11. Share-based Compensation

We have established and maintain a Long-term Incentive Plan (LTIP), as amended, for the granting of restricted common shares, performance share units (PSUs) and stock options to our employees. As of December 31, 2015, the total number of authorized common stock under LTIP, as amended, was 38.0 million shares, of which we have 14.2 million shares available for issuance. Outstanding restricted stock and PSUs generally vest three years from the date of grant. Restricted common shares are valued based on the prevailing market price of our common stock on the date of grant. Outstanding stock options vest over three years from the date of grant and have a 10‑year term and an exercise price equal to the market price on the date of grant.

The number of shares of common stock to be issued under the PSU agreement is based on a comparison of the Corporation’s total shareholder return (TSR) to the TSR of a predetermined group of peer companies over a three‑year performance period ending December 31 of the year prior to settlement of the grant. Payouts of the performance share awards will range from 0% to 200% of the target awards based on the Corporation’s TSR ranking within the peer group. Dividend equivalents for the performance period will accrue on performance shares, but will only be paid out on earned shares after the performance period.

Share‑based compensation expense consisted of the following:

	Before Income Taxes						After Income Taxes
	2015		2014		2013 (b)		2015		2014		2013
	(In millions)
Restricted stock	$	67	$	62	$	31	$	42	$	39	$	19
Stock options		5		2		13		3		1		8
Performance share units		25		19		10		16		12		6
Total (a)	$	97	$	83	$	54	$	61	$	52	$	33

(a)	Includes pre‑tax share‑based compensation expense included in Income from continuing operations of approximately $97 million, $87 million and $60 million for 2015, 2014 and 2013, respectively.

(b)	Reflects the reversal of $33 million ($25 million for restricted stock, $7 million for PSUs and $1 million for stock options) in compensation expense for grants that were not expected to vest as a result of our transformation to a pure play E&P company.

Based on share‑based compensation awards outstanding at December 31, 2015, unearned compensation expense, before income taxes, will be recognized in future years as follows (in millions): 2016—$73, 2017—$42 and 2018—$6.

Share‑based compensation activity consisted of the following:

	Performance Share Units					Stock Options					Restricted Stock
	Performance Share Units			Weighted - Average Fair Value on Date of Grant		Options			Weighted - Average Exercise Price per Share		Shares of Restricted Common Stock			Weighted - Average Price on Date of Grant
	(In thousands, except per share amounts)
Outstanding at January 1, 2015		800		$	89.91		6,766		$	66.79		2,901		$	71.58
Granted		366			76.64		521			74.49		1,131			74.38
Exercised		—			—		(244	)		48.51		—			—
Vested		(288	)		72.93		—			—		(921	)		63.63
Forfeited		(58	)		97.16		(132	)		79.29		(291	)		71.39
Outstanding at December 31, 2015		820		$	89.43		6,911		$	67.77		2,820		$	75.32

As of December 31, 2015, there were 6.91 million outstanding stock options (6.31 million exercisable) with a weighted average remaining contractual life of 3.5 years (3.0 years for exercisable options). The weighted average exercise price for options exercisable at December 31, 2015 was $67.03 per share.

The following weighted average assumptions were utilized to estimate the fair value of stock options:

	2015			2014			2013
Risk free interest rate		1.77	%		1.86	%		—
Stock price volatility		0.312		0.363				—
Dividend yield		1.34	%		1.24	%		—
Expected life in years		6.0			6.0			—
Weighted average fair value per option granted	$	21.00		$	26.46			—

The following weighted average assumptions were utilized to estimate the fair value of PSU awards:

	2015			2014			2013
Risk free interest rate		1.02	%		0.65	%		0.36	%
Stock price volatility		0.270		0.359			0.359
Contractual term in years		3.0			3.0			3.0
Grant date price of Hess common stock	$	74.49		$	80.35		$	69.49

The risk free interest rate is based on the vesting period of the award and is obtained from published sources. The stock price volatility is determined from the historical stock prices of the peer group using the vesting period. The contractual term is equivalent to the vesting period.