COMMON STOCK PLANS

Energen Employee Savings Plan (ESP): In October 2014, Energen’s Board of Directors amended and restated the ESP to make certain benefit design changes effective January 1, 2015. The benefit design changes include an increase in the percentage of Energen match and other contributions. A majority of our employees are eligible to participate in the ESP by electing to contribute a portion of their compensation to the ESP. Energen may match a percentage of the contributions and make these contributions in Energen common stock or in funds for the purchase of Energen common stock. Employees may diversify 100 percent of their ESP Energen stock account into other ESP investment options. The ESP also contains employer supplemental contributions. Effective January 1, 2015, the Company match will no longer be contributed in Energen common stock. Expense associated with Energen contributions to the ESP was $5.7 million, $3.7 million and $3.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Stock Incentive Plan: The Stock Incentive Plan provided for the grant of performance share awards and restricted stock units and restricted stock. The Stock Incentive Plan also provided for the grant of non-qualified stock options and incentive stock options to officers and key employees. Energen has typically funded performance share obligations, restricted stock obligations and options through original issue shares and restricted stock through treasury shares. Under the Stock Incentive Plan, established in 1997, 8,600,000 shares of Energen common stock were reserved for issuance, adjusted for stock splits, with 2,294,740 remaining for issuance as of December 31, 2015.

Performance Share Awards: The Stock Incentive Plan provided for the grant of performance share awards to eligible employees based on predetermined Energen performance criteria at the end of an award period. The Stock Incentive Plan provided that payment of earned performance share awards be made in the form of Energen common stock.

A summary of performance share award activity as of December 31, 2015, and transactions during the years ended December 31, 2015, 2014 and 2013 is presented below:



	Stock Incentive Plan
	Shares		Weighted Average Price
Nonvested at December 31, 2012	—		$	—
Granted (two-year vesting period)	86,221		61.14
Granted (three-year vesting period)	82,606		62.96
Forfeited	(8,008	)	60.03
Nonvested at December 31, 2013	160,819		62.13
Granted (two-year vesting period)	937		131.56
Granted (three-year vesting period)	65,309		93.49
Vested and paid	(14,097	)	70.06
Nonvested at December 31, 2014	212,968		71.53
Granted (three-year vesting period)	120,372		83.94
Vested and paid	(77,257	)	61.36
Nonvested at December 31, 2015	256,083		$	80.43

Energen recorded expense of $6.7 million, $6.2 million and $3.8 million for the years ended December 31, 2015, 2014 and 2013, respectively, for performance share awards with a related deferred income tax benefit of $2.4 million, $2.3 million and $1.4 million. As of December 31, 2015, there was $8.9 million of total unrecognized compensation cost related to performance share awards. These awards have a remaining weighted average requisite service period of 1.66 years.

Restricted Stock: In addition, the Stock Incentive Plan provided for the grant of restricted stock and restricted stock units (restricted stock awards) which have been valued based on the quoted market price of Energen’s common stock at the date of grant. Restricted stock awards vest within three years from grant date. A summary of restricted stock award activity as of December 31, 2015, and transactions during the years ended December 31, 2015, 2014 and 2013 is presented below:



	Stock Incentive Plan
	Awards		Weighted Average Price
Nonvested at December 31, 2012	11,115		$	45.24
Restricted stock granted	52,650		52.34
Forfeited	(1,247	)	48.36
Nonvested at December 31, 2013	62,518		51.16
Restricted stock units granted	48,904		71.91
Vested	(11,848	)	65.94
Nonvested at December 31, 2014	99,574		59.60
Restricted stock units granted	99,814		65.15
Vested	(14,446	)	53.20
Nonvested at December 31, 2015	184,942		$	63.09

Energen recorded expense of $6.0 million, $3.2 million and $1.9 million for the years ended December 31, 2015, 2014 and 2013, respectively, related to restricted stock awards, with a related deferred income tax benefit of $2.1 million, $1.2 million and $0.7 million, respectively. As of December 31, 2015, there was $1.9 million of total unrecognized compensation cost related to nonvested restricted stock awards recorded in premium on capital stock. These awards have a remaining requisite service period of 1.75 years.

Stock Options: The Stock Incentive Plan provided for the grant of non-qualified stock options, incentive stock options, or a combination thereof to officers and key employees. Options granted under the Stock Incentive Plan provided for the purchase of Energen common stock at not less than the fair market value on the date the option was granted. The sale or transfer of the shares is limited during certain periods. All outstanding options are incentive or non-qualified, vest within three years from date of grant and expire 10 years from the grant date.

A summary of stock option activity as of December 31, 2015, and transactions during the years ended December 31, 2015, 2014 and 2013 are presented below:



	Stock Incentive Plan
	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2012	1,648,475		$	47.58
Granted	137,762		49.22
Exercised	(590,119	)	40.92
Forfeited	(5,074	)	51.85
Outstanding at December 31, 2013	1,191,044		51.06
Granted	110,307		72.55
Exercised	(544,280	)	50.09
Outstanding at December 31, 2014	757,071		54.88
Exercised	(23,680	)	41.42
Outstanding at December 31, 2015	733,391		$	55.32
Exercisable at December 31, 2013	713,445		$	49.80
Exercisable at December 31, 2014	454,938		$	51.88
Exercisable at December 31, 2015	622,156		$	53.80

Energen uses the Black-Scholes pricing model to calculate the fair values of the options awarded. For purposes of this valuation the following assumptions were used to derive the fair values:



Grant date	4/15/2014	1/22/2014	10/15/2013	1/24/2013
Awards granted	2,439	107,868	3,686	134,076
Fair market value of stock option at grant	$32.22	$27.57	$30.53	$16.66
Expected life of award	5.8 years	5.8 years	5.8 years	5.8 years
Risk-free interest rate	1.93%	2.06%	1.79%	1.01	%
Annualized volatility rate	40.7%	40.7%	40.6%	40.3	%
Dividend yield	0.2%	0.8%	0.7%	1.2	%

Energen recorded stock option expense of $0.4 million, $2.9 million and $3.4 million during the years ended December 31, 2015, 2014 and 2013, respectively, with a related deferred tax benefit of $0.1 million, $1.1 million and $1.3 million, respectively.

The total intrinsic value of stock options exercised during the year ended December 31, 2015, was $0.7 million. During the year ended December 31, 2015, Energen received cash of $1.0 million from the exercise of stock options. Total intrinsic value for outstanding options as of December 31, 2015, was $0.3 million and $0.3 million for exercisable options. The fair value of options vested for the year ended December 31, 2015 was $3.7 million. As of December 31, 2015, there was $0.1 million of unrecognized compensation cost related to outstanding nonvested stock options.

The following table summarizes options outstanding as of December 31, 2015:



Stock Incentive Plan
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life
$46.45	19,990	1.00 year
$60.56	48,560	2.00 years
$29.79	24,291	3.00 years
$46.69	26,481	4.00 years
$54.99	104,841	5.00 years
$54.11	271,164	6.00 years
$48.36	124,071	7.00 years
$80.48	3,686	7.79 years
$72.39	107,868	8.00 years
$79.63	2,439	8.00 years
$29.79-$80.48	733,391	5.76 years

The weighted average remaining contractual life of currently exercisable stock options is 5.43 years as of December 31, 2015.

Stock Appreciation Rights Plan: The Energen Stock Appreciation Rights Plan provided for the payment of cash incentives measured by the long-term appreciation of Energen common stock. Officers of Energen are not eligible to participate in this Plan. These awards are liability awards which settle in cash and are remeasured each reporting period until settlement. These awards have a three year requisite service period.

A summary of stock appreciation rights activity as of December 31, 2015, and transactions during the years ended December 31, 2015, 2014 and 2013 are presented below:



	Stock Appreciation Rights Plan
	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2012	653,030		$	44.14
Granted	88,000		48.36
Exercised/forfeited	(363,653	)	39.66
Outstanding at December 31, 2013	377,377		49.48
Granted	62,749		72.39
Exercised/forfeited	(164,976	)	52.37
Outstanding at December 31, 2014	275,150		52.96
Exercised/forfeited	(10,283	)	55.18
Outstanding at December 31, 2015	264,867		$	52.88

Energen issued the following awards with stock appreciation rights. Energen uses the Black-Scholes pricing model to calculate the fair values of the rights awarded. On December 19, 2013, we modified certain stock appreciation rights subsequent to the original grant date. For purposes of this valuation the following assumptions were used to derive the fair values as of December 31, 2015:



Grant date	1/22/2014	1/22/2014	1/24/2013	1/24/2013	1/24/2013	1/26/2011
		(modified)		(modified)	(modified)
Awards granted	62,227	522	83,654	768	3,578	182,199
Fair market value of award	$5.11	$1.67	$8.30	$5.64	$4.24	$4.80
Expected life of award	4.56 years	2.13 years	3.57 years	2.13 years	1.50 years	2.53 years
Risk-free interest rate	1.67%	1.11%	1.43%	1.11%	0.80%	1.23%
Annualized volatility rate	33.4%	33.4%	33.4%	33.4%	33.4%	33.4%
Dividend yield	0.20%	0.20%	0.20%	0.20%	0.20%	0.20%



Grant date	1/26/2011	1/27/2010	1/28/2009	2/4/2008	2/1/2007
	(modified)
Awards granted	7,785	171,749	305,257	67,093	85,906
Fair market value of award	$2.74	$5.95	$13.18	$0.81	$2.16
Expected life of award	1.50 years	2.04 years	1.54 years	1.05 years	0.54 years
Risk-free interest rate	0.80%	1.08%	0.82%	0.65%	0.54%
Annualized volatility rate	33.4%	33.4%	33.4%	33.4%	33.4%
Dividend yield	0.20%	0.20%	0.20%	0.20%	0.20%

Income associated with stock appreciation rights of $3.2 million and $0.4 million was recorded for the years ended December 31, 2015 and 2014. Expense associated with stock appreciation rights of $9.9 million was recorded for the year ended 2013. During the year ended December 31, 2015, the total intrinsic value of stock appreciation rights exercised was $0.1 million. During the year ended December 31, 2015, Energen paid $0.1 million in settlement of stock appreciation rights.

Petrotech Incentive Plan: The Energen Resources’ Petrotech Incentive Plan provided for the grant of stock equivalent units which may include market conditions. Officers of Energen are not eligible to participate in this Plan. These awards are liability awards which are remeasured each reporting period and settle in cash at completion of the vesting period. Stock equivalent units with service conditions were valued based on Energen’s stock price at the end of the period adjusted to remove the present value of future dividends.

A summary of Petrotech unit activity as of December 31, 2015, and transactions during the years ended December 31, 2015, 2014 and 2013 are presented below:



	Petrotech Incentive Plan
	Shares
Outstanding at December 31, 2012	141,243
Granted (three-year vesting period)	92,418
Granted (17 month vesting period)	2,952
Paid	(36,792	)
Forfeited	(26,529	)
Outstanding at December 31, 2013	173,292
Granted	76,084
Paid	(4,431	)
Forfeited	(31,075	)
Outstanding at December 31, 2014	213,870
Granted (three-year vesting period)	128,519
Granted (two-year vesting period)	297
Granted (16 month vesting period)	1,648
Paid	(78,430	)
Forfeited	(22,158	)
Outstanding at December 31, 2015	243,746

Energen recognized expense of $3.0 million, $4.5 million and $6.2 million during 2015, 2014 and 2013, respectively, related to these units.

1997 Deferred Compensation Plan: The 1997 Deferred Compensation Plan allowed officers and non-employee directors to defer certain compensation. Amounts deferred by a participant under the 1997 Deferred Compensation Plan are credited to accounts maintained for a participant in either a stock account or an investment account. The stock account tracks the performance of Energen’s common stock, including reinvestment of dividends. The investment account tracks the performance of certain mutual funds. Energen has funded, and presently plans to continue funding, a trust in a manner that generally tracks participants’ accounts under the 1997 Deferred Compensation Plan. While intended for payment of benefits under the 1997 Deferred Compensation Plan, the trust’s assets remain subject to the claims of our creditors. Amounts earned under the 1997 Deferred Compensation Plan and invested in Energen common stock held by the trust have been recorded as treasury stock, along with the related deferred compensation obligation in the consolidated statements of shareholders’ equity. As of December 31, 2015 there were 576,850 shares reserved for issuance from the 1997 Deferred Compensation Plan.

1992 Energen Corporation Directors Stock Plan: In 1992 Energen adopted the Energen Corporation Directors Stock Plan to pay a portion of the compensation of its non-employee directors in shares of Energen common stock. Under the Plan, 11,550 shares, 10,360 shares and 13,500 shares were awarded during the years ended December 31, 2015, 2014 and 2013, respectively, leaving 116,374 shares reserved for issuance as of December 31, 2015.

Stock Repurchase Authorization: By resolution adopted October 22, 2014, the Board of Directors authorized Energen to repurchase up to 3,600,000 shares of Energen common stock. The resolution does not have an expiration date and does not limit Energen’s authorization to acquire shares in connection with tax withholdings and payment of exercise price on stock compensation plans. For the year ended December 31, 2014, Energen repurchased and retired 226,839 shares for $14.9 million pursuant to our repurchase authorization. There were no shares repurchased pursuant to its repurchase authorization for the years ended December 31, 2015 and 2013. As of December 31, 2015, a total of 3,373,161 shares remain authorized for future repurchase. Energen also from time to time acquires shares in connection with participant elections under Energen’s stock compensation plans. For the years ended December 31, 2015, 2014 and 2013, Energen acquired 73,126 shares, 32,768 shares and 14,766 shares, respectively, in connection with its stock compensation plans.