Share-based Compensation

9 Months Ended

Sep. 30, 2013

Share-based Compensation

Share-based Compensation

8.  Share-based Compensation

During the first quarter of 2013, we granted 644,677 restricted stock units (“RSUs”) to certain of our executive officers.  The RSUs were valued at $4.1 million and vest over three years.  Vesting for 212,384 of the RSUs is subject to (i) the grantees continued employment or providing service to us and (ii) reduction if the aggregate fair value of each grant exceeds a specified percentage of our Adjusted EBITDA (as defined) for 2013 (i.e., a market condition).  Vesting for the remaining 432,293 RSUs is subject to the grantees continued employment or providing service to us, and reaching certain revenue and Adjusted EBITDA growth targets (i.e., performance conditions).

In addition, during the first quarter of 2013 we also granted 84,622 RSUs to our outside directors as compensation for services.  These RSUs were valued at $0.6 million and vest over one to three years.

During the second quarter of 2013, we granted 430,470 RSUs to certain of our employees.  The RSUs were valued at $2.7 million and vest over three years.  Vesting is subject to the grantees continued employment with us or providing service to us, and reaching certain revenue and Adjusted EBITDA growth targets (i.e., performance conditions).

We recognized $3.2 million and $4.4 million in share-based compensation expense related to stock options, restricted stock awards and RSUs during the three months ended September 30, 2013 and 2012, and $9.7 million and $13.8 million during the nine months then ended, respectively. Unrecognized compensation costs related to unvested options and RSUs were $17.6 million at September 30, 2013. These costs are expected to be recognized over the weighted average remaining vesting period of 1.7 years.

As discussed in Note 1, immediately prior to the consummation of the merger transaction with ER all unvested stock options and RSUs will become fully vested.