EQUITY

At December 31, 2016, the Company had authorization to maintain up to 39.0 million shares of treasury stock under its stock repurchase program as approved by the Board of Directors on September 21, 2016. During 2016, 2015 and 2014, the Company repurchased outstanding shares of common stock at a cost of $815.1 million, $112.7 million and $163.2 million, respectively. For the years ended December 31, 2016, 2015 and 2014, the Company received proceeds of $41.0 million, $35.5 million and $49.0 million, respectively, primarily as a result of stock options exercised in the amount of 1.2 million, 1.1 million and 1.5 million in each of the years, respectively. It is the Company’s practice to issue shares from treasury stock when options are exercised. The tax benefit realized for the options exercised during the year ended December 31, 2016, 2015 and 2014 is $16.1 million, $11.6 million and $2.1 million, respectively.

The following table represents total outstanding shares of common stock and treasury stock for the years ended December 31:



(in millions)	Shares of Common Stock	Shares of Treasury Stock		Outstanding Shares

Balance at December 31, 2013	162.8	(20.5	)	142.3
Shares of treasury stock issued	—	1.9		1.9
Repurchase of common stock at an average cost of $49.88	—	(3.3	)	(3.3	)

Balance at December 31, 2014	162.8	(21.9	)	140.9
Shares of treasury stock issued	—	1.3		1.3
Repurchase of common stock at an average cost of $52.50	—	(2.1	)	(2.1	)

Balance at December 31, 2015	162.8	(22.7	)	140.1
Common stock issuance related to Merger	101.7	—		101.7
Shares of treasury stock issued	—	1.7		1.7
Repurchase of common stock at an average cost of $60.78	—	(13.4	)	(13.4	)

Balance at December 31, 2016	264.5	(34.4	)	230.1

On February 29, 2016, in conjunction with the Merger, the Company increased the authorized number of shares of common stock to 400.0 million.

The Company maintains the 2016 Omnibus Incentive Plan (the “Plan”) under which it may grant non-qualified stock options (“NQSO”), incentive stock options, restricted stock, restricted stock units (“RSU”) and stock appreciation rights, collectively referred to as “Awards.” Awards are granted at exercise prices that are equal to the closing stock price on the date of grant. The Company authorized grants under the Plan of 25.0 million shares of common stock, plus any unexercised portion of canceled or terminated stock options granted under the legacy DENTSPLY International Inc. 2010 and 2002 Equity Incentive Plans, as amended, and under the legacy Sirona Dental Systems, Inc. 2015 and 2006 Equity Incentive Plans, as amended. For each restricted stock and RSU issued, it is counted as a reduction of 3.09 shares of common stock available to be issued under the Plan. No key employee may be granted awards in excess of 1.0 million shares of common stock in any calendar year. The number of shares available for grant under the 2016 Plan at December 31, 2016 is 36.4 million.

Stock options granted become exercisable as determined by the grant agreement and expire ten years after the date of grant under these plans. RSU vest as determined by the grant agreement and are subject to a service condition, which requires grantees to remain employed by the Company during the period following the date of grant. Under the terms of the RSU, the vesting period is referred to as the restricted period. RSU and the rights under the award may not be sold, assigned, transferred, donated, pledged or otherwise disposed of during the restricted period prior to vesting. In addition to the service condition, certain key executives are granted RSU subject to performance requirements that can vary between the first year and up to the final year of the RSU award. If targeted performance is not met the RSU granted is adjusted to reflect the achievement level. Upon the expiration of the applicable restricted period and the satisfaction of all conditions imposed, all restrictions imposed on RSU will lapse, and one shares of common stock will be issued as payment for each vested RSU. Upon death, disability or qualified retirement all awards become immediately exercisable for up to one year. Awards are expensed as compensation over their respective vesting periods or to the eligible retirement date if shorter.

The following table represents total stock based compensation expense and the tax related benefit for the years ended:



	December 31,
(in millions)	2016		2015		2014

Stock option expense	$	10.6	$	8.1	$	8.8
RSU expense	29.1		16.2		15.4
Total stock based compensation expense	$	39.7	$	24.3	$	24.2

Related deferred income tax benefit	$	10.9	$	7.1	$	6.7

For the years ended December 31, 2016, 2015, and 2014, stock compensation expense of $39.7 million, $24.3 million and $24.2 million, respectively, was recorded in the Consolidated Statement of Operations. For the years ended December 31, 2016, 2015, and 2014, $39.1 million, $23.6 million and $23.5 million, respectively, was recorded in Selling, general and administrative expense and $0.6 million, $0.7 million and $0.7 million, respectively, was recorded in Cost of products sold.

There were 1.7 million non-qualified stock options unvested at December 31, 2016. The remaining unamortized compensation cost related to non-qualified stock options is $11.8 million, which will be expensed over the weighted average remaining vesting period of the options, or 1.4 years. The unamortized compensation cost related to RSU is $42.0 million, which will be expensed over the remaining weighted average restricted period of the RSU, or 1.5 years.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of each option awarded. The following table sets forth the average assumptions used to determine compensation cost for the Company’s NQSO issued during the years ended:



	December 31,
	2016			2015			2014

Weighted average fair value per share	$	12.78		$	10.87		$	9.41
Expected dividend yield	0.52		%	0.51		%	0.59		%
Risk-free interest rate	1.54		%	1.59		%	1.61		%
Expected volatility	20.8		%	20.3		%	21.6		%
Expected life (years)	6.14			5.68			5.13

The total intrinsic value of options exercised for the years ended December 31, 2016, 2015 and 2014 was $38.3 million, $22.3 million and $28.8 million, respectively.

The total fair value of shares vested for the years ended December 31, 2016, 2015 and 2014 was $34.8 million, $22.7 million and $20.2 million, respectively.

The following table summarizes the NQSO transactions for the year ended December 31, 2016:



	Outstanding						Exercisable
(in millions, except per share amounts)	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value

December 31, 2015	7.3		$	38.85	$	159.9	5.7	$	36.38	$	139.4
Granted	0.7		57.52
Merger	1.7		26.93
Exercised	(1.3	)	30.73
December 31, 2016	8.4		$	39.22	$	155.9	6.7	$	36.03	$	144.9

The weighted average remaining contractual term of all outstanding options is 5.1 years and the weighted average remaining contractual term of exercisable options is 4.3 years.

The following table summarizes information about NQSO outstanding for the year ended December 31, 2016:



			Outstanding				Exercisable
(in millions, except per share amounts and life)			Number Outstanding at December 31,	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable at December 31,	Weighted Average Exercise Price
Range of			Number Outstanding at December 31,				Number Exercisable at December 31,
Exercise Prices			2016				2016

5.01	-	10.00	0.3	1.9	$	6.50	0.3	$	6.50
10.01	-	20.00	0.1	1.4	14.39		0.1	14.39
20.01	-	30.00	0.9	2.3	25.68		0.9	25.68
30.01	-	40.00	3.4	4.4	36.49		3.2	36.47
40.01	-	50.00	2.3	5.6	44.11		1.9	43.69
50.01	-	60.00	1.2	8.5	53.58		0.3	52.12
60.01	-	70.00	0.2	9.2	60.74		—	—
			8.4	5.1	$	39.22	6.7	$	36.03

The following table summarizes the unvested RSU transactions for the year ended December 31, 2016:



	Unvested Restricted Stock Units
	Shares		Weighted Average Grant Date Fair Value
(in millions, except per share amounts)


Unvested at December 31, 2015	1.1		$	45.82
Granted	0.4		56.40
Merger	1.0		46.64
Vested	(0.5	)	40.06
Forfeited	(0.1	)	50.77
Unvested at December 31, 2016	1.9		$	49.55