

10.	Incentive Plans

The Insperity, Inc. 2001 Incentive Plan, as amended, and the 2012 Incentive Plan, as amended, (collectively, the “Incentive Plans”) provide for options and other stock-based awards that have been and may be granted to eligible employees and non-employee directors of Insperity or its subsidiaries. The 2012 Incentive Plan is currently the only plan under which new stock-based awards may be granted. The Incentive Plans are administered by the Compensation Committee of the Board of Directors (the “Committee”). The Committee has the power to determine which eligible employees will receive awards, the timing and manner of the grant of such awards, the exercise price of stock options (which may not be less than market value on the date of grant), the number of shares and all of the terms of the awards. The Board may at any time amend or terminate the Incentive Plans. However, no amendment that would impair the rights of any participant, with respect to outstanding grants, can be made without the participant’s prior consent. Stockholder approval of amendments to the Incentive Plans is necessary only when required by applicable law or stock exchange rules. At December 31, 2015, 997,059 shares of common stock were available for future grants under the 2012 Incentive Plan. The Incentive Plans permit stock options, including nonqualified stock options and options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code, stock awards, phantom stock awards, stock appreciation rights, performance units, and other stock-based awards and cash awards, all of which may or may not be subject to the achievement of one or more performance objectives. The purposes of the Incentive Plans generally are to retain and attract persons of training, experience and ability to serve as employees of Insperity and its subsidiaries and to serve as non-employee directors of Insperity, to encourage the sense of proprietorship of such persons and to stimulate the active interest of such persons in the development and financial success of Insperity and its subsidiaries.

On March 30, 2015, we adopted the Insperity, Inc. Long-Term Incentive Program under the Insperity, Inc. 2012 Incentive Plan. The LTIP provides for performance-based long-term compensation awards in the form of performance units to certain employees based on the achievement of pre-established performance goals. We granted performance units under the LTIP to our named executive officers and certain other officers in 2015.

We recognized $13.3 million, $11.1 million and $11.1 million of compensation expense associated with the restricted stock and the LTIP awards in 2015, 2014 and 2013, respectively. We recognized $5.3 million, $4.6 million and $4.5 million of tax benefits associated with stock-based compensation in 2015, 2014 and 2013, respectively.

Stock Option Awards

The following is a summary of stock option award activity for 2015:



	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)				(in years)	(in thousands)
Outstanding - December 31, 2014	43		$	28.04
Granted	—		—
Exercised	(15	)	25.14
Canceled	—		—
Outstanding - December 31, 2015	28		29.56		4.4	$	527
Exercisable - December 31, 2015	28		29.56		4.4	$	527

The intrinsic value of options exercised during the year was $0.3 million in 2015, $0.3 million in 2014 and $1.5 million in 2013.

Restricted Stock Awards

Restricted common shares, under equity plan accounting, are generally measured at fair value on the date of grant based on the number of shares granted, estimated forfeitures and the quoted price of the common stock. Such value is recognized as compensation expense over the corresponding vesting period, three to five years for our shares currently outstanding. The total fair value of shares vested during the years ended December 31, 2015, 2014, and 2013 was $18.6 million, $10.8 million and $12.3 million, respectively. The weighted average grant date fair value of restricted stock awards during the years ended December 31, 2015, 2014 and 2013 was $51.54, $28.22 and $29.25, respectively. As of December 31, 2015, unrecognized compensation expense associated with the unvested shares outstanding was $14.4 million and is expected to be recognized over a weighted average period of 23 months.

The following is a summary of restricted stock award activity for 2015:



	Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Non-vested - December 31, 2014	740		$	28.84
Granted	271		51.54
Vested	(368	)	29.71
Canceled/Forfeited	(25	)	36.68
Non-vested - December 31, 2015	618		37.98

Long-Term Incentive Program Awards

Each performance unit represents the right to receive one common share at a future date based on our performance against specified targets. Performance units have a vesting schedule of three years. The fair value of each performance unit is the market price of one common share on the date of grant. The compensation expense for such awards is recognized on a straight-line basis over the vesting terms. Over the performance period, the number of shares expected to be issued is adjusted upward or downward based upon the probability of achievement of the performance targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets. As of December 31, 2015, the unrecognized compensation cost was $6.0 million.

The following is a summary of LTIP award activity for 2015:



	Number of Performance Units at Target		Weighted Average Grant Date Fair Value		Maximum Shares Eligible to Receive

Unvested at December 31, 2014	—		$	—	—
Granted	103,450		52.80		201,800
Vested	—		—		—
Canceled	(2,550	)	—		—
Unvested at December 31, 2015	100,900		52.80		201,800

Expected to vest	153,146

The expected payout assumes the issuance of 153,146 shares of common stock.

Employee Stock Purchase Plan

Our employee stock purchase plan (the “ESPP”) enables employees to purchase shares of Insperity stock at a 5% discount. The ESPP is a non-compensatory plan under generally accepted accounting principles of stock-based compensation. As a result, no compensation expense is recognized in conjunction with this plan. Approximately 24,000, 37,000 and 34,000 shares were issued from treasury under the ESPP during fiscal years 2015, 2014 and 2013, respectively.