Common Stock and Stock Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Assumptions used in the pricing model and the weighted average grant-date fair value of stock options granted

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

Summary of stock option activity

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

Assumptions used in the pricing model and the weighted average grant-date fair value of performance share award units granted

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.

Earnings per share

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