Note 12. Share-Based Payment Arrangements

Hancock maintains incentive compensation plans that incorporate share-based payment arrangements for associates and directors. The current plan under which share-based awards may be granted, the 2014 Long Term Incentive Plan (the “2014 Plan”), was approved by the Company’s stockholders at the 2014 annual meeting as a successor to the Company’s 2005 Long-Term Incentive Plan (the “2005 Plan”). Certain share-based awards remain outstanding under the 2005 Plan and prior equity incentive compensation plans, but no future awards may be granted thereunder.

The Compensation Committee of the Company’s Board of Directors administers the equity incentive plans, makes determinations with respect to participation by employees or directors and authorizes the share-based awards. Under the 2014 Plan, participants may be awarded stock options (including incentive stock options for associates), restricted shares, performance stock awards and stock appreciation rights, all on a stand-alone, combination or tandem basis. To date, the Committee has awarded stock options, tenure-based restricted shares and performance stock awards under the 2014 Plan and the prior equity incentive plans.

Under the 2014 Plan, future awards may be granted for the issuance of an aggregate of 1,796,357 shares of the Company’s common stock, plus the number of any shares of the Company’s common stock for which awards under the 2005 Plan are cancelled, expired, forfeited or settled in cash. The 2014 Plan limits the number of shares for which awards may be granted to any participant during any calendar year to 100,000 shares. The Company may use authorized unissued shares or shares held in treasury to satisfy awards under the 2014 Plan.

At December 31, 2014 there were 1.7 million shares available for future issuance under equity compensation plans (including 170,935 shares under the Company’s 2010 Employee Stock Ownership Plan).

For the years ended December 31, 2014, 2013 and 2012 total share-based compensation recognized in income was $14.0 million, $13.1 million and $11.0 million, respectively. The total recognized tax benefit related to the share-based compensation was $4.9 million, $4.6 million and $3.9 million, respectively, for 2014, 2013 and 2012.

A summary of option activity for 2014 is presented below:


Options	Number of Shares			Weighted- Average Exercise Price ($)		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2014		1,332,656		$	38.85
Granted		—			—
Exercised		(81,842	)		30.40
Cancelled/Forfeited		(197,974	)		36.06
Expired		(113,447	)		63.41

Outstanding at December 31, 2014		939,393		$	37.21		4.2	$	221

Exercisable at December 31, 2014		781,529		$	38.62		3.7	$	107

The number of shares subject to the outstanding options reflected above include shares to be issued upon the exercise of options that were assumed by the Company in the acquisition of Whitney Holding Corporation.

The exercise price for stock options is set at the closing market price of the Company’s stock on the date immediately preceding the date of grant, except for the exercise price of certain options granted to major stockholders which is set at 110% of the market price. Option awards generally vest equally over five years of continuous service and have ten-year contractual terms.

The total intrinsic value of options exercised during 2014, 2013 and 2012 was $0.4 million, $0.6 million, and $0.8 million, respectively.

The weighted-average grant-date fair values of options awarded during 2012 were $8.43. There were no options granted in 2014 or 2013. The fair value of each option award was estimated as of the grant date using the Black-Scholes-Merton option-pricing model. The significant assumptions made in applying the option-pricing model are noted in the following table. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock and other factors. The expected term of options granted was derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding.


	2012
Expected volatility		38.64	%
Expected dividends		3.23	%
Expected term (in years)		6.58
Risk-free rates		1.78	%

There were no options granted in 2013.

A summary of the status of the Company’s nonvested restricted and performance shares as of December 31, 2014 and changes during 2014 are presented below:


	Number of Shares			Weighted- Average Grant-Date Fair Value ($)
Nonvested at January 1, 2014		1,981,820		$	31.75
Granted		608,856			34.42
Vested		(391,859	)		32.76
Cancelled/Forfeited		(158,518	)		32.75

Nonvested at December 31, 2014		2,040,299		$	32.27

As of December 31, 2014, there was $32.8 million of total unrecognized compensation related to nonvested restricted shares expected to vest. This compensation is expected to be recognized in expense over a weighted-average period of 3.7 years. The total fair value of shares which vested during 2014 and 2013 was $12.8 million and $3.2 million, respectively.

In 2014, Hancock granted 69,857 performance shares with an average fair value of $38.14 per share to key members of executive and senior management. The number of 2014 performance shares that ultimately vest, if any, at the end of the three-year required service period will be based on the relative rank of Hancock’s three-year total shareholder return (TSR) among the TSRs of a peer group of fifty regional banks. The maximum number of performance shares that could vest is 200% of the target award. The fair value of the awards at the grant date was determined using a Monte Carlo simulation method. Compensation expense for these performance shares will be recognized on a straight-line basis over the service period.