Share‑Based Compensation

The Company’s 2008 Employee Stock Incentive Plan (the Plan) permitted the grant of share‑based awards to its employees , directors and certain other service providers. Option awards were generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options granted during 2013, 2012 and 2011 generally vest over four-year periods. In general, the options expire after a period not exceeding ten years. As of September 30, 2013, there were 2,259 stock options outstanding under the 2008 Plan. No further awards may be granted under the 2008 Plan.

The Company's Long-Term Incentive Plan (the ‘‘LTIP”), which was adopted in March 2013 and became effective in May 2013 when it was approved by the Company's stockholders, permits the grant of share-based awards to its employees, directors and certain other service providers. A maximum of 6,000 shares may be issued pursuant to the LTIP. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant and generally have a three-year vesting period and an expiration period not exceeding ten years. Restricted stock units generally vest over a three-year period.

The weighted-average grant date fair value of stock options granted during the years ended September 30, 2013, 2012 and 2011 was $7.26, $6.39 and $5.91, respectively, and was estimated using the Black‑Scholes option‑pricing model with the following weighted-average assumptions:



	2013		2012		2011
Expected dividend yield	—		—		—
Expected volatility	48.8	%	53.6	%	50.5	%
Risk-free interest rate	1.23	%	1.00	%	2.05	%
Expected term (years)	5.86		5.87		6.07

The Company’s expected volatility assumption used in the Black‑Scholes option pricing model was based on peer group information, and the expected life assumption used the midpoint in estimating the expected term given the lack of historical exercise activity. The expected term is calculated as the midpoint between the vesting term and contractual term of the award. The risk-free interest rate used in the Black‑Scholes model was based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the Company’s expected term assumption. The Company has never declared dividends on its shares and has no current plans to declare such dividends that would require a dividend yield assumption other than zero for inclusion in the pricing model.

A summary of stock option activity is presented below:



	Years Ended September 30,
	2013				2012				2011
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
	(in thousands, except per share amounts)
Outstanding, beginning of period	2,448		$	13.76	1,836		$	13.84	1,762		$	14.20
Granted	1,086		15.58		740		13.48		298		10.03
Exercised	(124	)	12.52		—		—		—		—
Canceled *	(108	)	13.59		(128	)	13.42		(224	)	11.59
Outstanding, end of period	3,302		14.41		2,448		13.76		1,836		13.84

* The number of options forfeited and expired was not significant in years ended September 30, 2013, 2012 and 2011 and is included in canceled stock options.

The following table summarizes stock options outstanding and exercisable at September 30, 2013:



	Outstanding				Exercisable
	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
	(in thousands, except per share amounts)
Exercise price
$0.00 ‑ $4.26	55	$	3.50	3.19	55	$	3.50	3.19
$8.52 ‑ $12.77	507	10.34		6.54	376	10.45		6.21
$12.77 ‑ $17.03	2,715	15.13		7.39	1,402	15.57		5.61
$38.32 ‑ $42.58	25	41.85		9.93	—	—		—
	3,302	14.41		7.21	1,833	14.16		5.66

The intrinsic value of vested and outstanding stock options at September 30, 2013 was $53,004 and $94,667, respectively. As of September 30, 2013, the Company had $10,241 of total unrecognized compensation expense related to non-vested employee options that will be recognized over a weighted-average period of 2.33 years.

Under the 2008 Plan, the Company also granted restricted stock units to eligible employees and directors. The stated vesting of these grants generally ranged from immediate to three years, but the restricted stock units only became payable to employees in cash or shares of the Company's common stock if there was a change in control of the Company or termination of the agreements in connection with an initial public offering. As the Company had determined that neither of these events was probable in any period prior to the IPO, the Company had not recognized any share-based compensation expense related to the restricted stock units prior to June 12, 2013. In connection with the IPO, all outstanding 623 restricted stock units were terminated in accordance with their terms and became payable one year following the IPO, and the Company recorded share-based compensation expense equal to the fair value of the 623 restricted stock units of $9,351. As the shares associated with these RSUs have not yet been issued, these RSUs are not reflected as being vested but, rather, are reflected as outstanding as of September 30, 2013 in the table below. No further awards may be granted under the 2008 Plan.

A summary of RSU activity is presented below:



	Years Ended September 30,
	2013				2012				2011
	RSUs		Weighted Average Grant Date Fair Value		RSUs		Weighted Average Grant Date Fair Value		RSUs	Weighted Average Grant Date Fair Value
	(in thousands, except per share amounts)
Outstanding, beginning of period	630		$	13.74	348		$	14.20	232	$	16.26
Granted	92		18.85		286		13.03		116	10.47
Vested	—		—		—		—		—	—
Forfeited	(13	)	13.03		(4	)	13.03		—	—
Outstanding, end of period	709		$	15.50	630		$	13.74	348	$	14.20

Share-based compensation expense for employee equity awards under both the 2008 Plan and the LTIP was $12,628, $2,676 and $1,468, for the year ended September 30, 2013, 2012 and 2011, respectively, and is reflected in the following captions in the consolidated statements of operations:



	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Cost of services	$	2,147	$	203	$	171
General and administrative	5,294		1,588		955
Sales and marketing	2,471		298		(58		)
Technology and development	2,716		587		400
Total	$	12,628	$	2,676	$	1,468