Share-Based Compensation

The Company has various plans that provide for granting options, restricted stock units and restricted stock to certain employees and independent directors of the Company and its subsidiaries. The Company recognizes compensation expense for share-based payments based on the fair value of the awards at the grant date. The table below summarizes compensation expense for the Company’s non-qualified stock options based on the fair value method estimated using the Black-Scholes valuation model, and non-vested stock awards, including restricted stock units, and performance-based non-vested stock units based on the fair value method estimated using the Monte Carlo simulation model and the grant date stock market value for the years ended December 31, 2016, 2015 and 2014. The Company records compensation expense related to non-vested stock awards as a component of the SG&A expenses caption of the Consolidated Statements of Operations and Comprehensive Income (Loss).



	Year Ended
(in millions)	Dec 31, 2016			Dec 31, 2015			Dec 31, 2014
Non-qualified stock option expense	$	0.6		$	1.5		$	2.3
Immediately vested stock awards expense	—			—			0.8
Stock unit awards	3.4			4.5			8.0
Performance-based non-vested stock awards expense	1.4			6.1			4.7
Total pre-tax share-based compensation expense	$	5.4		$	12.1		$	15.8
Excess tax benefit (deficiency) on share-based compensation	$	(5.0	)	$	(1.7	)	$	(0.5	)

During the years ended December 31, 2016, 2015 and 2014, cash received from stock option exercises was $1.2 million, $0.2 million and $0.3 million, respectively. The total tax benefit to be realized for tax deductions from these option exercises was less than $0.1 million for the years ended December 31, 2016 and December 31, 2015 and $0.1 million for the year ended December 31, 2014. The $6.5 million and $4.3 million tax deductions for all share-based compensation for the years ended December 31, 2016 and 2015, respectively, includes $(5.0) million and $(1.7) million of excess tax benefits (deficiencies). The 2016, 2015 and 2014 deficiency does not impact cash flow due to the U.S. tax loss carry forward position. The Company has elected the shortcut method to calculate the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of ASC 718.

The Company currently has share-based compensation awards outstanding under the General Cable Corporation 2005 Stock Incentive Plan (“2005 Plan”) and the General Cable Corporation Stock Incentive Plan, as amended and restated, ("Amended Plan"). The Amended Plan is an amendment and restatement of the 2005 Plan and was effective as of May 14, 2015. These plans allow the Company to fulfill its incentive award obligations generally by granting nonqualified stock options and nonvested stock awards. New shares are issued when nonqualified stock options are exercised and when non-vested stock awards vest. The Compensation Committee of the Board of Directors will no longer grant any awards under the 2005 Plan but will continue to administer awards which were previously granted under such plan. The Amended Plan authorized a maximum of approximately 9 million shares to be granted. Shares reserved for future grants, including options, under the Amended Plan, approximated 3.2 million at December 31, 2016.

The Amended Plan authorizes the following types of awards to be granted: (i) Nonqualified Stock Options; (ii) Stock Appreciation Rights; (iii) Stock Awards; (iv) Stock Units and (v) Cash Awards, as more fully described in the Amended Plan. Stock awards, stock units and cash awards may constitute performance-based awards. Each award is subject to such terms and conditions consistent with the Amended Plan as determined by the Compensation Committee and as set forth in an award agreement.

Stock Options

All options awarded under the 2005 Plan and the Amended Plan have a term not to exceed 10 years from the grant date. The majority of the options vest ratably over three years of continued employment from the grant date. A summary of stock option activity for the year ended December 31, 2016 is as follows (options in thousands and aggregate intrinsic value in millions):



			Weighted Average		Weighted Average Remaining	Aggregate
	Options Outstanding		Exercise Price		Contractual Term	Intrinsic Value
Outstanding at December 31, 2015	2,079.9		$	31.51	4.9 years	$	—
Granted	—		—
Exercised	(60.0	)	19.59
Forfeited or Expired	(340.3	)	35.65
Outstanding as of December 31, 2016	1,679.6		$	31.01	4.3 years	$	—
Exercisable at December 31, 2016	1,444.8		$	32.86	3.6 years	$	—
Options expected to vest in the next twelve months	117.4		$	19.65	8.5 years	$	—

During the years ended December 31, 2016 and December 31, 2014 there were no stock options granted. During the year ended December 31, 2015, there were 352.1 thousand stock options granted and the weighted average grant date fair value of options granted was $19.65. The total intrinsic value of options exercised was less than $0.1 million during the years ended December 31, 2016 and 2015 and $0.2 million during the year ended December 31, 2014. The total fair value of options vested during the years ended December 31, 2016, 2015 and 2014 was $1.0 million, $27.7 million, and $25.7 million, respectively. At December 31, 2016, 2015 and 2014, the total compensation cost related to nonvested options not yet recognized was $1.3 million, $1.5 million and $1.1 million with a weighted average expense recognition period of 1.6 years, 2.3 years and 1.2 years, respectively.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model using the following weighted-average assumptions:



	Year Ended
	Dec 31, 2015
Risk-free interest rate ⁽¹⁾	1.4		%
Expected dividend yield	3.7		%
Expected option life ⁽²⁾	4.0 years
Expected stock price volatility ⁽³⁾	47.2		%
Weighted average fair value of options granted	$	5.68


(1)	Risk-free interest rate — This is the U.S. Treasury rate at the grant date having a term approximately equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.


(2)	Expected option life — This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted have a maximum term of ten years. An increase in expected life will increase compensation expense.

(3)

Expected stock price volatility — This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of the Company’s stock to calculate the volatility assumption as it is management’s belief that this is the best indicator of future volatility. An increase in the expected volatility will increase compensation expense.

Additional information regarding options outstanding as of December 31, 2016 is as follows (options in thousands):



Range of Option Prices	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Options Exercisable	Weighted Average Exercise Price
$0 -$14	—	$	—	0.0	—	$	—
$14 - $28	905.6	20.65		4.3	670.8	2.83
$28 -$42	366.0	33.10		2.0	366.0	1.97
$42 - $56	255.3	44.80		1.4	255.3	1.38
$56 - $70	152.7	64.40		1.0	152.7	1.02

Nonvested Stock

The majority of the nonvested stock and stock unit awards granted under the 2005 Plan and the Amended Plan are in the form of restricted stock units ("RSUs") and performance-based stock units ("PSUs"). The Company's RSUs include performance conditions and are restricted as to transferability and salability with these restrictions being removed in equal annual installments over a three-year or five-year period following the grant date. The vesting is contingent upon certification that the applicable performance condition has been achieved, and the performance condition operates on a rolling basis with a catch-up feature for each vesting tranche for RSU's granted in 2015 and 2014. The Company's PSUs vest upon certification of the achievement of two cumulative three-year performance metrics: relative total shareholder return (“RTSR”) and return on invested capital (“ROIC”). A minimal amount of immediately vesting restricted stock held by certain members of the Company’s Board of Directors in the Deferred Compensation Plan is included in this presentation as nonvested stock.

A summary of all nonvested stock activity for the year ended December 31, 2016, is as follows (shares in thousands):



	Shares Outstanding		Weighted Average Grant Date Fair Value
Balance, December 31, 2015	1,590.1		$	23.64
Granted	1,150.5		7.96
Vested	(530.3	)	26.78
Forfeited	(771.5	)	15.70
Balance, December 31, 2016	1,438.8		$	13.87

The fair values of RSUs and PSUs are estimated based on the assumed probable outcome on the date of grant in accordance with ASC 718 - Compensation - Stock Compensation. The probable outcome is assumed to be at the target level attainment. The estimated fair value of the RSUs and the PSUs with the performance condition tied to ROIC are calculated using the closing price per share of the Company's common stock on the grant date. The estimated fair value of the PSUs with the performance condition tied to RTSR are calculated using the simulated fair value per share of the Company's common stock based on the application of a Monte Carlo simulation model.

The weighted-average grant date fair value of all nonvested stock granted, the total fair value (in millions) of all nonvested stock granted, and the fair value (in millions) of all nonvested stock that have vested during each of the past three years is as follows:



	Year Ended
	Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
Weighted-average grant date fair value of nonvested shares granted	$	7.96	$	15.97	$	30.27
Fair value of nonvested shares granted	$	9.2	$	15.2	$	20.0
Fair value of shares vested	$	14.2	$	8.7	$	8.1

As of December 31, 2016, there was $6.1 million of total unrecognized compensation cost related to all nonvested stock. The cost is expected to be recognized over a weighted average period of 1.6 years. There is approximately 1.0 million nonvested stock with a weighted average grant price of $17.30 and a fair value of $17.3 million expected to vest in 2017.