SHARE-BASED COMPENSATION PROGRAMS

AXA and AXA Financial sponsor various share-based compensation plans for eligible employees and financial professionals of AXA Financial and its subsidiaries. AB also sponsors its own unit option plans for certain of its employees.

Compensation costs for the third quarter and first nine months of 2016 and 2015 for share-based payment arrangements as further described herein are as follows:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016			2015
	(In Thousands)
Performance Shares	$	2,953	$	3,200		$	14,774		$	14,226
Stock Options	110		117			825			623
AB Stock Options	200		2,900			200			9,300
AB Restricted Units	1,200		—			6,400			—
Other compensation plans⁽¹⁾	154		(64		)	(759		)	488
Total Compensation Expenses	$	4,617	$	6,153		$	21,440		$	24,637


(1)	Other compensation plans include Restricted Stock, Stock Appreciation Rights and AXA Miles.

Performance Shares

2016 Grant. On June 6, 2016, under the terms of the Performance Share Plan, AXA awarded approximately 1.93 million unearned performance shares to employees of AXA Equitable. The extent to which 2016-2018 cumulative performance targets measuring the performance of AXA and the insurance related businesses of AXA Financial Group are achieved will determine the number of performance shares earned, which may vary between 0% and 130% of the number of performance shares at stake. The performance shares earned during this performance period will vest and be settled on the fourth anniversary of the award date. The plan will settle in AXA ordinary shares to all participants. In the third quarter and first nine months of 2016, the expense associated with the June 6, 2016 grant of performance shares were approximately $1 million and $9 million, respectively.

Settlement of 2013 Grant in 2016. On March 22, 2016, share distributions totaling approximately $55 million were made to active and former AXA Equitable employees in settlement of 2,293,998 performance shares earned under the terms of the AXA Performance Share Plan 2013.

Stock Options

2016 Grant. On June 6, 2016, 576,169 options to purchase AXA ordinary shares were granted to employees of AXA Equitable under the terms of the Stock Option Plan at an exercise price of 21.52 euros. All of those options have a five-year graded vesting schedule, with one-third vesting on each of the third, fourth, and fifth anniversaries of the grant date. Of the total options awarded on June 6, 2016, 316,097 are further subject to conditional vesting terms that require the AXA ordinary share price to outperform the Euro Stoxx Insurance Index over a specified period. All of the options granted on June 6, 2016 have a ten-year term. The weighted average grant date fair value per option award was estimated at 1.85 euros using a Black-Scholes options pricing model with modification to measure the value of the conditional vesting feature. Key assumptions used in the valuation included expected volatility of 26.6%, a weighted average expected term of 8.1 years, an expected dividend yield of 6.49% and a risk-free interest rate of 0.33%. The total fair value of these options (net of expected forfeitures) of approximately $1 million is charged to expense over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible. In the third quarter and first nine months of 2016, the Company recognized expenses associated with the June 6, 2015 grant of options of approximately $31,000 and $558,000, respectively.

2016 AXA Shareplan. In 2016, eligible employees of participating AXA Financial subsidiaries were offered the opportunity to purchase newly issued AXA ordinary shares, subject to plan limits, under the terms of AXA Shareplan 2016. Eligible employees could have reserved a share purchase during the reservation period from August 29, 2016 through September 9, 2016 and could have canceled their reservation or elected to make a purchase for the first time during the retraction/subscription period from October 17, 2016 through October 19, 2016. The U.S. dollar purchase price was determined by applying the U.S. dollar/Euro forward exchange rate on October 13, 2016 to the discounted formula subscription price in Euros. “Investment Option A” permitted participants to purchase AXA ordinary shares at a 20% formula discounted price of 15.53 euros/per share. “Investment Option B” permitted participants to purchase AXA ordinary shares at an 8.63% formula discounted price of 17.73 euros/per share on a leveraged basis with a guaranteed return of initial investment plus a portion of any appreciation in the undiscounted value of the total shares purchased. For purposes of determining the amount of any appreciation, the AXA ordinary share price will be measured over a fifty-two week period preceding the scheduled end date of AXA Shareplan 2016, which is July 1, 2021. All subscriptions became binding and irrevocable on October 19, 2016.

AB Long-term Incentive Compensation Plans. During the third quarter and first nine months of 2016, AB purchased 2.0 million and 5.8 million Holding units for $45 million and $129 million respectively (on a trade date basis). These amounts reflect open-market purchases of 2.0 million and 5.7 million Holding Units for $45 million and $127 million, respectively with the remainder relating to purchases of Holding units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards. During the third quarter and first nine months of 2015, AB purchased 3.0 million and 3.8 million Holding units for $82 million and $103 million respectively (on a trade date basis). These amounts reflect open-market purchases of 3.0 million and 3.7 million Holding Units for $82 million and $101 million, respectively with the remainder relating to purchases of Holding units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards.

During the first nine months of 2016 and 2015, AB granted to employees and eligible Directors 0.7 million and 0.3 million restricted Holding awards. In the first nine months of 2016 and 2015, AB used Holding units repurchased during the period and newly issued Holding units to fund the restricted Holding unit awards.

During the first nine months of 2016 and 2015, AB Holding issued 0.1 million and 0.5 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $2.0 million and $9.0 million, respectively, received from employees as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

Other Compensation Plans

2012 AXA Miles. On March 16, 2016, AXA ordinary share distributions totaling approximately $4 million were made to active and former AXA Equitable employees in settlement of 164,150 AXA Miles earned under the terms of the AXA Miles Program 2012.