Share-Based Compensation Plans

We have share-based compensation plans to attract and retain employees and nonemployee directors and to more closely align their interests with those of our shareholders.

We have granted share-based awards to employees under the 2005 Equity Incentive Plan ("2005 Plan"), the 2013 Equity Incentive Plan ("2013 Plan") and the 2017 Equity Incentive Plan (the "2017 Plan"). These plans permit grants of restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights, stock options, as well as other share-based awards to eligible employees. The 2013 Plan and the 2017 Plan also permit cash awards to eligible employees. The 2017 Plan became effective May 2017. No further grants of awards will be made under the 2005 Plan or the 2013 Plan, although awards under these prior plans remain outstanding.

We have granted deferred stock units to directors under the 2017 Plan. Share-based awards were previously granted to directors and remain outstanding under the Non-Employee Director's Equity Plan and the Directors’ Stock Accumulation Plan, which has expired.

There are 6.5 million shares underlying share-based plans that are authorized, but not yet granted. Outstanding awards at December 31, 2017, include performance share units, market share units, restricted stock units, deferred stock units, performance-based stock options, time-based stock options and certain awards that will be settled in cash.

Compensation Expense

Compensation expense is measured using the fair-value-based method. For awards considered equity grants, compensation expense is recognized from the grant date to the earlier of the retirement-eligible date or the vesting date. For awards considered liability awards, compensation cost is based on the change in the fair value of the instrument for each reporting period and the percentage of the requisite service that has been rendered. Compensation cost associated with liability awards was not significant in the last three years.

Compensation expenses are classified as selling, general and administrative expenses in the consolidated statements of operations.

Compensation expenses for the last three years and the amount of unrecognized expense for awards outstanding at December 31, 2017, were as follows:



	Compensation Expense							Unrecognized Expense for Nonvested Awards at		Weighted-average No. of Years Unrecognized Expense to be Recognized
	Years Ended December 31,							Dec 31, 2017
(in millions except years)	2017			2016		2015

Performance Share Units	$	9.5		4.1		8.1		$	14.2	1.9
Market Share Units	0.3			0.1		2.3		—		0.2
Restricted Stock Units	4.7			3.8		3.2		4.5		1.5
Deferred Stock Units and fees paid in stock	1.0			0.9		0.5		0.2		0.3
Performance-based Options	2.2			0.6		—		4.3		1.9
Options	—			—		—		0.1		2.8
Share-based payment expense	17.7			9.5		14.1
Income tax benefit	(3.4		)	(3.0	)	(4.6	)
Share-based payment expense, net of tax	$	14.3		6.5		9.5

Fair Value of Distributed or Exercised Awards

The fair value of shares distributed or options exercised in the last three years is as follows:



	Fair Value of Shares Distributed or Exercised^(a)
	Years Ended December 31,
(in millions)	2017		2016	2015

Performance Share Units^(b)	$	13.3	8.2	—
Market Share Units^(b)	4.3		2.7	—
Restricted Stock Units	7.3		4.1	5.3
Deferred Stock Units and fees paid in stock	2.7		1.9	0.2
Options^(a)	2.0		5.3	1.1
Total	$	29.6	22.2	6.6


(a)	Intrinsic value for Options.


(b)	No Performance Share Units or Market Share Units had vested as of December 31, 2015.

Restricted Stock Units (“RSUs”)

We granted RSUs to senior executives and select employees in the last three years that contain only a service condition. RSUs are paid out in shares of Brink’s stock when the awards vest. For RSUs granted during the last three years, the units generally vest ratably in three equal annual installments. We measure the fair value of RSUs based on the price of Brink’s stock at the grant date, adjusted for a discount for dividends not received or accrued during the vesting period. The weighted-average fair value per share at grant date was $55.85 in 2017, $29.06 in 2016 and $27.09 in 2015. The weighted-average discount was approximately 2% in 2017 and 3% in 2016 and 2015.

The following table summarizes RSU activity during 2017:



	Shares (in thousands)		Weighted-Average Grant Date Fair Value Per Share

Nonvested balance as of December 31, 2016	296.5		$	27.84
Activity from January 1 to December 31, 2017:
Granted	111.4		55.85
Forfeited	(23.3	)	29.96
Vested	(118.8	)	26.92
Nonvested balance as of December 31, 2017	265.8		$	39.80

Performance Share Units (“PSUs”)

Prior to 2016, we granted PSUs which contained a performance condition, a market condition and a service condition ("Prior PSUs"). In 2016 and in 2017, we granted Internal Metric PSUs ("IM PSUs") and Total Shareholder Return PSUs ("TSR PSUs").

IM PSUs contain a performance condition as well as a service condition. We measure the fair value of these PSUs based on the price of Brink’s stock at the grant date, adjusted for a discount for dividends not received or accrued during the vesting period. For the IM PSUs granted in 2017, the performance period is from January 1, 2017 to December 31, 2019. For the majority of the IM PSUs granted in 2016, the performance period is from January 1, 2016 to December 31, 2017, with an additional year of service required. Other IM PSUs granted in 2016 have a performance period from July 1, 2016 to June 30, 2017, with an additional two years of service required.

TSR PSUs contain a market condition as well as a service condition. We measure the fair value of TSR PSUs as well as Prior PSUs at the grant date using a Monte Carlo simulation model.

Prior PSUs and IM PSUs granted to senior executives and select employees in 2017, 2016 and 2015 typically vest at the end of three years and are paid out in shares of Brink’s stock. For Prior PSUs and IM PSUs with a performance period greater than one year, the number of shares paid out ranges from 0% to 200% of an employee’s award, depending on the achievement of pre-established financial goals over the performance period, which can be three years or two years depending on the underlying award. Shares are not paid out if the financial results do not meet a pre-established threshold level of performance. For the IM PSUs granted in 2016 that have a one year performance period, the number of shares that will be paid out is either 0% or 100%, depending on the achievement of the specified performance goal.

For Prior PSUs, the number of shares paid out is also affected by Brink’s total shareholder return relative to the total return of a pre-established stock index over the performance period. The number of shares paid out is increased by 25% if Brink’s total shareholder return is at or above the 75th percentile of the index’s total return. The number of shares paid out is reduced by 25% if Brink’s performance is at or below the 25th percentile. The number of shares is not adjusted if Brink’s performance is between the 25th and 75th percentile.

TSR PSUs granted to senior executives typically vest at the end of three years and are paid out in shares of Brink’s stock. The number of shares paid out ranges from 0% to 150% of an employee’s award, depending on Brink's relative TSR rank among a selected peer group.

Changes to Performance Goals for the 2013, 2014 and 2015 Prior PSU Grants. The performance goals for the 2013, 2014 and 2015 Prior PSU grants were based on consolidated operating profit over the performance period, which were adjusted for various items including corporate items, acquisition and dispositions, unusual or infrequently occurring events and foreign currency. In 2014, the Compensation and Benefits Committee of the Board of Directors approved a second performance goal for the Prior PSU awards granted in 2013 and 2014 to reflect the change in currency exchange rate used to report the results of Venezuela because the rate had changed significantly. Additionally, in February 2016, the Compensation and Benefits Committee of the Board of Directors modified the terms of performance share units originally awarded or granted in 2013, 2014 and 2015 to reflect the impact of removing Venezuela operations from the Company’s segment results beginning in 2015. For each of the affected performance share units, consolidated results for 2015 and each subsequent year within the respective performance period was adjusted to reflect Venezuela results at the amount originally projected in the applicable performance target. After the conclusion of each performance period, the payout will be equal to the lower of the calculated payout under the adjusted performance goals and the original performance goals. Approximately 100 employees who received Prior PSUs in 2013, 2014 and 2015 were affected by the change. No incremental compensation cost associated with the modifications was recognized as the additional goals were expected to be more difficult to achieve and, in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, we continued to recognize expense as calculated using the original performance goals.

The following table summarizes all PSU activity during 2017:



	Shares (in thousands)		Weighted-Average Grant Date Fair Value Per Share

Nonvested balance as of December 31, 2016	603.2		$	28.02
Activity from January 1 to December 31, 2017:
Granted	220.9		54.31
Forfeited	(18.7	)	33.08
Vested^(a)	(134.2	)	24.39
Nonvested balance as of December 31, 2017	671.2		$	37.26


(a)	The vested PSUs presented are based on the target amount of the award. In accordance with the terms of the underlying award agreements or plan provisions, the actual shares earned and distributed for the performance period ended December 31, 2016 were 252.0.

Market Share Units (“MSUs”)

Prior to 2016, we granted MSUs, which contain a market condition as well as a service condition. We measure the fair value of MSUs using a Monte Carlo simulation model.

MSUs are paid out in shares of Brink’s stock when an award vests. MSUs reward the achievement of the appreciation of Brink’s stock over the performance period (generally three years) at a rate of 0% to 150% of the initial target number of shares awarded. The multiplier to the initial target number of MSUs awarded is calculated as the ratio of the price of Brink’s stock at the end of the performance period divided by the price of Brink’s stock at the beginning of the performance period. If the price of Brink’s stock at the end of the performance period is less than 50% of the initial price, no payout for MSUs will occur.

The following table summarizes all MSU activity during 2017:



	Shares (in thousands)		Weighted-Average Grant Date Fair Value Per Share

Nonvested balance as of December 31, 2016	141.7		$	27.02
Activity from January 1 to December 31, 2017:
Granted	—		—
Forfeited	—		—
Vested^(a)	(67.5	)	23.34
Nonvested balance as of December 31, 2017	74.2		$	30.37

(a)

The vested MSUs presented are based on the target amount of the award. In accordance with the terms of the underlying award agreements of plan provisions, the actual shares earned and distributed for the performance period ended December 31, 2016 were 81.8. No additional compensation expense was required to be recognized for the additional shares distributed, as the market condition was included in the $23.34 grant date fair value.

The following table provides the terms and weighted-average assumptions used in the Monte Carlo simulation model for those PSUs containing a market condition and for the MSU's:



Terms and Assumptions Used to Estimate Fair Value	2017 TSR PSUs			2016 TSR PSUs		2015 Prior PSUs		2015 MSUs

Terms of awards:
Performance period	Jan. 1, 2017 to			Jan. 1, 2016 to		Jan. 1, 2015 to		Jan. 1, 2015 to
	Dec. 31, 2019			Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2017

Weighted-average assumptions used to estimate fair value:
Expected dividend yield^(a)	0.8		%	1.4	%	1.5	%	1.5	%
Expected stock price volatility^(b)	30.6		%	29.1	%	30.0	%	30.0	%
Risk-free interest rate^(c)	1.4		%	0.8	%	1.0	%	1.0	%
Contractual term in years	2.9			2.7		2.8		2.8

Weighted-average fair value estimates at grant date:
In millions	$	2.0		2.3		5.8		3.3
Fair value per share	$	67.81		31.64		29.10		30.37

(a)

TSR is determined assuming that dividends are reinvested. The stock price projection in the Monte Carlo simulation model assumed a 0% dividend yield, which is mathematically equivalent to reinvesting dividends over the performance period. For the valuation of the TSR PSU and the TSR component of the Prior PSU awards, because the holders of the awards have no rights to any dividend paid during the vesting period, we applied a dividend yield in the Monte Carlo simulation model to reduce the projected stock price as of the grant date. Similar methodology was applied to the valuation of the MSU awards because the holders of the awards have no rights to any dividend during the vesting period.


(b)	The expected stock price volatility was calculated on the grant date for the most recent term equivalent to the contractual term in years.


(c)	The risk-free interest rate on each date of grant is the rate for a zero-coupon U.S. Treasury bill that was commensurate with the grant date contractual term.

Options

In 2017 and 2016, we granted performance-based stock options that have a service condition as well as a market condition. In addition, some of the awards granted in 2016 contain a non-financial performance condition. We measure the fair value of these awards at the grant date using a Monte Carlo simulation model. No performance-based options were granted prior to 2016.

In 2017 and prior to 2013, we granted time-based vesting stock options to select senior executives and employees and to directors. We measure the fair value of these awards at the grant date using the Black-Scholes-Merton option pricing model.

When vested, options entitle the holder to purchase a specified number of shares of Brink’s stock at a price set at the date the options were granted. The option price for Brink’s options was equal to the market price of Brink’s stock on the award date. All options granted to employees have a maximum term of six years and options previously granted to directors had a maximum term of ten years.

Performance-Based Option Activity

The table below summarizes the activity associated with grants of performance-based options:



	Shares (in thousands)	Weighted- Average Exercise Price Per Share		Weighted-Average Grant Date Fair Value Per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value^(a) (in millions)

Outstanding at December 31, 2016	580.9	$	30.33	$	6.01
Granted	298.9	52.75		11.97
Forfeited or expired	—	—		—
Exercised	—	—		—
Outstanding at December 31, 2017	879.8	$	37.95	$	8.04	4.7	$	35.9

Of the above, as of December 31, 2017:
Exercisable	—	$	—			0	$	—
Expected to vest in future periods^(b)	879.7	$	37.95			4.7	$	35.9


(a)	The intrinsic value of a stock option is the difference between the market price of the shares underlying the option and the exercise price of the option. The market price at December 29, 2017 was $78.70.


(b)	The number of options expected to vest takes into account an estimate of expected forfeitures. We currently have applied a 0% expected forfeiture rate to these options.

The following table provides the term of the performance period and the weighted-average assumptions used in the Monte Carlo simulation model for the performance-based options:



Terms and Assumptions Used to Estimate Fair Value of Performance-Based Options Granted	2017			2016

Terms of awards:
Performance period for achieving stock price hurdles	Three years from			Three years from
	grant date			grant date

Assumptions used to estimate fair value:
Expected dividend yield^(a)	0.8		%	1.3		%
Expected stock price volatility^(b)	29.3		%	30.9		%
Risk-free interest rate^(c)	1.8		%	1.1		%
Expected term in years^(d)	4.5			4.5

Weighted-average fair value estimates at grant date:
In millions	$	3.6		$	3.5
Fair value per share	$	11.97		$	6.01


(a)	Since the holders of the awards have no rights to any dividend paid during the vesting period, we applied a dividend yield in the Monte Carlo simulation model. At each grant date, the dividend yield was calculated based on the most recent annualized dividend payment of $0.40 and Brink's stock price at the date of grant.


(b)	The expected stock price volatility was calculated on each grant date for the most recent 4.5 year term.


(c)	The risk-free interest rate on each grant date is the rate for a zero-coupon U.S. Treasury bill that was commensurate with the expected life of 4.5 years.

(d)

Because we did not have historical exercise behavior for instruments with premiums, we assumed that the exercise of vested options occurred at the mid-point between the three-year vesting date and the six-year contractual term. In the Monte Carlo simulation, at each iteration of forecasted Brink's stock prices, the option was assumed to be exercised at the mid-point of 4.5 years if the stock price hurdle had been achieved. When the hurdle is achieved, the exercise price was then subtracted from the projected stock price, and discounted back to the grant date. In situations where the projected price had not met the hurdle, no value was attributed.

Time-based Vesting Option Activity

The table below summarizes the activity associated with grants of time-based vesting options:



	Shares (in thousands)		Weighted- Average Exercise Price Per Share		Weighted-Average Grant Date Fair Value Per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value^(a) (in millions)

Outstanding at December 31, 2016	121.5		$	28.80	$	5.90
Granted	2.7		84.65		21.09
Forfeited or expired	—		—		—
Exercised	(83.6	)	31.62		5.06
Outstanding at December 31, 2017^(b)	40.6		$	26.74	$	8.66	0.9	$	2.1

Of the above, as of December 31, 2017:
Exercisable	37.9		$	22.57			0.5	$	1.5
Expected to vest in future periods^(c)	1.9		$	84.65			5.8	$	—


(a)	The intrinsic value of a stock option is the difference between the market price of the shares underlying the option and the exercise price of the option. The market price at December 29, 2017 was $78.70.


(b)	There were 0.1 million shares of exercisable options with a weighted-average exercise price of $28.80 per share at December 31, 2016 and 0.7 million shares of exercisable options with a weighted-average exercise price of $26.01 per share at December 31, 2015.


(c)	The number of options expected to vest takes into account an estimate of expected forfeitures.

The following table provides the weighted-average assumptions used in the Black-Scholes-Merton option pricing model for the time-based vesting options granted in 2017:



Assumptions Used to Estimate Fair Value of Time-Based Options	2017

Assumptions used to estimate fair value:
Expected dividend yield^(a)	0.7		%
Expected stock price volatility^(b)	28.9		%
Risk-free interest rate^(c)	1.7		%
Expected term in years^(d)	4.5

Weighted-average fair value estimates at grant date:
In millions	$	0.1
Fair value per share	$	21.09


(a)	The expected dividend yield is the calculated annual yield on Brink's stock at the time of the grant.


(b)	The expected stock price volatility was calculated at time of the grant after reviewing the historic volatility of our stock using daily close prices.


(c)	The risk-free interest rate the grant date was the rate for a zero-coupon U.S. Treasury bill that was commensurate with the expected life of 4.5 years.


(d)	The expected term of the options was based on historical exercise, expiration and post-cancellation behavior.

Deferred Stock Units (“DSUs”)

We granted DSUs to our independent directors in 2017 and prior years. We measure the fair value of DSUs at the grant date, based on the price of Brink's stock, and, if applicable, adjusted for a discount for dividends not received or accrued during the vesting period.

In 2017, 2016 and 2015, our independent directors received grants of DSUs that vest and will be paid out in shares of Brink's stock on the first anniversary of the grant date, provided that the director has not elected to defer the distribution of shares until a later date. DSUs are forfeited if a director leaves before the vesting date. However, in connection with the retirement of two directors in January 2016, our Board of Directors waived the one-year vesting provision for those DSUs granted in 2015. The impact of this modification was recorded in the first quarter of 2016 and was not significant.

DSUs granted prior to 2015, in general, will be paid out in shares of stock following separation from service.

The following table summarizes all DSU activity during 2017:



	Shares (in thousands)		Weighted-Average Grant-Date Fair Value

Nonvested balance as of December 31, 2016	29.7		$	29.41
Activity from January 1 to December 31, 2017:
Granted	12.7		60.80
Forfeited	(5.5	)	39.65
Vested	(26.0	)	29.42
Nonvested balance as of December 31, 2017	10.9		$	60.80

The weighted-average grant-date fair value estimate per share for DSUs granted was $60.80 in 2017, $29.41 in 2016 and $32.79 in 2015.

Other Share-Based Compensation

We have a deferred compensation plan that allows participants to defer a portion of their compensation into stock units. Units may be redeemed by employees for an equal number of shares of Brink’s stock. Employee accounts held 145,720 units at December 31, 2017, and 234,426 units at December 31, 2016.

We have a stock accumulation plan for our non-employee directors that, prior to 2014, provided for awards of stock units. Additionally, some fees paid to our directors are in the form of stock and may be deferred for distribution to a later date. Directors’ accounts held 15,895 units at December 31, 2017, and 34,200 units at December 31, 2016.