QEP issues stock options, restricted shares and restricted share units under its Long-Term Stock Incentive Plan (LTSIP) and awards performance share units under its Cash Incentive Plan (CIP) to certain officers, employees, and non-employee directors. QEP recognizes the expense over the vesting periods for the stock options, restricted shares, restricted share units and performance share units. There were 6.9 million shares available for future grants under the LTSIP at March 31, 2016.

Share-based compensation expense is recognized within “General and administrative” expense on the Condensed Consolidated Statements of Operations and is summarized in the table below:



	Three Months Ended
	March 31,
	2016		2015
	(in millions)
Stock options	$	0.7	$	0.8
Restricted share awards	6.5		6.3
Performance share units	0.8		2.0
Restricted share units	—		—
Total share-based compensation expense	$	8.0	$	9.1

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 for the three months ended March 31, 2016:



	Stock Option Assumptions
Weighted-average grant date fair value of awards granted during the period	$	3.76
Weighted-average risk-free interest rate	1.15		%
Weighted-average expected price volatility	43.4		%
Expected dividend yield	—		%
Expected term in years at the date of grant	4.5

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, 2015	2,200,776		$	27.94
Granted	436,726		10.12
Canceled	(386,999	)	23.98
Outstanding at March 31, 2016	2,250,503		$	25.17	4.22	$	1.7
Options Exercisable at March 31, 2016	1,448,779		$	30.00	3.06	$	—
Unvested Options at March 31, 2016	801,724		$	16.43	6.32	$	1.7

During the three months ended March 31, 2016 and 2015, there were no exercises of stock options. As of March 31, 2016, $2.8 million of unrecognized compensation cost related to stock options granted under the LTSIP, which is included within "Additional paid-in capital" on the Condensed Consolidated Balance Sheet, is expected to be recognized over a weighted-average period of 2.45 years.

Restricted Share Awards

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 three months ended March 31, 2016 and 2015, was $20.4 million and $18.0 million, respectively. The weighted-average grant date fair value of restricted stock was $10.13 per share and $21.67 per share for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, $36.2 million of unrecognized compensation cost related to restricted shares granted under the LTSIP, which is included within "Additional paid-in capital" on the Condensed Consolidated Balance Sheet, is expected to be recognized over a weighted-average vesting period of 2.55 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, 2015	2,008,210		$	24.18
Granted	2,356,919		10.13
Vested	(783,782	)	26.01
Forfeited	(41,193	)	18.32
Unvested balance at March 31, 2016	3,540,154		$	14.50

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 March 31, 2016, the Company expects to settle all awards in cash. The weighted-average grant date fair value of the performance share units was $10.12 per share and $21.69 per share for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, $12.7 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 2.33 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
Unvested balance at December 31, 2015	630,786		$	27.50
Granted	594,245		10.12
Vested and Paid	(178,169	)	30.07
Forfeited	(3,024	)	27.39
Unvested balance at March 31, 2016	1,043,838		$	17.17

Restricted Share Units

Restricted share units vest over a three-year period and are deferred into the Company's nonqualified unfunded deferred compensation plan at the time of vesting. The weighted-average grant date fair value of the restricted share units was $10.12 per share for the three months ended March 31, 2016. As of March 31, 2016, $0.3 million of unrecognized compensation cost, which represents the unvested portion of the fair market value of restricted share units granted, is expected to be recognized over a weighted-average vesting period of 2.94 years.



	Restricted Share Units Outstanding	Weighted-Average Grant Date Fair Value
Unvested balance at December 31, 2015	—	$	—
Granted	21,493	10.12
Unvested balance at March 31, 2016	21,493	$	10.12