Common Stock and Stock Compensation

12 Months Ended

Dec. 31, 2015

Stock Issued

During 2015, Southern Company issued approximately 6.6 million shares of common stock primarily through the Omnibus Incentive Compensation Plan and received proceeds of approximately $256 million. During the first nine months of 2015, all sales under the Southern Investment Plan and the Employee Savings Plan were funded with shares acquired on the open market by independent plan administrators. In October 2015, Southern Company began issuing shares of common stock through the Southern Investment Plan and the Employee Savings Plan. The Company may satisfy its obligations with respect to the plans in several ways, including through using newly issued shares or treasury shares or acquiring shares on the open market through the independent plan administrators.

On March 2, 2015, Southern Company announced a program to repurchase up to 20 million shares of Southern Company common stock to offset all or a portion of the incremental shares issued under its employee and director stock plans, including through stock option exercises, until December 31, 2017. Repurchases may be made by means of open market purchases, privately negotiated transactions, or accelerated or other share repurchase programs, in accordance with applicable securities laws. Under this program, approximately 2.6 million shares were repurchased in 2015 at a total cost of approximately $115 million. No further repurchases under the program are anticipated.

Shares Reserved

At December 31, 2015, a total of 106 million shares were reserved for issuance pursuant to the Southern Investment Plan, the Employee Savings Plan, the Outside Directors Stock Plan, and the Omnibus Incentive Compensation Plan (which includes stock options and performance share units as discussed below). Of the total 106 million shares reserved, there were 14 million shares of common stock remaining available for awards under the Omnibus Incentive Compensation Plan as of December 31, 2015.

Stock-Based Compensation

Stock-based compensation, in the form of stock options and performance share units, may be granted through the Omnibus Incentive Compensation Plan to a large segment of Southern Company system employees ranging from line management to executives. As of December 31, 2015, there were 5,405 current and former employees participating in the stock option and performance share unit programs.

Stock Options

Through 2009, stock-based compensation granted to employees consisted exclusively of non-qualified stock options. The exercise price for stock options granted equaled the stock price of Southern Company common stock on the date of grant. Stock options vest on a pro rata basis over a maximum period of three years from the date of grant or immediately upon the retirement or death of the employee. Options expire no later than 10 years after the grant date. All unvested stock options vest immediately upon a change in control where Southern Company is not the surviving corporation. Compensation expense is generally recognized on a straight-line basis over the three-year vesting period with the exception of employees that are retirement eligible at the grant date and employees that will become retirement eligible during the vesting period. Compensation expense in those instances is recognized at the grant date for employees that are retirement eligible and through the date of retirement eligibility for those employees that become retirement eligible during the vesting period. In 2015, Southern Company discontinued the granting of stock options. As a result, stock-based compensation granted to employees in 2015 consisted exclusively of performance share units.

The estimated fair values of stock options granted were derived using the Black-Scholes stock option pricing model. Expected volatility was based on historical volatility of Southern Company's stock over a period equal to the expected term. Southern Company used historical exercise data to estimate the expected term that represents the period of time that options granted to employees are expected to be outstanding. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant that covers the expected term of the stock options.

The following table shows the assumptions used in the pricing model and the weighted average grant-date fair value of stock options granted:



Year Ended December 31	2014	2013
Expected volatility	14.6%	16.6%
Expected term (in years)	5	5
Interest rate	1.5%	0.9%
Dividend yield	4.9%	4.4%
Weighted average grant-date fair value	$2.20	$2.93

Southern Company's activity in the stock option program for 2015 is summarized below:



	Shares Subject to Option	Weighted Average Exercise Price
Outstanding at December 31, 2014	39,929,319	$40.55
Exercised	4,032,729	36.84
Cancelled	146,684	42.31
Outstanding at December 31, 2015	35,749,906	$40.96
Exercisable at December 31, 2015	25,857,590	$40.53

The number of stock options vested, and expected to vest in the future, as of December 31, 2015 was not significantly different from the number of stock options outstanding at December 31, 2015 as stated above. As of December 31, 2015, the weighted average remaining contractual term for the options outstanding and options exercisable was approximately six years and the aggregate intrinsic value for the options outstanding and options exercisable was $209 million and $162 million, respectively.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for stock option awards recognized in income was $6 million, $27 million, and $25 million, respectively, with the related tax benefit also recognized in income of $2 million, $10 million, and $10 million, respectively. As of December 31, 2015, the total unrecognized compensation cost related to stock option awards not yet vested was immaterial.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $48 million, $125 million, and $77 million, respectively. The actual tax benefit realized by the Company for the tax deductions from stock option exercises totaled $19 million, $48 million, and $30 million for the years ended December 31, 2015, 2014, and 2013, respectively.

Southern Company has a policy of issuing shares to satisfy share option exercises. Cash received from issuances related to option exercises under the share-based payment arrangements for the years ended December 31, 2015, 2014, and 2013 was $154 million, $400 million, and $204 million, respectively.

Performance Share Units

From 2010 through 2014, stock-based compensation granted to employees included performance share units in addition to stock options. Beginning in 2015, stock-based compensation consisted exclusively of performance share units. Performance share units granted to employees vest at the end of a three-year performance period which equates to the requisite service period for accounting purposes. All unvested performance share units vest immediately upon a change in control where Southern Company is not the surviving corporation. Shares of Southern Company common stock are delivered to employees at the end of the performance period with the number of shares issued ranging from 0% to 200% of the target number of performance share units granted, based on achievement of the performance goals established by the Compensation Committee of the Southern Company Board of Directors.

The performance goal for all performance share units issued from 2010 through 2014 was based on the total shareholder return (TSR) for Southern Company common stock during the three-year performance period as compared to a group of industry peers. For these performance share units, at the end of three years, active employees receive shares based on Southern Company's performance while retired employees receive a pro rata number of shares based on the actual months of service during the performance period prior to retirement. The fair value of TSR-based performance share unit awards is determined as of the grant date using a Monte Carlo simulation model to estimate the TSR of Southern Company's common stock among the industry peers over the performance period. Southern Company recognizes compensation expense on a straight-line basis over the three-year performance period without remeasurement.

Beginning in 2015, Southern Company issued two additional types of performance share units to employees in addition to the TSR-based awards. These included performance share units with performance goals based on cumulative EPS over the performance period and performance share units with performance goals based on Southern Company's equity-weighted ROE over the performance period. The EPS-based and ROE-based awards each represent 25% of total target grant date fair value of the performance share unit awards granted. The remaining 50% of the target grant date fair value consists of TSR-based awards. In contrast to the Monte Carlo simulation model used to determine the fair value of the TSR-based awards, the fair values of the EPS-based awards and the ROE-based awards are based on the closing stock price of Southern Company common stock on the date of the grant. Compensation expense for the EPS-based and ROE-based awards is generally recognized ratably over the three-year performance period initially assuming a 100% payout at the end of the performance period. The TSR-based performance share units, along with the EPS-based and ROE-based awards, issued in 2015, vest immediately upon the retirement of the employee. As a result, compensation expense for employees that are retirement eligible at the grant date is recognized immediately while compensation expense for employees that become retirement eligible during the vesting period is recognized over the period from grant date to the date of retirement eligibility. The expected payout related to the EPS-based and ROE-based awards is reevaluated annually with expense recognized to date increased or decreased based on the number of shares currently expected to be issued. Unlike the TSR-based awards, the compensation expense ultimately recognized for the EPS-based awards and the ROE-based awards will be based on the actual number of shares issued at the end of the performance period.

In determining the fair value of the TSR-based awards issued to employees, the expected volatility was based on the historical volatility of Southern Company's stock over a period equal to the performance period. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant that covers the performance period of the awards. The following table shows the assumptions used in the pricing model and the weighted average grant-date fair value of performance share award units granted:



Year Ended December 31	2015	2014	2013
Expected volatility	12.9%	12.6%	12.0%
Expected term (in years)	3	3	3
Interest rate	1.0%	0.6%	0.4%
Annualized dividend rate^(*)	N/A	$2.03	$1.96
Weighted average grant-date fair value	$46.38	$37.54	$40.50


(*)	Beginning in 2015, cash dividends paid on Southern Company's common stock are accumulated and payable in additional shares of Southern Company's common stock at the end of the three-year performance period and are embedded in the grant date fair value which equates to the grant date stock price.

Total unvested performance share units outstanding as of December 31, 2014 were 1,830,381. During 2015, 1,542,653 performance share units were granted, 812,740 performance share units were vested, and 79,902 performance share units were forfeited, resulting in 2,480,392 unvested performance share units outstanding at December 31, 2015. In January 2016, based on achievement of the TSR performance goal, a portion of the performance share award units granted in 2013 vested and 227,515 shares were issued at a share price of $46.80 for the three-year performance and vesting period ended December 31, 2015.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for performance share units recognized in income was $88 million, $33 million, and $31 million, respectively, with the related tax benefit also recognized in income of $34 million, $13 million, and $12 million, respectively. As of December 31, 2015, there was $33 million of total unrecognized compensation cost related to performance share award units that will be recognized over a weighted-average period of approximately 19 months.

Diluted Earnings Per Share

For Southern Company, the only difference in computing basic and diluted earnings per share is attributable to awards outstanding under the stock option and performance share plans. The effect of both stock options and performance share award units was determined using the treasury stock method. Shares used to compute diluted earnings per share were as follows:



	Average Common Stock Shares
	2015	2014	2013
	(in millions)
As reported shares	910	897	877
Effect of options and performance share award units	4	4	4
Diluted shares	914	901	881

Stock options and performance share award units that were not included in the diluted earnings per share calculation because they were anti-dilutive were 1 million and 7 million as of December 31, 2015 and 2014, respectively.

Common Stock Dividend Restrictions

The income of Southern Company is derived primarily from equity in earnings of its subsidiaries. At December 31, 2015, consolidated retained earnings included $7.0 billion of undistributed retained earnings of the subsidiaries.

Alabama Power [Member]

Class of Stock [Line Items]

STOCK COMPENSATION

Stock-Based Compensation

Stock-based compensation, in the form of Southern Company stock options and performance share units, may be granted through the Omnibus Incentive Compensation Plan to a large segment of the Company's employees ranging from line management to executives. As of December 31, 2015, there were 881 current and former employees participating in the stock option and performance share unit programs.

Stock Options

For the years ended December 31, 2014 and 2013, employees of the Company were granted stock options for 2,027,298 shares and 1,319,038 shares, respectively. The weighted average grant-date fair value of stock options granted during 2014 and 2013 derived using the Black-Scholes stock option pricing model was $2.20 and $2.93, respectively.

The compensation cost and tax benefits related to the grant of Southern Company stock options to the Company's employees and the exercise of stock options are recognized in the Company's financial statements with a corresponding credit to equity, representing a capital contribution from Southern Company. No cash proceeds are received by the Company upon the exercise of stock options. The amounts were not material for any year presented. As of December 31, 2015, the amount of unrecognized compensation cost related to stock option awards not yet vested was immaterial.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $8 million, $21 million, and $11 million, respectively. The actual tax benefit realized by the Company for the tax deductions from stock option exercises totaled $3 million, $8 million, and $4 million for the years ended December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, the aggregate intrinsic value for the options outstanding and options exercisable was $33 million and $26 million, respectively.

Performance Share Units

The performance goal for all performance share units issued from 2010 through 2014 was based on the total shareholder return (TSR) for Southern Company common stock during the three-year performance period as compared to a group of industry peers. For these performance share units, at the end of three years, active employees receive shares based on Southern Company's performance while retired employees receive a pro rata number of shares based on the actual months of service during the performance period prior to retirement. The fair value of TSR-based performance share unit awards is determined as of the grant date using a Monte Carlo simulation model to estimate the TSR of Southern Company's common stock among the industry peers over the performance period. The Company recognizes compensation expense on a straight-line basis over the three-year performance period without remeasurement.

Beginning in 2015, Southern Company issued two additional types of performance share units to employees in addition to the TSR-based awards. These included performance share units with performance goals based on cumulative earnings per share (EPS) over the performance period and performance share units with performance goals based on Southern Company's equity-weighted ROE over the performance period. The EPS-based and ROE-based awards each represent 25% of total target grant date fair value of the performance share unit awards granted. The remaining 50% of the target grant date fair value consists of TSR-based awards. In contrast to the Monte Carlo simulation model used to determine the fair value of the TSR-based awards, the fair values of the EPS-based awards and the ROE-based awards are based on the closing stock price of Southern Company common stock on the date of the grant. Compensation expense for the EPS-based and ROE-based awards is generally recognized ratably over the three-year performance period initially assuming a 100% payout at the end of the performance period. The TSR-based performance share units, along with the EPS-based and ROE-based awards, issued in 2015, vest immediately upon the retirement of the employee. As a result, compensation expense for employees that are retirement eligible at the grant date is recognized immediately while compensation expense for employees that become retirement eligible during the vesting period is recognized over the period from grant date to the date of retirement eligibility. The expected payout related to the EPS-based and ROE-based awards is reevaluated annually with expense recognized to date increased or decreased based on the number of shares currently expected to be issued. Unlike the TSR-based awards, the compensation expense ultimately recognized for the EPS-based awards and the ROE-based awards will be based on the actual number of shares issued at the end of the performance period.

For the years ended December 31, 2015, 2014, and 2013, employees of the Company were granted performance share units of 214,709, 176,070, and 141,355, respectively. The weighted average grant-date fair value of TSR-based performance share units granted during 2015, 2014, and 2013, determined using a Monte Carlo simulation model to estimate the TSR of Southern Company's stock among the industry peers over the performance period, was $46.42, $37.54, and $40.50, respectively. The weighted average grant-date fair value of both EPS-based and ROE-based performance share units granted during 2015 was $47.78.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for performance share units recognized in income was $13 million, $5 million, and $5 million, respectively, with the related tax benefit also recognized in income of $5 million, $2 million, and $2 million, respectively. The compensation cost and tax benefits related to the grant of Southern Company performance share units to the Company's employees are recognized in the Company's financial statements with a corresponding credit to equity, representing a capital contribution from Southern Company. As of December 31, 2015, there was $4 million of total unrecognized compensation cost related to performance share award units that will be recognized over a weighted-average period of approximately 19 months.

Georgia Power [Member]

Class of Stock [Line Items]

STOCK COMPENSATION

Stock-Based Compensation

Stock-based compensation, in the form of Southern Company stock options and performance share units, may be granted through the Omnibus Incentive Compensation Plan to a large segment of the Company's employees ranging from line management to executives. As of December 31, 2015, there were 1,002 current and former employees participating in the stock option and performance share unit programs.

Stock Options

For the years ended December 31, 2014 and 2013, employees of the Company were granted stock options for 2,034,150 shares and 1,509,662 shares, respectively. The weighted average grant-date fair value of stock options granted during 2014 and 2013 derived using the Black-Scholes stock option pricing model was $2.20 and $2.93, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $9 million, $19 million, and $16 million, respectively. The actual tax benefit realized by the Company for the tax deductions from stock option exercises totaled $4 million, $7 million, and $6 million for the years ended December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, the aggregate intrinsic value for the options outstanding and options exercisable was $45 million and $38 million, respectively.

Performance Share Units

The performance goal for all performance share units issued from 2010 through 2014 was based on the total shareholder return (TSR) for Southern Company common stock during the three-year performance period as compared to a group of industry peers. For these performance share units, at the end of three years, active employees receive shares based on Southern Company's performance while retired employees receive a pro rata number of shares based on the actual months of service during the performance period prior to retirement. The fair value of TSR-based performance share unit awards is determined as of the grant date using a Monte Carlo simulation model to estimate the TSR of Southern Company's common stock among the industry peers over the performance period. The Company recognizes compensation expense on a straight-line basis over the three-year performance period without remeasurement.

Beginning in 2015, Southern Company issued two additional types of performance share units to employees in addition to the TSR-based awards. These included performance share units with performance goals based on cumulative earnings per share (EPS) over the performance period and performance share units with performance goals based on Southern Company's equity-weighted ROE over the performance period. The EPS-based and ROE-based awards each represent 25% of total target grant date fair value of the performance share unit awards granted. The remaining 50% of the target grant date fair value consists of TSR-based awards. In contrast to the Monte Carlo simulation model used to determine the fair value of the TSR-based awards, the fair values of the EPS-based awards and the ROE-based awards are based on the closing stock price of Southern Company common stock on the date of the grant. Compensation expense for the EPS-based and ROE-based awards is generally recognized ratably over the three-year performance period initially assuming a 100% payout at the end of the performance period. The TSR-based performance share units, along with the EPS-based and ROE-based awards, issued in 2015, vest immediately upon the retirement of the employee. As a result, compensation expense for employees that are retirement eligible at the grant date is recognized immediately while compensation expense for employees that become retirement eligible during the vesting period is recognized over the period from grant date to the date of retirement eligibility. The expected payout related to the EPS-based and ROE-based awards is reevaluated annually with expense recognized to date increased or decreased based on the number of shares currently expected to be issued. Unlike the TSR-based awards, the compensation expense ultimately recognized for the EPS-based awards and the ROE-based awards will be based on the actual number of shares issued at the end of the performance period.

For the years ended December 31, 2015, 2014, and 2013, employees of the Company were granted performance share units of 236,804, 176,224, and 161,240, respectively. The weighted average grant-date fair value of TSR-based performance share units granted during 2015, 2014, and 2013, determined using a Monte Carlo simulation model to estimate the TSR of Southern Company's stock among the industry peers over the performance period, was $46.41, $37.54, and $40.50, respectively. The weighted average grant-date fair value of both EPS-based and ROE-based performance share units granted during 2015 was $47.78.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for performance share units recognized in income was $15 million, $6 million, and $6 million, respectively, with the related tax benefit also recognized in income of $6 million, $2 million, and $2 million, respectively. The compensation cost and tax benefits related to the grant of Southern Company performance share units to the Company's employees are recognized in the Company's financial statements with a corresponding credit to equity, representing a capital contribution from Southern Company. As of December 31, 2015, there was $4 million of total unrecognized compensation cost related to performance share award units that will be recognized over a weighted-average period of approximately 19 months.

Gulf Power [Member]

Class of Stock [Line Items]

STOCK COMPENSATION

Stock-Based Compensation

Stock-based compensation, in the form of Southern Company stock options and performance share units, may be granted through the Omnibus Incentive Compensation Plan to a large segment of the Company's employees ranging from line management to executives. As of December 31, 2015, there were 198 current and former employees participating in the stock option and performance share unit programs.

Stock Options

For the years ended December 31, 2014 and 2013, employees of the Company were granted stock options for 432,371 shares and 285,209 shares, respectively. The weighted average grant-date fair value of stock options granted during 2014 and 2013 derived using the Black-Scholes stock option pricing model was $2.20 and $2.93, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $2 million, $5 million, and $2 million, respectively. The actual tax benefit realized by the Company for the tax deductions from stock option exercises totaled $1 million, $2 million, and $1 million for the years ended December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, the aggregate intrinsic value for the options outstanding and options exercisable was $7 million and $5 million, respectively.

Performance Share Units

The performance goal for all performance share units issued from 2010 through 2014 was based on the total shareholder return (TSR) for Southern Company common stock during the three-year performance period as compared to a group of industry peers. For these performance share units, at the end of three years, active employees receive shares based on Southern Company's performance while retired employees receive a pro rata number of shares based on the actual months of service during the performance period prior to retirement. The fair value of TSR-based performance share unit awards is determined as of the grant date using a Monte Carlo simulation model to estimate the TSR of Southern Company's common stock among the industry peers over the performance period. The Company recognizes compensation expense on a straight-line basis over the three-year performance period without remeasurement.

Beginning in 2015, Southern Company issued two additional types of performance share units to employees in addition to the TSR-based awards. These included performance share units with performance goals based on cumulative earnings per share (EPS) over the performance period and performance share units with performance goals based on Southern Company's equity-weighted ROE over the performance period. The EPS-based and ROE-based awards each represent 25% of total target grant date fair value of the performance share unit awards granted. The remaining 50% of the target grant date fair value consists of TSR-based awards. In contrast to the Monte Carlo simulation model used to determine the fair value of the TSR-based awards, the fair values of the EPS-based awards and the ROE-based awards are based on the closing stock price of Southern Company common stock on the date of the grant. Compensation expense for the EPS-based and ROE-based awards is generally recognized ratably over the three-year performance period initially assuming a 100% payout at the end of the performance period. The TSR-based performance share units, along with the EPS-based and ROE-based awards, issued in 2015, vest immediately upon the retirement of the employee. As a result, compensation expense for employees that are retirement eligible at the grant date is recognized immediately while compensation expense for employees that become retirement eligible during the vesting period is recognized over the period from grant date to the date of retirement eligibility. The expected payout related to the EPS-based and ROE-based awards is reevaluated annually with expense recognized to date increased or decreased based on the number of shares currently expected to be issued. Unlike the TSR-based awards, the compensation expense ultimately recognized for the EPS-based awards and the ROE-based awards will be based on the actual number of shares issued at the end of the performance period.

For the years ended December 31, 2015, 2014, and 2013, employees of the Company were granted performance share units of 48,962, 37,829, and 30,627, respectively. The weighted average grant-date fair value of TSR-based performance share units granted during 2015, 2014, and 2013, determined using a Monte Carlo simulation model to estimate the TSR of Southern Company's stock among the industry peers over the performance period, was $46.38, $37.54, and $40.50, respectively. The weighted average grant-date fair value of both EPS-based and ROE-based performance share units granted during 2015 was $47.75.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for performance share units recognized in income was $2 million, $1 million, and $1 million, respectively. The related tax benefit also recognized in income was $1 million in 2015 and immaterial in 2014 and 2013. The compensation cost and tax benefits related to the grant of Southern Company performance share units to the Company's employees are recognized in the Company's financial statements with a corresponding credit to equity, representing a capital contribution from Southern Company. As of December 31, 2015, there was $2 million of total unrecognized compensation cost related to performance share award units that will be recognized over a weighted-average period of approximately 19 months.

Mississippi Power [Member]

Class of Stock [Line Items]

STOCK COMPENSATION

Stock-Based Compensation

Stock-based compensation, in the form of Southern Company stock options and performance share units, may be granted through the Omnibus Incentive Compensation Plan to a large segment of the Company's employees ranging from line management to executives. As of December 31, 2015, there were 231 current and former employees participating in the stock option and performance share unit programs.

Stock Options

For the years ended December 31, 2014 and 2013, employees of the Company were granted stock options for 578,256 shares and 345,830 shares, respectively. The weighted average grant-date fair value of stock options granted during 2014 and 2013 derived using the Black-Scholes stock option pricing model was $2.20 and $2.93, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $3 million, $5 million, and $3 million, respectively. The actual tax benefit realized by the Company for the tax deductions from stock option exercises totaled $1 million, $2 million, and $1 million for the years ended December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, the aggregate intrinsic value for the options outstanding and options exercisable was $7 million and $5 million, respectively.

Performance Share Units

The performance goal for all performance share units issued from 2010 through 2014 was based on the total shareholder return (TSR) for Southern Company common stock during the three-year performance period as compared to a group of industry peers. For these performance share units, at the end of three years, active employees receive shares based on Southern Company's performance while retired employees receive a pro rata number of shares based on the actual months of service during the performance period prior to retirement. The fair value of TSR-based performance share unit awards is determined as of the grant date using a Monte Carlo simulation model to estimate the TSR of Southern Company's common stock among the industry peers over the performance period. The Company recognizes compensation expense on a straight-line basis over the three-year performance period without remeasurement.

Beginning in 2015, Southern Company issued two additional types of performance share units to employees in addition to the TSR-based awards. These included performance share units with performance goals based on cumulative earnings per share (EPS) over the performance period and performance share units with performance goals based on Southern Company's equity-weighted ROE over the performance period. The EPS-based and ROE-based awards each represent 25% of total target grant date fair value of the performance share unit awards granted. The remaining 50% of the target grant date fair value consists of TSR-based awards. In contrast to the Monte Carlo simulation model used to determine the fair value of the TSR-based awards, the fair values of the EPS-based awards and the ROE-based awards are based on the closing stock price of Southern Company common stock on the date of the grant. Compensation expense for the EPS-based and ROE-based awards is generally recognized ratably over the three-year performance period initially assuming a 100% payout at the end of the performance period. The TSR-based performance share units, along with the EPS-based and ROE-based awards, issued in 2015, vest immediately upon the retirement of the employee. As a result, compensation expense for employees that are retirement eligible at the grant date is recognized immediately while compensation expense for employees that become retirement eligible during the vesting period is recognized over the period from grant date to the date of retirement eligibility. The expected payout related to the EPS-based and ROE-based awards is reevaluated annually with expense recognized to date increased or decreased based on the number of shares currently expected to be issued. Unlike the TSR-based awards, the compensation expense ultimately recognized for the EPS-based awards and the ROE-based awards will be based on the actual number of shares issued at the end of the performance period.

For the years ended December 31, 2015, 2014, and 2013, employees of the Company were granted performance share units of 53,909, 49,579, and 36,769, respectively. The weighted average grant-date fair value of TSR-based performance share units granted during 2015, 2014, and 2013, determined using a Monte Carlo simulation model to estimate the TSR of Southern Company's stock among the industry peers over the performance period, was $46.41, $37.54, and $40.50, respectively. The weighted average grant-date fair value of both EPS-based and ROE-based performance share units granted during 2015 was $47.77.

For the years ended December 31, 2015, 2014, and 2013, total compensation cost for performance share units recognized in income was $4 million, $2 million, and $2 million, respectively, with the related tax benefit also recognized in income of $2 million, $1 million, and $1 million, respectively. The compensation cost and tax benefits related to the grant of Southern Company performance share units to the Company's employees are recognized in the Company's financial statements with a corresponding credit to equity, representing a capital contribution from Southern Company. As of December 31, 2015, there was $1 million of total unrecognized compensation cost related to performance share award units that will be recognized over a weighted-average period of approximately 19 months.