(7) INCENTIVE PLANS

During 2007, upon the expiration of our 1997 Incentive Plan, as discussed below, our Board of Trustees and shareholders approved the Universal Health Realty Income Trust 2007 Restricted Stock Plan which was amended and restated in 2016 (the “2007 Plan”). An aggregate of 125,000 shares were authorized for issuance under this plan and a total of 77,285 shares, net of cancellations, have been issued pursuant to the terms of this plan, 57,825 of which have vested as of December 31, 2016. At December 31, 2016 there are 47,715 shares remaining for issuance under the terms of the 2007 Plan.

During 2016, there were 9,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $56.34 per share ($548,188 in the aggregate). These restricted shares are scheduled to vest in June of 2018 (the second anniversary of the date of grant).

During 2015, there were 9,730 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $47.75 per share ($464,608 in the aggregate). These restricted shares are scheduled to vest in June of 2017 (the second anniversary of the date of grant).

During 2014, there were 9,850 restricted Shares of Beneficial Interest, net of cancellations, issued to the Trustees and officers of the Trust pursuant to the 2007 Plan at a weighted average grant price of $43.21 per share ($425,619 in the aggregate). These restricted shares vested in June of 2016 (the second anniversary of the date of grant).

We expense the grant-date fair value restricted stock awards under the straight-line method over the stated vesting period of the award. In connection with these grants, we recorded compensation expense of approximately $481,000, $427,000 and $399,000 during 2016, 2015 and 2014, respectively. The remaining expenses associated with these grants is approximately $485,000 and will be recorded over the remaining weighted average vesting period for outstanding restricted Shares of Beneficial Interest of approximately one year at December 31, 2016.

Prior to its expiration in 2007, the Universal Health Realty Income Trust 1997 Incentive Plan (the “1997 Plan”) provided for the granting of stock options and dividend equivalents rights (“DERs”) to employees of the Trust, including officers and trustees. Awards granted pursuant to the 1997 Plan prior to its termination date remained exercisable, in accordance with the terms of the outstanding agreements. All stock options were granted with an exercise price equal to the fair market value on the date of the grant. The options granted vested ratably at 25% per year beginning one year after the date of grant, and expired in ten years. DERs on outstanding awards were earned in amounts equal to the cash or stock dividends declared subsequent to the date of grant. As of December 31, 2016, there were no options outstanding under the 1997 Plan. The net expense recorded in connection with the DERs did not have a material impact on our consolidated financial statements during each of the years ended December 31, 2016, 2015 and 2014.

During the fourth quarter of 2008, the Board of Trustees of the Trust approved amendments to the outstanding stock option agreements made pursuant to the 1997 Plan. These original agreements provided for the deferred payment of dividend equivalents on shares covered by the options, with payment tied to the date the options were exercised or expire. In order to meet certain changes to tax law requirements, the agreements, as amended, provided for the current payment of dividend equivalents in the years in which dividends were declared and paid or, if later, when the related options became vested. There were no DERs were outstanding at December 31, 2016. DERs with respect to 23,000 shares and 36,000 shares were outstanding at December 31, 2015 and 2014, respectively. In December of 2016, 2015 and 2014, DERs which were vested and accrued as of each respective date, were paid to officers and Trustees of the Trust amounting to approximately $30,000, $75,000 and $94,000, respectively.

Stock options to purchase shares of beneficial interest have been granted to eligible individuals, including our officers and trustees. Information with respect to these options, before adjustment to the option price to give effect to the dividend equivalent rights, is summarized as follows:

Outstanding Options	Number of Shares			Exercise Weighted- Average Price		Grant Price Range (High-Low)
Balance, January 1, 2014		40,000		$	35.65	$36.53/$30.06
Exercised		(4,000	)		33.07	$30.06/$34.07
Balance, January 1, 2015		36,000		$	35.94	$34.90/$36.53
Exercised		(13,000	)		34.90	$34.90/$34.90
Balance, January 1, 2016		23,000		$	36.53	$36.53/$36.53
Exercised		(23,000	)		36.53	$36.53/$36.53
Outstanding options vested and exercisable as of December 31, 2016		—		N/A		N/A

During 2016, there were 23,000 stock options exercised with a total in-the-money value of $520,420. During 2015, there were 13,000 stock options exercised with a total in-the-money value of $154,500. During 2014, there were 4,000 stock options exercised with a total in-the-money value of $44,160. There are no options outstanding at December 31, 2016.