STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

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 Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Stock-based compensation charged	$	1,186	$	1,004	$	2,180	$	2,091

Stock Options

A summary of option activity for the six months ended June 30, 2013 is presented below:

	Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at January 1, 2013	2,219,625		$	31.51	4.06	$	—
Exchanged	(1,618,000	)	31.54
Forfeited	(55,875	)	38.46
Expired	(70,000	)	$	51.45
Outstanding at June 30, 2013	475,750		$	27.67	1.93	$	—
Vested or expected to vest	475,750		27.67		1.93	—
Exercisable at June 30, 2013	475,750		$	27.67	1.93	$	—

At the annual general meeting of CME Ltd. held on June 13, 2012, the shareholders approved an employee option exchange program whereby employees would be given the opportunity to exchange certain outstanding stock options for a lesser number of restricted stock units ("RSUs"). The exchange program was completed on June 25, 2013, and 1,618,000 outstanding stock options were exchanged for 545,136 RSUs pursuant to the exchange program. The unrecognized compensation expense related to the exchanged options is being recognized ratably of the requisite service period of the replacement RSUs.

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 first quarter of 2013 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 June 30, 2013. This amount changes based on the fair value of our Class A common stock. As at June 30, 2013, there was no unrecognized compensation expense related to stock options.

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 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 shares of our Class A common stock on the date of grant. For certain awards with market conditions, the grant date fair value is calculated using a Monte Carlo simulation model. The Monte Carlo simulation model, requires the input of subjective assumptions, including the expected volatility of our common stock, interest rates, dividend yields and correlation coefficient between our common stock and the relevant market index.

The following table summarizes information about unvested RSUs as at June 30, 2013:

	Number of Shares/Units		Weighted- Average Grant Date Fair Value
Unvested at December 31, 2012	584,000		$	5.61
Granted	670,500		2.60
Granted - option exchange program	545,136		3.27
Vested	(235,500	)	5.48
Forfeited	(76,250	)	4.81
Unvested at June 30, 2013	1,487,886		$	3.46

As at June 30, 2013, the intrinsic value of unvested RSUs was US$ 4.9 million. Total unrecognized compensation expense related to unvested RSUs as at June 30, 2013 was US$ 6.8 million and is expected to be recognized over a weighted-average period of 3.2 years.