Stock Incentive Plans

On April 5, 2013, the shareholders approved the 2013 Stock Incentive Plan, which was previously adopted by the Board on March 1, 2013, subject to shareholder approval. The aggregate number of shares of common stock that are subject to awards under the 2013 Stock Incentive Plan, subject to adjustment upon a change in capitalization, is 4.0 million. On June 20, 2006, the shareholders approved the 2006 Stock Incentive Plan and, as amended, the aggregate number of shares of common stock that are subject to awards is 7.9 million.

The 2013 Stock Incentive Plan and 2006 Stock Incentive Plan allow for the issuance of stock options, stock appreciation rights (“SARs”), restricted stock and common stock, subject to share availability. Vesting of equity instruments is determined on a grant-by-grant basis. Options expire at the end of 10 years from the date of grant, and Kforce issues new shares upon exercise of options.

The 2013 Stock Incentive Plan terminates on April 5, 2023 and the 2006 Stock Incentive Plan terminates on April 28, 2016. The Incentive Stock Option Plan expired in 2005.

During the three months ended March 31, 2015 and 2014, Kforce recognized total stock-based compensation expense of $1.3 million and $0.8 million, respectively. During the three months ended March 31, 2015 and 2014, Kforce recognized stock-based compensation expense from continuing operations of $1.3 million and $0.8 million, respectively.

Stock Options

The following table presents the activity under each of the stock incentive plans discussed above for the three months ended March 31, 2015 (in thousands, except per share amounts):



	Incentive Stock Option Plan		2006 Stock Incentive Plan	Total		Weighted Average Exercise Price Per Share		Total Intrinsic Value of Options Exercised
Outstanding and Exercisable as of December 31, 2014	22		35	57		$	11.69
Exercised	(22	)	—	(22	)	$	11.00	$	269
Forfeited/Canceled	—		—	—		$	—
Outstanding and Exercisable as of March 31, 2015	—		35	35		$	12.14

No compensation expense was recorded during the three months ended March 31, 2015 or 2014 as a result of the grant date fair value having been fully amortized as of December 31, 2009. As of March 31, 2015, there was no unrecognized compensation cost related to non-vested options.

Restricted Stock

Kforce's annual restricted stock grants made to executives and management are generally based on the extent by which annual long-term incentive performance goals, which are established by Kforce’s Compensation Committee during the first quarter of the year of performance, have been met, as determined by the Compensation Committee. Additionally, Kforce, with the approval of the Compensation Committee, grants restricted stock in varying amounts as determined appropriate during the year to retain executives and management. Restricted stock granted during the three months ended March 31, 2015 primarily vests over a period of five years with 20% of the awards vesting annually.

During the three months ended March 31, 2014, the Firm modified all awards containing a performance-acceleration feature that were granted during the three months ended December 31, 2013, as follows: (1) eliminated the performance-acceleration feature and (2) changed the time-based vesting term to five years, with equal vesting annually. The total number of restricted shares impacted by this modification was 268 thousand, excluding already forfeited shares, and the number of employees impacted was 87. The total incremental compensation cost resulting from the modification was $109 thousand, which will be amortized on a straight-line basis over the requisite service period of the modified awards.

Restricted stock contain the same voting rights as other common stock and are included in the number of shares of common stock issued and outstanding. Restricted stock contain the right to forfeitable dividends in the form of additional shares of restricted stock at the same rate as the cash dividend on common stock and containing the same vesting provisions as the underlying award. The following table presents the activity for the three months ended March 31, 2015 (in thousands, except per share amounts):



	Number of Restricted Stock		Weighted Average Grant Date Fair Value		Total Intrinsic Value of Restricted Stock Vested
Outstanding as of December 31, 2014	982		$	18.55
Granted	441		$	24.09
Forfeited/Canceled	(9	)	$	19.48
Vested	(69	)	$	17.10	$	1,672
Outstanding as of March 31, 2015	1,345		$	20.43

The fair market value of restricted stock is determined based on the closing stock price of Kforce’s common stock at the date of grant, and is amortized on a straight-line basis over the requisite service period. As of March 31, 2015, total unrecognized compensation expense related to restricted stock was $19.5 million, which will be recognized over a weighted average remaining period of 4.7 years.