QEP issues stock options, restricted share awards 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 share awards, restricted share units and performance share units. There were 5.1 million shares available for future grants under the LTSIP at September 30, 2017.

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					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
	(in millions)
Stock options	$	0.5		$	0.6	$	1.7		$	1.8
Restricted share awards	5.4			6.0		18.7			18.2
Performance share units	(0.1		)	3.2		(6.9		)	8.8
Restricted share units	—			0.1		—			0.2
Total share-based compensation expense	$	5.8		$	9.9	$	13.5		$	29.0

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 stock options granted and major assumptions used in the model at the date of grant are listed below for the nine months ended September 30, 2017:



	Stock Option Assumptions
Weighted-average grant date fair value of awards granted during the period	$	6.44
Weighted-average risk-free interest rate	1.81		%
Weighted-average expected price volatility	43.9		%
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, 2016	2,151,957		$	25.26
Granted	418,752		16.77
Forfeited	(14,172	)	15.33
Canceled	(202,260	)	27.55
Outstanding at September 30, 2017	2,354,277		$	23.62	3.75	$	—
Options Exercisable at September 30, 2017	1,551,861		$	27.90	2.73	$	—
Unvested Options at September 30, 2017	802,416		$	15.33	5.73	$	—

During the nine months ended September 30, 2017 and 2016, there were no exercises of stock options. As of September 30, 2017, $2.1 million of unrecognized compensation cost related to stock options granted under the LTSIP is expected to be recognized over a weighted-average vesting period of 2.23 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 nine months ended September 30, 2017 and 2016 was $22.9 million and $24.2 million, respectively. The weighted-average grant date fair value of restricted share awards was $14.13 per share and $10.37 per share for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, $25.2 million of unrecognized compensation cost related to restricted share awards granted under the LTSIP is expected to be recognized over a weighted-average vesting period of 2.17 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, 2016	3,208,503		$	14.32
Granted	2,123,016		14.13
Vested	(1,384,011	)	16.54
Forfeited	(240,732	)	14.71
Unvested balance at September 30, 2017	3,706,776		$	13.35

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 September 30, 2017, 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 Condensed Consolidated Balance Sheets. As these awards are dependent upon the Company's total shareholder return and stock price, they are remeasured at fair value at the end of each reporting period. The weighted-average grant date fair value of the performance share units was $16.90 per share and $10.16 per share for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, $0.2 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 2.03 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, 2016	1,027,280		$	17.24
Granted	405,014		16.90
Vested and Paid	(215,439	)	31.63
Forfeited	(17,519	)	13.88
Unvested balance at September 30, 2017	1,199,336		$	14.59

Restricted Share Units

Employees may elect to defer their grants of restricted share awards and these deferred awards are designated as 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 and are included in "Other long-term liabilities" on the Condensed Consolidated Balance Sheets 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 $16.98 and $10.12 per share for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, $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 1.43 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, 2016	18,034		$	10.12
Granted	9,924		16.98
Vested	(6,012	)	10.12
Unvested balance at September 30, 2017	21,946		$	13.22