015. The grant date for each sub tranche of the awards will be the date when performance criteria for the relevant year are set and communicated to employees.

Exercise is also subject to the condition that the closing price of the Company's common stock has exceeded $12.00 per share on at least ten trading days prior to exercise; this condition has been satisfied. As a condition to the receipt of an award under the Plan, any employee that held an outstanding option award under the Company's 2009 Equity Incentive Plan was required to forfeit the unvested portion of such award; the vested portion of outstanding option awards remained unaffected by the new program. The Company expects to settle employee RSU exercises out of treasury stock.

The Company's Board of Directors approved performance criteria for the 2013 sub-tranche in respect of 637,800 RSUs with a weighted average per unit grant date fair value of $10.53. As of December 31, 2013, the performance criteria in respect of only one-third of the 2013 sub-tranche had been achieved.

Fair value of Stock-Based Compensation

Under the provisions of ASC 718, the fair value of stock-based awards 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 stock-based awards that actually vest will usually differ from the total number issued because employees forfeit awards 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 life of stock-based awards 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 awards are based on the US Treasury yield curve in effect at the grant date.

The assumptions used in the option-pricing models for grants in accordance with the 2009 and 2013 Plans made in the years ending December 31, 2011, 2012 and 2013 were as follows:

	2011 (2009 Plan)	2012 (2009 Plan)	2013 (2013 Plan)

Risk free interest rate	0.02%–2.37%	0.38%–1.20%	0.11%–1.07%
Expected option life (years)	0.25–5.0	2.5–5.5	0.67–4.00
Expected dividend yield	2.87%–7.15%	5.4%–6.28%	5.32%–5.66%
Volatility factor	39.37%–87.88%	51.44%–84.69%	36.36%–53.63%
Weighted-average grant date fair value (per share)	$7.88	$2.24	$10.53

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

	Restricted stock units			Common Stock Options					Equity-based incentive awards

	Quantity			Quantity			Weighted Average Exercise Price		Quantity			Weighted Average Exercise Price
Outstanding as of December 31, 2012		—			3,578,707			18.58		2,200,552			14.00




Granted		637,800			30,000			9.07		—			—
Exercised		—			(50,000	)		9.07		(86,250	)		14.00
Forfeited		(103,337	)		(576,566	)		15.05		(266,252	)		14.00
Expired		—			(577,073	)		19.85		(276,731	)		14.00


Outstanding as of December 31, 2013		534,463			2,405,068			19.20		1,571,319			14.00

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

	Restricted stock units			Common stock options					Equity-based incentive awards

	Quantity			Quantity			Weighted Average Grant-date Fair Value		Quantity			Weighted Average Grant-date Fair Value
Nonvested as of December 31, 2012		—			782,502			7.53		319,688			2.80




Granted		637,800			30,000			0.77		—			—
Vested		—			(187,184	)		6.64		(53,436	)		2.80
Forfeited		(103,337	)		(576,566	)		7.90		(266,252	)		2.80


Nonvested as of December 31, 2013		534,463			48,752			2.43		—			2.80

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

	Restricted stock units		Common Stock Options						Equity-based incentive awards

	Quantity		Quantity		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Quantity		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
December 31, 2013		—		2,356,316		19.41		5.4		1,571,319		14.00		5.8

The intrinsic value of the Company's common stock options and equity-based incentive awards outstanding and exercisable as of December 31, 2013 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 2011, 2012 and 2013:

	2011		2012		2013

Total intrinsic value of options exercised	$	2,575	$	4,624	$	122
Total intrinsic value of equity-based incentive awards exercised	$	598	$	35	$	242

As of December 31, 2013, all vested options and equity-based incentive awards under the 2009 Plan were exercisable. In the periods ended December 31, 2011, 2012 and 2013, the Company recognized expenses under the 2009 Plan of $18,318, $4,779 and $798, respectively.

In the period ended December 31, 2013, the Company also recognized $1,035 of expense attributable to RSUs under the 2013 Plan. The Company estimates that the total compensation expense related to awards approved under the 2013 Plan not yet recognized as of December 31, 2013 approximates $11.7 million, of which $1.1 million relates to RSU granted in 2013 and $10.6 million relates to RSU for which performance criteria for the 2014 and following years are not set, which is expected to be expensed over a weighted average period of 3.3 years.