Stock-Based Compensation

Under the Company's 2004 Stock Incentive Plan ("2004 Plan"), the Company granted options to purchase shares of the Company's common stock at the fair market value on the date of grant. The options vested over periods of up to three years and have a term of 10 years from date of grant. At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees primarily vests 50% after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the first anniversary date of the grant. In February 2014, the Company's Board of Directors replaced the expired 2004 Plan by adopting the BorgWarner Inc. 2014 Stock Incentive Plan ("2014 Plan"). On April 30, 2014, the Company's stockholders approved the 2014 Plan. Under the 2014 Plan, 8 million shares are authorized for grant, of which approximately 4.8 million shares are available for future issuance as of September 30, 2017.

Stock options A summary of the Company’s stock option activity for the nine months ended September 30, 2017 is as follows. As of March 31, 2017, there were no outstanding stock options.



	Shares under option (thousands)		Weighted average exercise price		Weighted average remaining contractual life (in years)	Aggregate intrinsic value (in millions)
Outstanding and exercisable at December 31, 2016	473		$	17.47	0.1	$	10.4
Exercised	(473	)	$	17.47
Outstanding and exercisable at September 30, 2017	—

Restricted stock The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In the first nine months of 2017, restricted stock in the amount of 776,753 shares and 26,919 shares were granted to employees and non-employee directors, respectively. The value of the awards is recognized as compensation expense ratably over the restriction periods. As of September 30, 2017, there was $34.7 million of unrecognized compensation expense that will be recognized over a weighted average period of 1.9 years.

The Company recorded restricted stock compensation expense of $6.7 million and $6.8 million for the three months ended September 30, 2017 and 2016, respectively, and $20.2 million and $19.9 million for the nine months ended September 30, 2017 and 2016, respectively.

A summary of the Company’s nonvested restricted stock for the nine months ended September 30, 2017 is as follows:



	Shares subject to restriction (thousands)		Weighted average price
Nonvested at December 31, 2016	1,429		$	44.12
Granted	777		$	40.07
Vested	(453	)	$	57.35
Forfeited	(28	)	$	41.87
Nonvested at March 31, 2017	1,725		$	39.27
Granted	27		$	41.13
Vested	(61	)	$	51.71
Forfeited	(28	)	$	38.06
Nonvested at June 30, 2017	1,663		$	38.86
Vested	(7	)	$	45.09
Forfeited	(19	)	$	38.22
Nonvested at September 30, 2017	1,637		$	38.85

Total Shareholder Return Performance Share Plans The 2004 and 2014 Plans provide for awarding of performance shares to members of senior management at the end of successive three-year periods based on the Company's performance in terms of total shareholder return relative to a peer group of automotive companies. The Company recorded compensation expense of $2.2 million and $2.3 million for the three months ended September 30, 2017 and 2016, respectively, and $7.6 million and $7.4 million for the nine months ended September 30, 2017 and 2016, respectively.

Relative Revenue Growth Performance Share Plans In the second quarter of 2016, the Company started a new performance share program to reward members of senior management based on the Company's performance in terms of revenue growth relative to the vehicle market over three-year performance periods. The Company recorded compensation expense of $2.3 million and income of $2.1 million for the three months ended September 30, 2017 and 2016, respectively, and $7.7 million for the nine months ended September 30, 2017 and no expense for the nine months ended September 30, 2016.