QEP issues stock options, restricted share awards and restricted share units 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 share awards, restricted share units and performance share units. There were 7.1 million shares available for future grants under the LTSIP at December 31, 2016.

Share-based compensation expense related to continuing operations is recognized within "General and administrative" expense on the Consolidated Statements of Operations and is summarized in the table below. In addition, during the year ended December 31, 2014, QEP recognized $5.8 million in total compensation expense related to discontinued operations (including compensation expense related to the QEP Midstream Long Term Incentive Plan) which is reflected within "Net income from discontinued operations, net of income tax" on the Consolidated Statement of Operations.



	Year Ended
	December 31,
	2016		2015		2014
	(in millions)
Stock options	$	2.3	$	2.9	$	3.3
Restricted share awards	23.7		25.6		18.1
Performance share units	9.4		6.2		0.7
Restricted share units	0.2		—		—
Total share-based compensation expense	$	35.6	$	34.7	$	22.1

Stock Options

QEP uses the Black-Scholes-Merton mathematical model to estimate the fair value of stock option awards at the date of 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 calculating the value of options not 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,
	2016			2015			2014
Weighted-average grant date fair value of awards granted during the period	$	3.77		$	6.82		$	10.11
Risk-free interest rate range	0.99% - 1.15%			1.38% - 1.38%			1.31% - 1.34%
Weighted-average risk-free interest rate	1.2		%	1.4		%	1.3		%
Expected price volatility range	43.42% - 43.66%			36.8% - 36.8%			36.1% - 37.3%
Weighted-average expected price volatility	43.4		%	36.8		%	37.1		%
Expected dividend yield	—		%	0.37		%	0.25		%
Expected term in years at the date of grant	4.5			4.5			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	438,180		10.14
Canceled	(486,999	)	23.77
Outstanding at December 31, 2016	2,151,957		$	25.26	3.66	$	3.6
Options Exercisable at December 31, 2016	1,385,753		$	30.18	2.61	$	0.1
Unvested Options at December 31, 2016	766,204		$	16.38	5.57	$	3.5

During the year ended December 31, 2016, there were no exercises of stock options. 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 and $0.6 million during the years ended December 31, 2015 and 2014, respectively. The Company realized an income tax benefit of $0.2 million for the year ended December 31, 2016, $6.4 million of income tax expense for the year ended December 31, 2015, and there was no income tax impact for the year ended December 31, 2014. Stock options increased the Company's Additional Paid-in-Capital (APIC) pool by $0.3 million as of December 31, 2016. As of December 31, 2016, $1.2 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 1.84 years.

Restricted Share Awards

Restricted share award 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 share awards that vested during the years ended December 31, 2016, 2015 and 2014, was $24.3 million, $22.7 million and $26.8 million, respectively. There was no income tax impact for the year ended December 31, 2016. The Company realized an income tax benefit of $3.2 million for the year ended December 31, 2015, and an income tax expense $0.5 million for the year ended December 31, 2014. Restricted share awards increased the Company's APIC pool by $3.5 million as of December 31, 2016. The weighted-average grant date fair value of restricted share awards granted was $10.50 per share, $20.92 per share and $31.40 per share for the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016, $17.5 million of unrecognized compensation cost related to restricted share awards 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 1.98 years.

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



	Restricted Share Awards Outstanding		Weighted-Average Grant Date Fair Value
			(per share)
Unvested balance at December 31, 2015	2,008,210		$	24.18
Granted	2,467,954		10.50
Vested	(973,307	)	25.01
Forfeited	(294,354	)	14.26
Unvested balance at December 31, 2016	3,208,503		$	14.32

Performance Share Units

The payouts for performance share units' 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, 2016, the Company expects to settle all awards in cash. These awards are classified as liabilities and are included within "Other long-term liabilities" on the Consolidated Balance Sheet. As these awards are dependent upon the Company's total shareholder return and stock price, they are measured at fair value at the end of each reporting period. The Company paid $2.8 million, $3.1 million and $1.7 million for vested performance share units related to continuing operations during the years ended December 31, 2016, 2015 and 2014, respectively. In addition, during the year ended December 31, 2014, the Company paid $0.5 million for vested performance share units related to discontinued operations. The weighted-average grant date fair value of the performance share units granted during the years ended December 31, 2016, 2015 and 2014, were $10.16, $21.69, and $31.57 per share, respectively. As of December 31, 2016, $12.3 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 1.85 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, 2015	630,786		$	27.50
Granted	597,185		10.16
Vested and paid out	(178,169	)	30.07
Forfeited	(22,522	)	15.16
Unvested balance at December 31, 2016	1,027,280		$	17.24

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. These awards are ultimately delivered in cash. They are classified as liabilities in"Other long-term liabilities" on the Consolidated Balance Sheet and are measured at fair value at the end of each reporting period. The weighted-average grant date fair value of the restricted share units was $10.12 per share for the year ended December 31, 2016. As of December 31, 2016, $0.1 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 1.32 years.

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



	Restricted Share Units Outstanding		Weighted-Average Grant Date Fair Value
			(per share)
Unvested balance at December 31, 2015	—		$	—
Granted	21,493		10.12
Vested	(193	)	10.12
Forfeited	(3,266	)	10.12
Unvested balance at December 31, 2016	18,034		$	10.12