Shareholders' Equity

Share-Based Compensation — On April 27, 2004, our shareholders approved the adoption of the Ciber, Inc. 2004 Incentive Plan (the "2004 Plan"). To date, 20,350,000 shares of Ciber, Inc. common stock have been authorized for issuance under the 2004 Plan. The plan administrators may grant restricted stock, stock options, performance units or any combination thereof, to officers, employees and consultants. The Compensation Committee of the Board of Directors determines the number, nature and vesting of such awards. As of December 31, 2013, there were 8,180,639 shares available for future grants under the 2004 Plan.

On November 9, 2010, the Board of Directors adopted a new non-employee director compensation program effective January 1, 2011. Under the new program, upon election or appointment to the Board of Directors, non-employee directors are granted restricted stock units ("RSUs") valued at $100,000 of Company common stock (the "initial grant") and non-employee directors are granted RSUs valued at $100,000 of Company common stock annually (the "annual grant"). The initial grant and annual grant vest in equal quarterly installments over a period of three years and one year, respectively. Compensation expense for equity grants to non-employee directors was approximately $558,000, $517,000, and $349,000 for the years ended December 31, 2013, 2012, and 2011, respectively, and is included in our total recorded share-based compensation costs.

From time to time, Ciber has made inducement grants to executive level employees. They are generally granted with an exercise price equal to the market value of our common stock on the date of issuance with similar vesting terms as awards granted under the 2014 Plan. These grants are outside of the 2004 Plan and are not subject to shareholder approval.

The table below summarizes the amounts recorded in the Consolidated Statements of Operations for share-based compensation:



	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Share-based compensation costs — continuing operations	$	11,746	$	7,282	$	4,540
Share-based compensation costs — discontinued operations	—		269		371
Total share-based compensation costs included in consolidated net loss	$	11,746	$	7,551	$	4,911

Options

Options granted under the 2004 Plan generally have an exercise price that is equal to the market value of our common stock on the date of issuance. Options granted during the last three fiscal years under the 2004 Plan are subject to cliff or graded vesting. Graded vesting generally ranges from two to three years, as determined at the date of grant by the Board of Directors, with the exception of some options granted to employees of our International segment, which may be fully vested on the grant date. Additionally, options granted under the 2004 Plan have contractual terms ranging from four to 10 years, but all 2004 Plan options must expire no later than 10 years from the grant date. Options granted during the last three fiscal years under the 2004 Plan had contractual terms of five years to seven years. We did not grant any options during 2013.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing method. Compensation costs related to options with graded vesting are recognized on a straight-line basis over the vesting period. The expected life for options with a contractual life of 10 years is derived from historical data pertaining to option exercises and employee terminations. The expected life for options with a contractual life of less than 10 years is derived using the SEC's "simplified method," as we do not have sufficient historical data pertaining to options with contractual lives of less than 10 years upon which to base an expected term assumption. Expected volatilities are based on historical volatility of our common stock. The risk-free interest rate is derived from the U.S. Treasury yields in effect at the time of grant and the dividend yield is based on historical experience and expected future changes.

A summary of the weighted average assumptions used to value options granted and the grant date fair value follows:



	Year Ended December 31,
	2012			2011
Expected life (in years)	4.4			4.2
Risk-free interest rate	0.63		%	1.34		%
Expected volatility	70		%	67		%
Dividend yield	0		%	0		%
Fair value	$	2.13		$	2.55

A summary of stock option activity for 2013 is presented below:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
	(In thousands, except per share amounts or as otherwise disclosed)
Outstanding at January 1, 2013	8,115		$	4.58
Granted	—		$	—
Exercised	(635	)	$	3.43
Expired or canceled	(1,801	)	$	6.00
Forfeited	(302	)	$	4.42
Outstanding at December 31, 2013	5,377		$	4.33	3.22	$	3,500
Vested and expected to vest at December 31, 2013	5,336		$	4.34	3.19	$	3,469
Exercisable at December 31, 2013	4,375		$	4.55	2.86	$	2,682

The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) was $0.5 million, $0.3 million, and $2.1 million during the years ended December 31, 2013, 2012, and 2011, respectively.

RSUs

RSUs granted during the last three fiscal years under the 2004 Plan are generally subject to vesting over a period of one to three years, varying from graded vesting or performance-based conditions in combination with graded vesting, as well as other possible vesting schedules as determined at the date of grant by the Board of Directors. The fair value of the RSUs, equivalent to the Company's stock price at the date of grant, is expensed over the vesting term.

A summary of RSU activity for 2013 is presented below:



	Number of RSUs		Weighted Average Grant Date Fair Value
	(In thousands, except per share amounts)
Nonvested shares outstanding at January 1, 2013	1,685		$	4.43
Granted	3,244		$	4.12
Vested	(1,770	)	$	4.29
Forfeited	(410	)	$	4.06
Nonvested shares outstanding at December 31, 2013	2,749		$	4.09

The total fair value of RSUs that vested during the years ended December 31, 2013, 2012, and 2011, was $6.8 million, $2.9 million, and $2.8 million, respectively.

As of December 31, 2013, there was approximately $9.3 million of total unrecognized compensation cost related to the nonvested stock options and RSUs disclosed in the tables above. That cost is expected to be recognized over a weighted average period of 2.0 years.

At December 31, 2013, there were 16,305,984 shares of Ciber common stock reserved for share-based awards outstanding or available for future grants under our share-based plans.

Employee Stock Purchase Plan — Under our Employee Stock Purchase Plan ("ESPP"), which is a non-qualified plan, substantially all employees may elect to contribute up to 10% of their compensation during one calendar year, or a maximum of $10,000. Our ESPP allows eligible employees to purchase shares of our common stock at a price equal to 95% of fair market value on the last day of the applicable three-month offering period. The Company records no compensation cost for our ESPP. We issued approximately 206,000, 281,000, and 442,000 shares in 2013, 2012, and 2011, respectively, under our ESPP.

Shelf Registration Statements on Form S-4 — At December 31, 2013, we had two effective registration statements on Form S-4, under which together approximately 13,469,000 shares of our common stock remained available. The shares available under either one of these registration statements may be used by Ciber from time to time in connection with future business combinations.

Stock Purchase Rights — Pursuant to our Rights Agreement, dated August 31, 1998, Ciber, Inc. paid a dividend of one preferred stock purchase right (a "Right") for each outstanding share of Ciber, Inc. common stock ("Common Stock") on September 21, 1998. A Right is also attached to all shares of Common Stock issued after the dividend date. On May 2, 2008, we amended and restated our original Rights Agreement. Under the Amended Rights Agreement, each shareholder of the Company holds one Right for each share of Common Stock held. The Rights generally become exercisable only in the event that an acquiring party accumulates 15% or more of our outstanding Common Stock. Each Right entitles the registered holder to purchase one thousandth of a share of Series A Junior Participating Preferred Stock of Ciber, Inc., par value $0.01, at a purchase price of $37.00, subject to the conditions set forth in the Amended Rights Agreement. If this were to occur, subject to certain exceptions, each Right (except for the Rights held by the acquiring party) would allow its holder to purchase Common Stock with a value equal to twice the exercise price of the Right. In the event that, after an acquiring party has accumulated 15% or more of our outstanding Common Stock, the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets, cash flow or earning power are sold, each unexercised Right (except for the Rights held by the acquiring party) would thereafter allow its holder to purchase stock of the acquiring company (or our Common Stock if it is the surviving company to the transaction) with a value equal to twice the purchase price of the Right. If the Rights were fully exercised, the shares issued would cause substantial dilution to the acquiring party or the shareholders of the acquiring company. The Amended Rights Agreement provides a period of time during which we may redeem the Rights, in whole or in part at a price of $0.001 per Right, such that this period will end on the earlier of (i) the tenth business day following the date a person or group becomes the beneficial owner of 15% or more of the Common Stock or (ii) the final expiration date of the Rights, which is May 2, 2018.