Stock-Based Compensation

We currently issue equity awards under the CoreLogic, Inc. 2011 Performance Incentive Plan (the “Plan”) which was approved by our stockholders at our Annual Meeting held on May 19, 2011. The Plan permits the grant of restricted stock units ("RSUs"), performance-based restricted stock units ("PBRSUs"), stock options, stock appreciation rights, stock bonuses and other forms of awards granted or denominated in our common stock, as well as cash bonus awards. The Plan was adopted, in part, to make an additional 18,000,000 shares of the Company's common stock available for award grants, so we have sufficient authority and flexibility to adequately provide for future incentives. Prior to the approval of the Plan, we issued share-based awards under the CoreLogic, Inc. 2006 Incentive Plan (the “2006 Plan”).

We primarily utilize RSUs, PBRSUs and stock options as our share-based compensation instruments for employees and directors. The fair value of any share-based compensation instrument grant is based on the market value of our shares on the date of grant and is recognized as compensation expense over its vesting period.

Restricted Stock Units

For the three months ended March 31, 2014 and 2013, we awarded 657,932 and 593,164 RSUs, respectively, with an estimated grant date fair value of $20.2 million and $15.5 million, respectively. The RSU awards will vest ratably over three years.

RSU activity for the three months ended March 31, 2014 is as follows:



	Number of		Weighted-Average Grant-Date
(in thousands, except weighted-average fair value prices)	Shares		Fair Value
Unvested RSUs outstanding at December 31, 2013	1,466		$	22.13
RSUs granted	658		$	30.72
RSUs vested	(497	)	$	20.11
RSUs forfeited	(29	)	$	22.45
Unvested RSUs outstanding at March 31, 2014	1,598		$	26.28

As of March 31, 2014, there was $33.1 million of total unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted-average period of 2.4 years. The fair value of RSUs is based on the market value of the Company’s common stock on the date of grant.

Performance-Based Restricted Stock Units

For the three months ended March 31, 2014 and 2013, we awarded 330,075 and 390,091 PBRSUs, respectively, with an estimated grant date fair value of $10.4 million and $10.2 million, respectively. These awards are subject to service-based, performance-based and market-based vesting. The performance period for the PBRSUs awarded during the three months ended March 31, 2014 is from January 1, 2014 to December 31, 2016 and the performance metric is adjusted earnings per share and market-based conditions. Subject to satisfaction of the performance criteria, the 2014 awards will vest on December 31, 2016.

The performance period for the PBRSUs awarded during the three months ended March 31, 2013 is from January 1, 2013 to December 31, 2015 and the performance metric is adjusted earnings per share and market-based conditions. Subject to satisfaction of the performance criteria, the 2013 awards will vest on December 31, 2015. The fair values of the 2013 awards were estimated using Monte-Carlo simulation with the following weighted-average assumptions.

The fair values of the 2014 and 2013 awards were estimated using Monte-Carlo simulation with the following weighted-average assumptions.



	For the Three Months Ended March 31,
	2014		2013

Expected dividend yield	—	%	—	%
Risk-free interest rate ⁽¹⁾	0.70	%	0.35	%
Expected volatility ⁽²⁾	27.87	%	30.59	%
Average total shareholder return ⁽²⁾	(0.84	)%	8.21	%


(1)	The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.


(2)	The expected volatility and average total shareholder return is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate based primarily on our and our peers' historical data.

PBRSU activity for the three months ended March 31, 2014, is as follows:



	Number of		Weighted-Average Grant-Date
(in thousands, except weighted-average fair value prices)	Shares		Fair Value
Unvested PBRSUs outstanding at December 31, 2013	1,247		$	18.52
PBRSUs granted	330		$	31.57
PBRSUs vested	(612	)	$	16.92
PBRSUs forfeited	(11	)	$	19.81
Unvested PBRSUs outstanding at March 31, 2014	954		$	22.02

As of March 31, 2014, there was $16.4 million of total unrecognized compensation cost related to unvested PBRSUs that is expected to be recognized over a weighted-average period of 2.3 years. The fair value of PBRSUs is based on the market value of the Company's common stock on the date of grant.

Stock Options

In 2014 and 2013, we issued stock options as incentive compensation for certain key employees. The exercise price of each stock option is the closing market price of our common stock on the date of grant. The 2014 and 2013 options will vest in three equal annual installments on the first, second and third anniversaries of grant and expire ten years after the grant date. The fair values of these stock options were estimated using the Black-Scholes valuation model with the following weighted-average assumptions:



	For the Three Months Ended
	March 31,
	2014		2013
Expected dividend yield	—	%	—	%
Risk-free interest rate ⁽¹⁾	1.74	%	0.90	%
Expected volatility ⁽²⁾	37.92	%	41.65	%
Expected life ⁽³⁾	5.5		5.50


(1)	The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.


(2)	The expected volatility is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate based primarily on our and our peers' historical data.


(3)	The expected life is the period of time, on average, that participants are expected to hold their options before exercise based primarily on our historical data.

For the three months ended March 31, 2014 and 2013, we awarded 242,687 and 402,511 options, respectively, with an estimated fair value of $7.7 million and $10.5 million, respectively. Option activity for the three months ended March 31, 2014 is as follows:



(in thousands, except weighted-average price)	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2013	2,663		$	21.12
Options granted	243		$	31.59
Options exercised	(70	)	$	17.50
Options canceled	(16	)	$	20.66
Options outstanding at March 31, 2014	2,820		$	22.11	5.5	$	22,775
Options vested and expected to vest at March 31, 2014	2,771		$	22.02	5.4	$	22,600
Options exercisable at March 31, 2014	1,914		$	21.37	4.2	$	16,590

As of March 31, 2014, there was $6.2 million of total unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted-average period of 2.2 years.

The intrinsic value of options exercised was $1.0 million and $1.5 million for the three months ended March 31, 2014 and 2013, respectively. This intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option.

Employee Stock Purchase Plan

The employee stock purchase plan allows eligible employees to purchase our common stock at 85.0% of the lesser of the closing price on the first day or the last day of each quarter. Our employee stock purchase plan was approved by our stockholders at our 2012 annual meeting of stockholders and the first offering period commenced in October 2012. We recognized an expense for the amount equal to the discount during the last offering period.

The following table sets forth the stock-based compensation expense recognized for the three months ended March 31, 2014 and 2013.



	For the Three Months Ended
	March 31,
(in thousands)	2014		2013
RSUs	$	5,473	$	5,100
PBRSUs	1,243		2,155
Stock options	1,105		683
Employee stock purchase plan	265		204
	$	8,086	$	8,142

The above share-based compensation expense includes $0.3 million and $0.1 million within cost of services in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, respectively. It also includes $0.1 million and less than $0.1 million of share-based compensation expense for the three months ended March 31, 2014 and 2013, respectively, reported within income from discontinued operations in the accompanying condensed consolidated statements of operations.