STOCK-BASED COMPENSATION

7,500,000 shares have been authorized for issuance in respect of equity awards under our Amended and Restated Stock Incentive Plan (“the Plan”). Under the Plan, awards are made to employees at the discretion of the Compensation Committee and to directors pursuant to an annual automatic grant under the Plan or at the discretion of the Board of Directors.

The charge for stock-based compensation in our consolidated statements of operations was as follows:



	For The Years Ending December 31,
	2012		2011		2010
Stock-based compensation charged	$	4,249	$	5,898	$	6,837

Stock Options

Grants of options allow the holders to purchase shares of Class A common stock at an exercise price, which is generally the market price prevailing at the date of the grant, with vesting between one and four years after the awards are granted. A summary of option activity for the twelve months ended December 31, 2012 is presented below:



	Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at January 1, 2012	2,901,687		$	32.86	4.49	$	71
Exercised	(16,000	)	2.06
Forfeited	(636,062	)	35.61
Expired	(30,000	)	$	90.54
Outstanding at December 31, 2012	2,219,625		$	31.51	4.06	$	—
Vested or expected to vest	2,145,544		31.80		3.99	—
Exercisable at December 31, 2012	1,631,500		$	34.26	3.43	$	—

When options are vested, holders may exercise them at any time up to the maximum contractual life of the instrument which is specified in the option agreement. At December 31, 2012, the maximum life of options that had been issued under the Plan was ten years. Upon providing the appropriate written notification, holders pay the exercise price and receive shares. Shares delivered under the Plan are newly issued shares. We received US$ 0.03 million, US$ 0.2 million and US$ 0.6 million in cash from the awards that were exercised in 2012, 2011 and 2010, respectively, which had an intrinsic value of US$ 0.1 million, US$ 0.3 million and US$ 0.2 million, respectively. The income tax benefits realized thereon was US$ nil in 2012, 2011 and 2010.

The fair value of stock options is estimated on the grant date using the Black-Scholes option-pricing model and recognized ratably over the requisite service period.

The aggregate intrinsic value (the difference between the stock price on the last day of trading of the fourth quarter of 2012 and the exercise prices multiplied by the number of in-the-money options) represents the total intrinsic value that would have been received by the option holders had they exercised all in-the-money options as at December 31, 2012. This amount changes based on the fair value of our common stock. As at December 31, 2012, there was US$ 4.9 million of total unrecognized compensation expense related to options.

At the annual general meeting of CME Ltd. on June 13, 2012, the shareholders approved an employee option exchange program whereby up to 1.7 million options may be exchanged for up to 0.8 million RSUs. While we have yet to set the terms of any such exchange and can not be assured of the number of options likely to be tendered, if we complete the exchange program we expect the number of outstanding options to decrease significantly.

There were no options granted during during 2012. The weighted average assumptions used in the Black-Scholes model for grants made in the years ending December 31, 2011 and 2010 were as follows:



	For The Years Ending December 31,
	2011			2010
Risk -free interest rate	1.67		%	2.02		%
Expected term (years)	4.82			4.90
Expected volatility	57.90		%	57.26		%
Dividend yield	0		%	0		%
Weighted-average fair value	$	10.98		$	12.64

The following table summarizes information about stock option activity during 2012, 2011, and 2010:



	2012		2011				2010
	Shares	Weighted Average Exercise Price (US$/share)	Shares		Weighted Average Exercise Price (US$/share)		Shares		Weighted Average Exercise Price (US$/share)
Outstanding at beginning of year	2,901,687	32.86	2,539,062		$	35.44	2,000,750		$	39.59
Awards granted	—	—	555,000		22.33		720,000		25.59
Awards exercised	(16,000)	2.06	(23,625	)	10.23		(32,313	)	18.31
Awards forfeited	(636,062)	35.61	(168,750	)	40.17		(149,375	)	47.28
Awards expired	(30,000)	90.54	—		—		—		—
Outstanding at end of year	2,219,625	31.51	2,901,687		$	32.86	2,539,062		$	35.44

The following table summarizes information about stock options outstanding at December 31, 2012:



	Options outstanding
Range of exercise prices	Shares	Average remaining contractual life (years)	Aggregate intrinsic value (US$)		Weighted average exercise price (US$)
$ 0.01 - 20.00	322,000	1.87	$	—	$	16.77
$ 20.01 - 40.00	1,562,875	4.75	—		23.86
$ 40.01 - 60.00	123,250	2.97	—		53.08
$ 60.01 - 80.00	72,000	3.91	—		71.20
$ 80.01 - 100.00	—	0	—		—
$ 100.01 - 120.00	139,500	2.39	—		111.77
Total	2,219,625	4.06	$	—	$	31.51

The following table summarizes information about stock options exercisable at December 31, 2012:



	Options exercisable
Range of exercise prices	Shares	Average remaining contractual life (years)	Aggregate intrinsic value (US$)		Weighted average exercise price (US$)
$ 0.01 - 20.00	322,000	1.87	$	—	$	16.77
$ 20.01 - 40.00	974,750	4.12	—		23.84
$ 40.01 - 60.00	123,250	2.97	—		53.08
$ 60.01 - 80.00	72,000	3.91	—		71.20
$ 80.01 - 100.00	—	0	—		—
$ 100.01 - 120.00	139,500	2.39	—		111.77
Total	1,631,500	3.43	$	—	$	34.26

Restricted Stock Units

Pursuant to the Plan, we may grant RSUs to our employees and non-employee directors. Each RSU represents a right to receive one share of Class A common stock of the Company for each RSU that vests in accordance with the vesting schedule, generally between one to four years from the date of grant. Upon vesting, shares of CME Class A common stock are issued from authorized but unissued shares. Holders of RSU awards are not entitled to receive cash dividend equivalents. The grant date fair value of RSUs is calculated as the closing price of our class A common shares on the date of grant.

The following table summarizes information about unvested RSUs as at December 31, 2012:



	Number of Shares/Units		Weighted- Average Grant Date Fair Value
Unvested at December 31, 2011	—		—
Granted	600,000		5.61
Vested	—		—
Forfeited	(16,000	)	5.59
Unvested at December 31, 2012	584,000		5.61

As at December 31, 2012, the intrinsic value of unvested RSUs was US$ 3.6 million. Total unrecognized compensation cost related to unvested RSUs as at December 31, 2012 was US$ 2.3 million and is expected to be recognized over a weighted-average period of 1.7 years.