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SHARE-BASED COMPENSATION
9 Months Ended
Sep. 30, 2014
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION
In year-to-date 2014, we granted 2,463,254 stock options, 686,310 restricted stock units, 321,403 performance share units and 73,605 stock appreciation rights. In addition, 432,583 outstanding restricted stock units and 216,622 outstanding performance share units vested during year-to-date 2014. A total of 4,333,908 shares of common stock were issued as a result of restricted stock unit vesting, performance share unit vesting and stock option exercises.
As a result of the Real Estate Divestiture, the outstanding awards for active WRECO employees were converted into TRI Pointe awards. In third quarter 2014, 1,601,107 stock options, 279,507 restricted stock units and 44,030 performance share units were cancelled. These shares will be available for future issuance under our Long-Term Incentive Compensation Plan. See Note 2. Discontinued Operations.

STOCK OPTIONS
The weighted average exercise price of all of the stock options granted in 2014 was $30.14. The vesting and post-termination vesting terms for stock options granted in 2014 were as follows:
vest ratably over four years;
vest or continue to vest in the event of death while employed, disability or retirement at an age of at least 62;
continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one year anniversary of the grant;
continue to vest for one year in the event of involuntary termination when the retirement criteria has not been met; and
stop vesting for all other situations including early retirement prior to age 62.

Weighted Average Assumptions Used in Estimating the Value of Stock Options Granted in 2014
 
OPTIONS
Expected volatility
31.71
%
Expected dividends
2.92
%
Expected term (in years)
4.97

Risk-free rate
1.57
%
Weighted average grant date fair value
$
6.62



RESTRICTED STOCK UNITS
The weighted average fair value of the restricted stock units granted in 2014 was $30.14. The vesting provisions for restricted stock units granted in 2014 were as follows:
vest ratably over four years;
immediately vest in the event of death while employed or disability;
continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one year anniversary of the grant;
continue vesting for one year in the event of involuntary termination when the retirement criteria has not been met; and
will be forfeited upon termination of employment in all other situations including early retirement prior to age 62.

PERFORMANCE SHARE UNITS
The weighted average grant date fair value of performance share units granted in 2014 was $30.62. The vesting provisions for performance share units granted in 2014 and that are earned were as follows:
vest 50 percent, 25 percent and 25 percent on the second, third and fourth anniversaries of the grant date, respectively, as long as the individual remains employed by the company;
fully vest in the event the participant dies or becomes disabled while employed;
continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one year anniversary of the grant;
continue vesting for one year in the event of involuntary termination when the retirement criteria has not been met; and
will be forfeited upon termination of employment in all other situations including early retirement prior to age 62.
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2014
 
Performance Share Units
Performance period
1/1/2014 – 12/31/2015
 
Valuation date closing stock price
$
30.16
 
Expected dividends
2.91
%
Risk-free rate
0.03
%
0.79
%
Expected volatility
20.74
%
23.53
%

STOCK APPRECIATION RIGHTS
Stock appreciation rights are remeasured to reflect the fair value at each reporting period. The following table shows the weighted average assumptions applied to all outstanding stock appreciation rights as of September 30, 2014.

Weighted Average Assumptions Used to Remeasure the Value of Stock Appreciation Rights as of September 30, 2014
 
SEPTEMBER 30,
2014
Expected volatility
19.03
%
Expected dividends
3.59
%
Expected term (in years)
1.47

Risk-free rate
0.42
%
Weighted average fair value
$
9.24


The vesting and post-termination vesting terms for stock appreciation rights granted in 2014 are the same as for stock options described above.