14. STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

 

 

 

Stock-based compensation expense is not allocated to segments because it is centrally managed at the corporate level.

Stock Options

There were no stock options granted in the three months ended March 31, 2015 and 2014.

Performance Shares and Restricted Stock Units

During the three months ended March 31, 2015 and 2014, the Company granted 884,202 and 450,580, respectively, of performance shares to certain employees and executives, at a weighted average fair value of $14.27 and $13.87 per share, respectively. The 2015 and 2014 grants are generally divided evenly over three annual performance periods commencing with calendar year 2015 and 2014, respectively.

During the three months ended March 31, 2015 and 2014, the Company granted 2,693,878 and 2,582,618, respectively, of restricted stock units at a weighted average fair value of $13.82 and $12.97 per share, respectively.

During the three months ended March 31, 2015 and 2014, there were no restricted stock units granted to non-employee directors.

Employee Stock Purchase Plan

During the three months ended March 31, 2015 and 2014, 1,183,426 and 1,696,177 shares were purchased under the Company’s employee stock purchase plan (“ESPP”), respectively. As of March 31, 2015, there were 10,131,641 shares available to be issued under the ESPP.

Valuation Assumptions

For purchase rights granted pursuant to the ESPP, the estimated fair value per share of employee stock purchase rights for the two-year offering period commencing on February 2, 2015 ranged from $3.09 to $4.27, compared to the estimated fair value per share from $2.82 to $4.48 for the two-year offering period commencing on February 3, 2014.

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

 

 

 

The Company computed its expected volatility assumption based on blended volatility (50% historical volatility and 50% implied volatility). The selection of the blended volatility assumption was based upon the Company’s assessment that blended volatility is more representative of the Company’s future stock price trends as it weighs in the longer term historical volatility with the near term future implied volatility.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the Company’s employee stock purchases.

The dividend yield assumption is based on the Company’s history of not paying dividends and future expectation of dividend payouts.

The expected life of employee stock purchase rights represents the contractual terms of the underlying program.