STOCK-BASED COMPENSATION PLANS

At December 31, 2015, the Company had 38.0 common shares that were authorized for issuance under the Convergys Corporation 1998 Long-Term Incentive Plan (Convergys LTIP), as amended on January 28, 2011. The Company granted stock options in 2012 and 2011 with exercise prices that were no less than the market value of the Company’s common shares at the grant date and have a ten-year term and vesting terms of two to three years. The Company also grants restricted stock units to certain employees and directors. The restricted stock units do not possess voting rights and consist of both time-related and performance-related units. The restrictions for the time-related restricted stock units generally lapse one to three years after the grant date. The performance-related units vest upon the Company’s satisfaction of certain financial targets. Performance-related units that have not vested by the end of three years from the grant date (i.e., the performance conditions for vesting of those units have not been met within that period) are forfeited.

The following table shows certain information as of December 31, 2015, with respect to compensation plans under which common shares are authorized for issuance:



Shares (in millions)	Number of Common Shares to be Issued Upon Exercise	Weighted Average Exercise Price		Common Shares Available for Future Issuance
Equity compensation plans approved by shareholders
Stock options	0.5	$	13.33	—
Restricted stock units	2.2	—		—
	2.7	$	13.33	7.4

The Company’s operating results reflect stock-based compensation expense of $16.9, $10.2 and $13.4 for 2015, 2014 and 2013, respectively. Expense in 2015 and 2014 included $1.2 and $1.8, respectively, related to awards classified as liabilities that will ultimately settle in cash.

Restricted Stock Units

Time-based Restricted Stock Units

During the years ended December 31, 2015, 2014 and 2013, the Company granted 0.7, 0.7 and 0.6 shares, respectively, of time-based restricted stock units. The weighted average grant date fair values of these grants were $22.41, $20.55 and $16.35, respectively. These time-based grants are scheduled to vest 25% at the first anniversary of the grant date, 25% at the second anniversary and 50% at the third anniversary.

The total compensation cost related to non-vested time-based restricted stock units not yet recognized as of December 31, 2015 was approximately $15.1, which is expected to be recognized over a weighted average period of 1.0 year. Changes to non-vested time-based restricted stock units for the years ended December 31, 2015 and 2014 were as follows:



Shares (in millions)	Number of Shares		Weighted Average Fair Value at Date of Grant
Non-vested at December 31, 2012	1.6		$	13.04
Granted	0.6		16.35
Vested	(0.7	)	12.75
Forfeited	(0.1	)	14.09
Non-vested at December 31, 2013	1.4		14.62
Granted	0.7		20.55
Vested	(0.6	)	14.33
Forfeited	(0.2	)	18.85
Non-vested at December 31, 2014	1.3		17.66
Granted	0.7		22.41
Vested	(0.5	)	16.53
Forfeited	(0.2	)	20.78
Non-vested at December 31, 2015	1.3		$	20.20

Performance-based Restricted Stock Units

During the years ended December 31, 2015, 2014 and 2013, the Company granted 0.4, 0.3 and 0.4 shares, respectively, of performance-based restricted stock units. These grants provide for payout based upon the extent to which the Company achieves certain EPS targets, as determined by the Compensation and Benefits Committee of the Board of Directors, over three-year periods. Payout levels for earned shares range from 50% to 200% of award shares. No payout is earned if performance is below the performance minimum threshold level. At December 31, 2015, the targets for the third year of the 2014 grants and the second and third years of the 2015 grants had not yet been set, the key terms had not been effectively communicated to the recipients, and as such the expense related to these grants had not yet been recognized. These grants have been excluded from the table below.

During 2015, the Company established and communicated to participants the final key terms of the 2013 grants, resulting in grants for accounting purposes with a grant date fair value of $21.84 per share. The total compensation cost related to the 2013 non-vested performance-based restricted stock units not yet recognized as of December 31, 2015 was approximately $0.1, which is expected to be recognized ratably over the remaining vesting period ending in February 2016.

Changes to non-vested performance-based restricted stock units for the years ended December 31, 2015, 2014 and 2013 were as follows:



Shares (in millions)	Number of Shares		Weighted Average Fair Value at Date of Grant
Non-vested at December 31, 2012	1.0		$	12.69
Granted	0.1		16.34
Vested	(0.8	)	13.32
Forfeited	—		—
Non-vested at December 31, 2013	0.3		12.90
Granted	—		—
Vested	(0.3	)	12.90
Forfeited	—		—
Non-vested at December 31, 2014	—		—
Granted	0.3		21.84
Vested	—		—
Forfeited	—		—
Non-vested at December 31, 2015	0.3		$	21.84

The aggregate intrinsic value of non-vested restricted stock units was $41.1 at December 31, 2015.

Stock Options

Presented below is a summary of Company stock option activity:



Shares (in millions)	Shares		Weighted Average Exercise Price
Options outstanding at January 1, 2013	1.2		$	12.91
Options exercisable at January 1, 2013	0.3		11.86
Granted	—		—
Exercised	(0.3	)	12.24
Forfeited	(0.1	)	13.31
Options outstanding at December 31, 2013	0.8		$	13.11
Options exercisable at December 31, 2013	0.2		$	13.14
Granted	—		—
Exercised	(0.1	)	12.38
Forfeited	—		—
Options outstanding at December 31, 2014	0.7		$	13.24
Options exercisable at December 31, 2014	0.5		$	13.41
Granted	—		—
Exercised	(0.2	)	13.09
Forfeited	—		—
Options outstanding at December 31, 2015	0.5		$	13.33
Options exercisable at December 31, 2015	0.5		$	13.33

Approximately one-half of the stock options granted during 2012 vested in two years and the remaining vested in three years. The Company used the Black-Scholes option pricing model to calculate the fair value of stock options granted. For the 2012 grants, the weighted average fair value at grant date of $3.43 per option granted included assumptions of a strike price of $12.79, a 30.74% implied volatility, an expected term of 4.5 years, a risk-free rate of 0.76%, and a dividend yield of 0.00%. These 2012 option grants resulted in stock compensation expense of less than $0.1, $0.2 and $0.6 in 2015, 2014 and 2013, respectively. Expected volatility is based on the unbiased standard deviation of the Company’s common shares over the option term. The expected life of the options represents the period of time that the Company expects the options granted to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option for the expected term of the instrument. The dividend yield reflects an estimate of dividend payouts over the term of the award. As of December 31, 2015, all outstanding stock options are fully vested and the related expense has been fully recognized.

The weighted average grant date fair value per share for the outstanding and exercisable options at December 31, 2015 was $3.78 and $3.74, respectively.

The following table summarizes the status of the Company stock options outstanding and exercisable at December 31, 2015:



Shares (in millions)	Options Outstanding				Options Exercisable
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$11.56 to $21.81	0.5	5.6	13.33		0.5	5.6	13.33
Total	0.5	5.6	$	13.33	0.5	5.6	$	13.33

The aggregate intrinsic value of stock options exercised was $2.7 in 2015, $1.1 in 2014 and $1.3 in 2013. The actual tax benefit realized from the exercised stock options was $0.6 in 2015, $0.2 in 2014 and $0.3 in 2013. As of December 31, 2015, the aggregate intrinsic value was $5.3 for both stock options outstanding and exercisable. Intrinsic value represents the Company’s closing price on the last trading day of the year in excess of the weighted average exercise price for those tranches of options with a weighted average exercise price less than the closing price multiplied by the number of options outstanding or exercisable.