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 2.4 million shares available for future grants under the LTSIP at March 31, 2018.

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. During the three months ended March 31, 2018, the Company recorded an additional $2.8 million of share-based compensation expense related to the acceleration of vesting incurred as part of the severance program (refer to Note 8 – Restructuring for additional information):



	Three Months Ended
	March 31,
	2018		2017
	(in millions)
Stock options	$	0.5	$	0.6
Restricted share awards	8.8		7.3
Performance share units	1.9		(1.9		)
Restricted share units	—		—
Total share-based compensation expense	$	11.2	$	6.0

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 Company recognizes forfeitures of stock options as they occur.

In 2018, QEP did not issue stock options as the Company continues to evaluate the components of its incentive compensation package to better align our Long-Term Incentive awards with those typical of the industry.

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, 2017	2,354,277		$	23.62
Canceled	(202,235	)	39.07
Outstanding at March 31, 2018	2,152,042		$	22.17	3.56	$	—
Options Exercisable at March 31, 2018	1,743,963		$	23.96	3.10	$	—
Unvested Options at March 31, 2018	408,079		$	14.51	5.56	$	—

During the three months ended March 31, 2018 and 2017, there were no exercises of stock options. As of March 31, 2018, $1.1 million of unrecognized compensation expense related to stock options granted under the LTSIP is expected to be recognized over a weighted-average vesting period of 1.87 years. The weighted-average vesting period may be reduced under the severance program (refer to Note 8 – Restructuring for additional information).

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 Company recognizes restricted share forfeitures as they occur. The total fair value of restricted share awards that vested during the three months ended March 31, 2018 and 2017 was $21.0 million and $20.3 million, respectively. The weighted-average grant date fair value of restricted share awards was $9.55 per share and $17.02 per share for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, $37.4 million of unrecognized compensation expense related to restricted share awards granted under the LTSIP is expected to be recognized over a weighted-average vesting period of 2.59 years. The weighted-average vesting period may be reduced under the severance program (refer to Note 8 – Restructuring for additional information).

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, 2017	3,721,334		$	13.23
Granted	2,929,369		9.55
Vested	(1,414,155	)	14.83
Forfeited	(86,386	)	11.31
Unvested balance at March 31, 2018	5,150,162		$	10.73

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 paid 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, 2018, 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 $9.55 per share and $16.98 per share for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, $10.1 million of unrecognized compensation expense, 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 2.39 years. The weighted-average vesting period may be reduced under the severance program (refer to Note 8 – Restructuring for additional information).

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, 2017	1,199,336		$	14.59
Granted	724,095		9.55
Vested and Paid	(229,620	)	21.69
Unvested balance at March 31, 2018	1,693,811		$	11.47

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 paid 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 $9.55 and $16.98 per share for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, $0.3 million of unrecognized compensation expense, 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 2.00 years. The weighted-average vesting period may be reduced under the severance program (refer to Note 8 – Restructuring for additional information).

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, 2017	21,946		$	13.22
Granted	31,835		9.55
Vested	(9,320	)	12.56
Unvested balance at March 31, 2018	44,461		$	10.73