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 2017 and 2016 for share-based payment arrangements as further described herein are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(in thousands)
Performance Shares	$	2,630	$	2,953	$	15,588	$	14,774
Stock Options	350		110		1,088		825
AB Stock Options	—		200		—		200
AB Restricted Units	5,600		1,200		26,900		6,400
Other compensation plans⁽¹⁾	1,518		154		1,546		(759		)
Total Compensation Expenses	$	10,098	$	4,617	$	45,122	$	21,440


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

Performance Shares

2017 Grant. On June 21, 2017, under the terms of the Performance Share Plan, AXA awarded approximately 1.69 million unearned performance shares to employees of AXA Equitable. The extent to which 2017-2019 cumulative performance targets measuring the performance of AXA and the insurance related businesses of AXA Financial are achieved will determine the number of performance shares earned, which may vary in linear formula 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 shares to all participants. In the first nine months of 2017, the expense associated with the June 21, 2017 grant of performance shares was $8 million.

Settlement of 2014 Grant in 2017. On March 24, 2017, share distributions totaling approximately $21 million were made to active and former AXA Equitable employees in settlement of 1.0 million performance shares earned under the terms of the first tranche of the AXA Performance Share Plan 2014.

Stock Options

2017 Grant. On June 21, 2017, 487,840 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 23.92 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 21, 2017, 275,942 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 21, 2017 have a ten-year term. The weighted average grant date fair value per option award was estimated at 1.78 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 25.05%, a weighted average expected term of 8.8 years, an expected dividend yield of 6.53% and a risk-free interest rate of 0.59%. 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 first nine months of 2017, the Company recognized expenses associated with the June 21, 2017 grant of options of approximately $0.4 million.

2017 AXA Shareplan. In 2017, 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 2017. Eligible employees could have reserved a share purchase during the reservation period from August 28, 2017 through September 8, 2017 and could have canceled their reservation or elected to make a purchase for the first time during the retraction/subscription period from October 13, 2017 through October 17, 2017. The U.S. dollar purchase price was determined by applying the U.S. dollar/Euro forward exchange rate on October 11, 2017 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 20.19 euros/per share. “Investment Option B” permitted participants to purchase AXA ordinary shares at an 8.98% formula discounted price of 22.96 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 2017, which is July 1, 2022. All subscriptions became binding and irrevocable on October 17, 2017.

AB Long-term Incentive Compensation Plans. During the third quarter and first nine months of 2017, AB purchased 0.3 million and 5.9 million Holding Units for $7 million and $135 million respectively (on a trade date basis). These amounts reflect open-market purchases of 0.3 million and 5.2 million Holding Units for $7 million and $117 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 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 first nine months of 2017 and 2016, AB granted to employees and eligible Directors $2.2 million and 0.7 million restricted Holding awards, respectively. In the first nine months of 2017 and 2016, 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 2017 and 2016, AB Holding issued 1.0 million and 0.1 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $18 million and $2 million, respectively, received from employees as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.