3.SHARE-BASED COMPENSATION:

Share-based Compensation Plans

The Company has stock option and equity compensation plans for which a total of 26.4 million shares of the Company’s common stock have been reserved for issuance since inception of the plans. These plans provide that the exercise prices of qualified options will be at or above the fair market value of the common stock at the time of the grant. Board policy requires that nonqualified options also be priced at or above the fair market value of the common stock at the time of grant. At June 30, 2015, there were a total of 2.2 million shares available for future grants under the plans.

On May 8, 2015, the Company’s compensation committee, acting on behalf of the full board of directors, approved an amendment to one of the Company’s equity compensation plans which would permit the issuance of an additional 4.1 million shares under the plan. That amendment will be presented for shareholder approval at the August 18, 2015 annual shareholders’ meeting and, if approved, will bring the total number of shares of the Company’s common stock available for issuance under its stock option and equity compensation plans to 30.5 million shares.

Stock Option Activity

The Company granted 426,380 stock options in the three months ended June 30, 2015. The per-share weighted-average fair value of the stock options granted during the three months ended June 30, 2015 was $6.43. This valuation was determined using a customized binomial lattice approach with the following weighted-average assumptions: dividend yield of 0.0%; risk-free interest rate of 2.2%; expected option life of 4.5 years; expected volatility of 40% and a suboptimal exercise multiple of 1.4. The dividend yield was determined to be 0.0% since Acxiom is currently not paying dividends and there are no plans to pay dividends. The risk-free rate was determined by reference to the U.S. Treasury securities with a term equal to the life of the options. The expected option life is an output of the lattice model. The expected volatility was determined by considering both the historical volatility of Acxiom common stock, as well as the implied volatility of traded Acxiom options. The suboptimal exercise multiple was determined using actual historical exercise activity of Acxiom options.

Option activity for the three months ended June 30, 2015 was as follows:

	Number of shares		Weighted-average exercise price per share		Weighted-average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at March 31, 2015	4,870,219		$	15.11
Granted	426,380		$	17.73
Exercised	(114,534	)	$	5.92		$	1,337
Forfeited or cancelled	(266,442	)	$	28.68

Outstanding at June 30, 2015	4,915,623		$	14.81	4.92	$	23,091


Exercisable at June 30, 2015	3,239,911		$	16.66	3.28	$	10,911

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Acxiom’s closing stock price on the last trading day of the quarter and the exercise price for each in-the-money option) that would have been realized by the option holders had option holders exercised their options on June 30, 2015. This amount changes based upon changes in the fair market value of Acxiom’s common stock.

Following is a summary of stock options outstanding and exercisable as of June 30, 2015:

	Options outstanding				Options exercisable
Range of exercise price per share	Options outstanding	Weighted-average remaining contractual life	Weighted-average exercise price per share		Options exercisable	Weighted-average exercise price per share

$ 0.63 - $ 8.90	1,012,561	7.27 years	$	1.68	308,431	$	2.14
$ 11.08 - $ 14.42	1,404,362	4.33 years	$	13.17	1,204,803	$	13.12
$ 15.10 - $ 19.76	988,969	5.45 years	$	16.94	549,649	$	16.27
$ 20.44 - $ 25.00	1,363,721	3.78 years	$	22.27	1,045,683	$	22.57
$ 26.33 - $ 35.16	69,850	2.43 years	$	32.42	55,185	$	32.30
$ 41.38 - $ 62.06	76,160	0.32 years	$	41.97	76,160	$	41.97

	4,915,623	4.92 years	$	14.81	3,239,911	$	16.66

Total expense related to stock options for the three months ended June 30, 2015 and 2014 was approximately $2.7 million and $0.6 million, respectively. Future expense for these options is expected to be approximately $17.2 million over the next four years.

Stock Appreciation Right (SAR) Activity

Following is a summary of SAR activity for the three months ended June 30, 2015:

	Number of shares	Weighted-average exercise price per share		Weighted-average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at March 31, 2015	245,404	$	40.00
Outstanding at June 30, 2015	245,404	$	40.00	1.75	$	—


Exercisable at June 30, 2015	—	$	—	—	$	—

Total expense related to SARs for the three months ended June 30, 2015 and 2014 was not material. Future expense for these SARs is expected to be approximately $0.3 million over the next two years.

Restricted Stock Unit Activity

During the three months ended June 30, 2015, the Company granted time-vesting restricted stock units covering 634,145 shares of common stock with a value at the date of grant of $11.1 million. Of the restricted stock units granted in the current period, 614,892 vest in equal annual increments over four years and 19,253 vest in one year. Valuation of these units is equal to the quoted market price for the shares on the date of grant.

Non-vested time-vesting restricted stock unit activity for the three-month period ending June 30, 2015 was as follows:

	Number of shares		Weighted-average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2015	2,052,865		$	20.53	1.95
Granted	634,145		$	17.58
Vested	(310,781	)	$	18.02
Forfeited or cancelled	(65,787	)	$	19.91

Outstanding at June 30, 2015	2,310,442		$	20.07	2.27

During the three months ended June 30, 2015, the Company granted performance-based restricted stock units covering 327,187 shares of common stock with a value at the date of grant of $5.9 million. All of the performance-based restricted stock units granted in the current period vest subject to attainment of performance criteria established by the compensation committee of the board of directors. The units granted in the current period may vest in a number of shares from zero to 200% of the award, based on the attainment of an earnings-per-share target for fiscal 2018, with a modifier based on the total shareholder return of Acxiom stock compared to total shareholder return of a group of peer companies established by the compensation committee of the board of directors for the period from April 1, 2015 to March 31, 2018. The value of the performance-based restricted stock units is determined using a Monte Carlo simulation model.

Non-vested performance-based restricted stock unit activity for the three-month period ending June 30, 2015 was as follows:

	Number of shares		Weighted-average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2015	389,310		$	21.12	1.57
Granted	327,187		$	18.12
Forfeited or cancelled	(41,814	)	$	20.97

Outstanding at June 30, 2015	674,683		$	19.67	2.02

Total expense related to all restricted stock units in the three months ended June 30, 2015 and 2014 was approximately $5.1 million and $3.2 million, respectively. Future expense for these restricted stock units is expected to be approximately $43.3 million over the next four years.

Other Performance Unit Activity

Following is a summary of other performance-based unit activity for the three months ended June 30, 2015:

	Number of shares	Weighted-average fair value per share at grant date		Weighted-average remaining contractual term (in years)
Outstanding at March 31, 2015	312,575	$	5.23
Outstanding at June 30, 2015	312,575	$	5.23	2.11

Total expense related to other performance units for the three months ended June 30, 2015 and 2014 was not material. Future expense for these performance units is expected to be approximately $1.2 million over the next three years.

Share-based Compensation Plan Activity Related to Discontinued Operations

The share-based compensation plan activity related to the ITO discontinued operations was not material. At June 30, 2015, the Company had outstanding 22,827 stock options and restricted stock units covering 56,813 shares of the Company’s common stock related to associates of the ITO discontinued operations.