Capital Stock

(a) Common Shares

The Company had 500 million authorized common shares at December 31, 2015 and March 31, 2015. The table below outlines common shares reserved for future issuance:



	December 31, 2015	March 31, 2015
	(Amounts in thousands)
Stock options outstanding, average exercise price $24.60 (March 31, 2015 - $22.22)	14,899	12,215
Restricted share units — unvested	1,676	1,662
Share purchase options and restricted share units available for future issuance	2,885	7,163
Shares issuable upon conversion of April 2009 3.625% Notes at conversion price of $8.15 per share at March 31, 2015	—	1,984
Shares issuable upon conversion of January 2012 4.00% Notes at conversion price of $10.30 per share (March 31, 2015 - $10.38)	4,063	4,032
Shares issuable upon conversion of April 2013 1.25% Notes at conversion price of $29.44 per share (March 31, 2015 - $29.65)	2,038	2,024
Shares reserved for future issuance	25,561	29,080

In September 2012, the Company adopted the 2012 Performance Incentive Plan, as amended on September 9, 2014 (the "2012 Plan"). The 2012 Plan provides for the issuance of up to 27.6 million common shares of the Company, stock options, share appreciation rights, restricted shares, stock bonuses and other forms of awards granted or denominated in common shares or units of common shares of the Company, as well as certain cash bonus awards to eligible directors of the Company, officers or employees of the Company or any of its subsidiaries, and certain consultants and advisors to the Company or any of its subsidiaries.

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2015, and 2014:



	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2015			2014			2015			2014
	(Amounts in thousands)
Compensation Expense:
Stock Options	$	6,322		$	7,551		$	25,845		$	25,560
Restricted Share Units and Other Share-based Compensation	6,913			6,477			21,373			19,515
Share Appreciation Rights	—			1,104			288			3,800
	13,235			15,132			47,506			48,875
Impact of accelerated vesting on stock options and restricted share units⁽¹⁾	—			—			—			1,194
Total share-based compensation expense	$	13,235		$	15,132		$	47,506		$	50,069

Tax impact⁽²⁾	(4,853		)	(5,547		)	(17,420		)	(18,355		)
Reduction in net income	$	8,382		$	9,585		$	30,086		$	31,714

___________________


(1)	Represents the impact of the acceleration of certain vesting schedules for stock options and restricted share units pursuant to the severance arrangements related to the integration of the marketing operations of the Company's Lionsgate and Summit film labels.


(2)	Represents the income tax benefit recognized in the statements of income for share-based compensation arrangements.

The following table sets forth the stock option, equity-settled share appreciation rights, and restricted share unit activity during the nine months ended December 31, 2015:



	Stock Options		Weighted-Average Exercise Price	Restricted Share Units		Weighted-Average Grant-Date Fair Value
Outstanding at March 31, 2015	13,214,696		$21.26	1,662,028		$28.10
Granted	3,089,552		$32.75	1,282,319		$33.51
Options exercised or RSUs vested	(635,183	)	$12.96	(1,235,455	)	$28.46
Forfeited or expired	(8,429	)	$21.48	(32,897	)	$30.50
Outstanding at December 31, 2015	15,660,636		$23.86	1,675,995		$31.92

During the nine months ended December 31, 2014, 75,000 cash-settled share appreciation rights were exercised resulting in a cash payment of $1.7 million.

The excess tax benefits realized from tax deductions associated with option exercises and RSU activity were $6.8 million for the nine months ended December 31, 2014. There were no excess tax benefits realized for the nine months ended December 31, 2015.

Total unrecognized compensation cost related to unvested stock options and restricted share unit awards at December 31, 2015 are $52.9 million and $34.1 million, respectively, and are expected to be recognized over a weighted average period of 1.6 and 1.7 years, respectively.

On December 11, 2015, the Company's Board of Directors declared a quarterly cash dividend of $0.09 per common share payable on February 5, 2016, to shareholders of record as of December 31, 2015. As of December 31, 2015, the Company had $13.4 million of cash dividends payable included in accounts payable and accrued liabilities on the unaudited condensed consolidated balance sheet.

(d) Shareholder Transactions

In November 2015, the Company was advised that each of Liberty Global Incorporated Limited (“Liberty”), a limited company organized under the laws of the United Kingdom and a wholly owned subsidiary of Liberty Global plc, and Discovery Lightning Investments Ltd. (“Discovery”), a limited company organized under the laws of the United Kingdom and a wholly owned subsidiary of Discovery Communications, Inc., agreed to each purchase 5,000,000 common shares, no par value per share, of the Company (“common shares”) from funds affiliated with MHR Fund Management, LLC (“MHR Fund Management”). In connection with the purchases, the Company entered into separate registration rights agreements with each of Liberty and Discovery, and amended the registration rights agreement with MHR Fund Management, which provide Liberty, Discovery and MHR Fund Management (together with certain of their affiliates) with certain registration rights, subject to the terms and conditions set forth therein. The Company also entered into an underwriting agreement with J.P. Morgan Securities LLC, as underwriter, Liberty, Discovery and Bank of America, N.A. in connection with a registered underwritten secondary public offering of the common shares. Among other transaction costs, the Company has incurred expenses on behalf of MHR Fund Management for certain costs related to the registration and offering of the common shares. Such costs, amounting to approximately $0.8 million, are included in general and administration expense in the unaudited condensed consolidated statement of income for the three months ended December 31, 2015. Mark H. Rachesky, the Chairman of the Board of the Company, is the principal of MHR Fund Management, which holds approximately 20.1% of the Company’s outstanding common stock as of January 8, 2016. The registration and offering were disclosed by the Company on Current Reports on Form 8-K dated November 10, 2015 and November 13, 2015.