Common Stock and Share-based Compensation Plans

Meredith has a shareholder-approved stock incentive plan. Prior to January 1, 2016, the Company had a shareholder-approved employee stock purchase plan (ESPP). The ESPP was suspended indefinitely as of January 1, 2016. More detailed descriptions of these plans follows. Compensation expense recognized for these plans was $12.7 million in fiscal 2017, $12.8 million in fiscal 2016, and $12.5 million in fiscal 2015. The total income tax benefit recognized in earnings was $4.8 million in fiscal 2017, $4.6 million in fiscal 2016, and $4.6 million in fiscal 2015.

Stock Incentive Plan

Meredith has a stock incentive plan that permits the Company to issue stock options, restricted stock, stock equivalent units, restricted stock units, and performance shares to key employees and directors of the Company. Approximately 9.0 million shares remained available for future awards under the plan as of June 30, 2017. Forfeited awards, shares deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax withholding on option exercises and the vesting of restricted shares and restricted stock units increase shares available for future awards. The plan is designed to provide an incentive to contribute to the achievement of long-range corporate goals; provide flexibility in motivating, attracting, and retaining employees; and to align more closely the employees' interests with those of shareholders.

The Company has awarded restricted shares of common stock and restricted stock units to eligible key employees and to non-employee directors under the plan. In addition, certain awards are granted based on specified levels of Company stock ownership. All awards have restriction periods tied primarily to employment and/or service. The awards granted to employees generally vest over three or five years and the awards granted to directors vest one-third each year during the three-year period from date of grant. The grant date of awards is the date the Compensation Committee of the Board of Directors approves the granting of the awards. The awards are recorded at the market value of traded shares on the date of the grant as unearned compensation. The initial values of the grants, net of estimated forfeitures, are amortized over the vesting periods.

The Company's restricted stock activity during the year ended June 30, 2017, was as follows:



Restricted Stock	Shares		Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
(Shares and Aggregate Intrinsic Value in thousands)
Nonvested at June 30, 2016	179			$	45.93
Granted	7			47.65
Vested	(148	)		47.08
Forfeited	—			45.78
Nonvested at June 30, 2017	38			41.85			$	2,282

As of June 30, 2017, there was $0.1 million of unearned compensation cost related to restricted stock granted under the plan. That cost is expected to be recognized over a weighted average period of 0.9 years. The weighted average grant date fair value of restricted stock granted during the years ended June 30, 2017, 2016, and 2015 was $47.65, $47.01, and $51.22, respectively. The total fair value of shares vested during the years ended June 30, 2017, 2016, and 2015, was $7.9 million, $8.5 million, and $7.8 million, respectively.

The Company's restricted stock unit activity during the year ended June 30, 2017, was as follows:



Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
(Shares and Aggregate Intrinsic Value in thousands)
Nonvested at June 30, 2016	319			$	45.28
Granted	153			52.97
Vested	(3	)		47.70
Forfeited	(38	)		47.47
Nonvested at June 30, 2017	431			47.80			$	25,628

As of June 30, 2017, there was $5.3 million of unearned compensation cost related to restricted stock units granted under the plan. That cost is expected to be recognized over a weighted average period of 1.5 years. The weighted average grant date fair value of restricted stock units granted during the years ended June 30, 2017, 2016, and 2015 was $52.97, $44.44, and $46.21, respectively. The total fair value of shares vested during the years ended June 30, 2017, 2016, and 2015 was $0.2 million, $0.1 million, and $0.1 million, respectively.

Meredith also has outstanding stock equivalent units resulting from the deferral of compensation of employees and directors under various deferred compensation plans. The period of deferral is specified when the deferral election is made. These stock equivalent units are issued at the market price of the underlying stock on the date of deferral. In addition, shares of restricted stock and restricted stock units may be converted to stock equivalent units upon vesting.

The following table summarizes the activity for stock equivalent units during the year ended June 30, 2017:



Stock Equivalent Units	Units		Weighted Average Issue Date Fair Value			Aggregate Intrinsic Value
(Units and Aggregate Intrinsic Value in thousands)
Balance at June 30, 2016	296			$	36.77
Additions	19			53.58
Converted to common stock	(19	)		37.51
Balance at June 30, 2017	296			37.81			$	6,406

The total intrinsic value of stock equivalent units converted to common stock was $0.2 million in fiscal 2017, $0.1 million in fiscal 2016, and $0.1 million for fiscal year 2015.

Meredith has granted nonqualified stock options to certain employees and directors under the plan. The grant date of options issued is the date the Compensation Committee of the Board of Directors approves the granting of the options. The exercise price of options granted is set at the fair value of the Company's common stock on the grant date. All options granted under the plan expire at the end of 10 years. Options granted to employees vest three years from the date of grant and options granted to directors vest one-third each year during the three-year period from date of grant.

A summary of stock option activity and weighted average exercise prices follows:



Stock Options	Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
(Options and Aggregate Intrinsic Value in thousands)
Outstanding July 1, 2016	2,414			$	42.12
Granted	467			52.43
Exercised	(906	)		41.76
Forfeited	(138	)		49.82
Outstanding June 30, 2017	1,837			44.34		6.8	$	27,773
Exercisable June 30, 2017	694			38.19		4.3	14,788

The fair value of each option is estimated as of the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatility of the Company's common stock and other factors. The expected life of options granted incorporates historical employee exercise and termination behavior. Different expected lives are used for separate groups of employees who have similar historical exercise patterns. The risk-free rate for periods that coincide with the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

The following summarizes the assumptions used in determining the fair value of options granted:



Years ended June 30,	2017		2016		2015
Risk-free interest rate	1.3-2.1%		1.8-2.0%		1.4-2.0%
Expected dividend yield	4.00	%	4.00	%	4.00	%
Expected option life	7 yrs		7 yrs		7 yrs
Expected stock price volatility	29	%	36	%	37	%

The weighted average grant date fair value of options granted during the years ended June 30, 2017, 2016, and 2015, was $9.35, $10.80, and $11.59, respectively. The total intrinsic value of options exercised during the years ended June 30, 2017, 2016, and 2015 was $15.2 million, $8.0 million, and $14.2 million, respectively. As of June 30, 2017, there was $2.1 million in unrecognized compensation cost for stock options granted under the plan. This cost is expected to be recognized over a weighted average period of 1.4 years.

Cash received from option exercises under all share-based payment plans for the years ended June 30, 2017, 2016, and 2015 was $37.9 million, $18.2 million, and $37.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $5.9 million, $3.0 million, and $5.5 million, respectively, for the years ended June 30, 2017, 2016, and 2015.

Employee Stock Purchase Plan

Meredith has an ESPP available to substantially all employees. As of January 1, 2016, the ESPP was suspended indefinitely. The ESPP allowed employees to purchase shares of Meredith common stock through payroll deductions at the lesser of 85 percent of the fair market value of the stock on either the first or last trading day of an offering period. The ESPP had quarterly offering periods. One million five hundred thousand common shares were authorized and approximately 244,000 shares remained available for issuance under the ESPP. Compensation cost for the ESPP was based on the present value of the cash discount and the fair value of the call option component as of the grant date using the Black-Scholes option-pricing model. The term of the option was three months, the term of the offering period. The expected stock price volatility was 36 percent in fiscal 2016 and 37 percent in fiscal 2015. Information about the shares issued under this plan is as follows:



Years ended June 30,	2016		2015
Shares issued (in thousands)	45		72
Average fair value	$	6.77	$	7.52
Average purchase price	35.94		39.95
Average market price	42.91		50.83