NOTE 13 — SHARE-BASED COMPENSATION:

Under the Stone Energy Corporation 2009 Amended and Restated Stock Incentive Plan, as amended from time to time (the “2009 Plan”), we may grant both incentive stock options qualifying under Section 422 of the Internal Revenue Code and options that are not qualified as incentive stock options to all employees and directors. All such options must have an exercise price of not less than the fair market value of our common stock on the date of grant and may not be re-priced without stockholder approval. Stock options to all employees vested ratably over a five-year service-vesting period and expire 10 years subsequent to award. Stock options issued to non-employee directors vested ratably over a three-year service-vesting period and expire 10 years subsequent to award. In addition, the 2009 Plan provides that shares available under the 2009 Plan may be granted as restricted stock. Restricted stock typically vests over a one- to three-year period.

We record share-based compensation expense under U.S. GAAP for share-based compensation awards based on the fair value on the date of grant. Compensation expense for share-based compensation awards is recognized in our financial statements over the vesting period of the award.

For the year ended December 31, 2014, we incurred $17,051 of share-based compensation, all of which related to restricted stock issuances, and of which a total of approximately $5,797 was capitalized into oil and gas properties. For the year ended December 31, 2013, we incurred $15,425 of share-based compensation, of which $15,405 related to restricted stock issuances and $20 related to stock option grants, and of which a total of approximately $5,078 was capitalized into oil and gas properties. For the year ended December 31, 2012, we incurred $13,399 of share-based compensation, of which $13,308 related to restricted stock issuances and $91 related to stock option grants, and of which a total of approximately $4,288 was capitalized into oil and gas properties. Because of the non-cash nature of share-based compensation, the expensed portion of share-based compensation is added back to net income in arriving at net cash provided by operating activities in our statement of cash flows. The capitalized portion is not included in net cash used in investing activities.

Stock Options. There were no stock option grants during the years ended December 31, 2014, 2013 or 2012.

A summary of stock option activity under the 2009 Plan during the year ended December 31, 2014 is as follows (amounts in table represent actual values except where indicated otherwise):


	Number of Options		Wgtd. Avg. Exercise Price		Wgtd. Avg. Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period		331,174		$39.37
Granted		-		-
Exercised		(250)		46.20
Forfeited		-		-
Expired		(125,950)		48.21

Options outstanding, end of period		204,974		33.94		2.4 years		$531

Options exercisable, end of period		204,974		33.94		2.4 years		531

Options unvested, end of period		-		-		-		-

Exercise prices for stock options outstanding at December 31, 2014 range from $6.97 to $53.20.

A summary of stock option activity under the 2009 Plan during the year ended December 31, 2013 is as follows (amounts in table represent actual values except where indicated otherwise):


	Number of Options		Wgtd. Avg. Exercise Price		Wgtd. Avg. Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period		411,794		$39.04
Granted		-		-
Exercised		-		-
Forfeited		(15,250)		42.45
Expired		(65,370)		36.56

Options outstanding, end of period		331,174		39.37		2.2 years		$1,708

Options exercisable, end of period		318,279		40.62		2.1 years		1,373

Options unvested, end of period		12,895		8.64		5.0 years		335

A summary of stock option activity under the 2009 Plan during the year ended December 31, 2012 is as follows (amounts in table represent actual values except where indicated otherwise):


	Number of Options		Wgtd. Avg. Exercise Price		Wgtd. Avg. Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period		438,394		$38.76
Granted		-		-
Exercised		-		-
Forfeited		(4,200)		35.54
Expired		(22,400)		34.25

Options outstanding, end of period		411,794		39.04		2.8 years		$766

Options exercisable, end of period		378,004		41.00		2.5 years		459

Options unvested, end of period		33,790		17.17		5.4 years		307

Restricted Stock. The fair value of restricted shares is typically determined based on the average of our high and low stock prices on the grant date. During the year ended December 31, 2014, we issued 674,904 shares of restricted stock valued at $24,593. During the year ended December 31, 2013, we issued 848,498 shares of restricted stock valued at $17,487. During the year ended December 31, 2012, we issued 670,818 shares of restricted stock valued at $21,085.

A summary of the restricted stock activity under the 2009 Plan for the years ended December 31, 2014, 2013 and 2012 is as follows (amounts in table represent actual values):


	2014				2013				2012
	Number of Restricted Shares		Wgtd. Avg. Fair Value Per Share		Number of Restricted Shares		Wgtd. Avg. Fair Value Per Share		Number of Restricted Shares		Wgtd. Avg. Fair Value Per Share
Restricted stock outstanding, beginning of period		1,258,053		$23.92		1,108,874		$27.56		923,740		$20.08
Issuances		674,904		36.44		848,498		20.61		670,818		31.43
Lapse of restrictions		(598,796)		24.57		(534,041)		25.45		(462,141)		18.29
Forfeitures		(31,055)		30.19		(165,278)		26.43		(23,543)		26.10

Restricted stock outstanding, end of period		1,303,106		$29.95		1,258,053		$23.92		1,108,874		$27.56

As of December 31, 2014, there was $22,354 of unrecognized compensation cost related to all non-vested share-based compensation arrangements under the 2009 Plan. That cost is being amortized on a straight-line basis over the vesting period and is expected to be recognized over a weighted-average period of 1.8 years.

Under U.S. GAAP, if tax deductions exceed book compensation expense, then excess tax benefits are credited to additional paid-in capital to the extent realized. If book compensation expense exceeds tax deductions, the tax deficit results in either a reduction in additional paid-in capital and/or an increase in income tax expense, depending on the pool of available excess tax benefits to offset such deficit. Adjustments to additional paid-in capital related to the net tax effect of stock option exercises and restricted stock vesting were ($54), ($884) and $814 in 2014, 2013 and 2012, respectively. Additionally, during 2014, $609 of tax deficits were charged to income tax expense.