QEP issues stock options and restricted shares under its LTSIP and awards performance share units under its CIP to certain officers, employees, and non-employee directors. QEP recognizes expense over the vesting periods for the stock options, restricted shares and performance share units. There were 9.3 million shares available for future grants under the LTSIP at December 31, 2015. Share-based compensation expense related to continuing operations is recognized within "General and administrative" expense on the Consolidated Statements of Operations, and expenses related to discontinued operations (including compensation expense related to the QEP Midstream Long Term Incentive Plan) are reflected within "Net income from discontinued operations, net of income tax" on the Consolidated Statement of Operations. During the year ended December 31, 2015, QEP recognized $34.7 million in total compensation expense related to share-based compensation for continuing operations, compared to $21.4 million and $25.7 million during the years ended December 31, 2014 and 2013, respectively. In addition, during the year ended December 31, 2014, QEP recognized $5.8 million in total compensation expense related to discontinued operations, compared to $1.4 million during the year ended December 31, 2013.

Stock Options

QEP uses the Black-Scholes-Merton mathematical model to estimate the fair value of stock option awards at the date of the grant. Fair value calculations rely upon subjective assumptions used in the mathematical model and may not be representative of future results. The Black-Scholes-Merton model is intended for measuring the value of options traded on an exchange. The Company utilizes the "simplified" method to estimate the expected term of the stock options granted as there is limited historical exercise data available in estimating the expected term of the stock options. QEP uses a historical volatility method to estimate the fair value of stock options awards and the risk-free interest rate is based on the yield on U.S. Treasury strips with maturities similar to those of the expected term of the stock options. The stock options typically vest in equal installments over a three-year period from the grant date and are exercisable immediately upon vesting through the seventh anniversary of the grant date. To fulfill options exercised, QEP either reissues treasury stock or issues new shares.

The calculated fair value of options granted and major assumptions used in the model at the date of grant are listed below:



	Stock Option Assumptions
	Year Ended December 31,
	2015			2014			2013
Weighted-average grant date fair value of awards granted during the period	$	6.82		$	10.11		$	15.16
Risk-free interest rate range	1.38% - 1.38%			1.31% - 1.34%			0.97% - 1.84%
Weighted-average risk-free interest rate	1.4		%	1.3		%	1.0		%
Expected price volatility range	36.8% - 36.8%			36.1% - 37.3%			51.5% - 58.5%
Weighted-average expected price volatility	36.8		%	37.1		%	58.3		%
Expected dividend yield	0.37		%	0.25		%	0.27		%
Expected term in years at the date of grant	4.5			4.5			5.5

Stock option transactions under the terms of the LTSIP are summarized below:



	Options Outstanding		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
			(per share)		(in years)	(in millions)
Outstanding at December 31, 2014	1,996,215		$	28.60
Granted	425,877		21.69
Exercised	(15,000	)	19.37
Forfeited	(2,817	)	31.31
Canceled	(203,499	)	21.87
Outstanding at December 31, 2015	2,200,776		$	27.94	3.19	$	—
Options Exercisable at December 31, 2015	1,522,326		$	29.17	2.10	$	—
Unvested Options at December 31, 2015	678,450		$	25.20	5.63	$	—

The total intrinsic value (the difference between the market price at the exercise date and the exercise price) of options exercised was $0.1 million, $0.6 million and $4.3 million during the years ended December 31, 2015, 2014 and 2013, respectively. The Company realized an income tax expense of $6.4 million for the year ended December 31, 2015, no income tax impact for the year ended December 31, 2014, and $1.4 million of income tax benefits for the year ended December 31, 2013, which increased its Additional Paid-in-Capital (APIC) pool by $0.1 million as of December 31, 2015. As of December 31, 2015, $1.9 million of unrecognized compensation cost related to stock options granted under the LTSIP, which is included within "Additional paid-in capital" on the Consolidated Balance Sheet, is expected to be recognized over a weighted-average period of 1.96 years. During the year ended December 31, 2015, QEP issued shares for stock option exercises from its treasury stock and issued new shares. In addition, QEP received $0.3 million in cash in relation to the exercise of stock options.

Restricted Shares

Restricted share grants typically vest in equal installments over a three-year period from the grant date. The grant date fair value is determined based on the closing bid price of the Company's common stock on the grant date. The total fair value of restricted stock that vested during the years ended December 31, 2015, 2014 and 2013, was $22.7 million, $26.8 million and $19.8 million, respectively. The Company realized an income tax benefit of $3.2 million for the year ended December 31, 2015, and income tax expense of $0.5 million and $0.1 million for the years ended December 31, 2014, and 2013, respectively. Restricted stock increased the Company's APIC pool by $3.5 million as of December 31, 2015. The weighted-average grant date fair value of restricted stock granted was $20.92 per share, $31.40 per share and $30.06 per share for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, $20.3 million of unrecognized compensation cost related to restricted shares granted under the LTSIP, which is included within "Additional paid-in capital" on the Consolidated Balance Sheet, is expected to be recognized over a weighted-average vesting period of 2.04 years.

Transactions involving restricted shares under the terms of the LTSIP are summarized below:



	Restricted Shares Outstanding		Weighted- Average Grant Date Fair Value
			(per share)
Unvested balance at December 31, 2014	1,426,453		$	31.02
Granted	1,509,384		20.92
Vested	(748,157	)	30.33
Forfeited	(179,470	)	25.45
Unvested balance at December 31, 2015	2,008,210		$	24.18

Performance Share Units

The performance share units' cash payouts are dependent upon the Company's total shareholder return compared to a group of its peers over a three-year period. The awards are denominated in share units and have historically been delivered in cash. Beginning with awards granted in 2015, the Company has the option to settle earned awards in cash or shares of common stock under the Company's LTSIP; however, as of December 31, 2015, the Company expects to settle all awards in cash. The weighted-average grant date fair values of the performance share units granted during the years ended December 31, 2015, 2014 and 2013, were $21.69, $31.57, and $30.12 per share, respectively. As of December 31, 2015, $4.5 million of unrecognized compensation cost, which represents the unvested portion of the fair market value of performance shares granted, is expected to be recognized over a weighted-average vesting period of 1.75 years.

Transactions involving performance share units under the terms of the CIP are summarized below:



	Performance Share Units Outstanding		Weighted- Average Grant Date Fair Value
			(per share)
Unvested balance at December 31, 2014	552,209		$	30.85
Granted	234,085		21.69
Vested and paid out	(131,665	)	30.77
Canceled ⁽¹⁾	(14,612	)	30.77
Forfeited	(9,231	)	29.19
Unvested balance at December 31, 2015	630,786		$	27.50

____________________________


⁽¹⁾	Represents units that were not paid out due to performance under the Plan.