(12) Stock Compensation Plans

The shareholders and Board of Directors of BOK Financial have approved various stock-based compensation plans. An independent compensation committee of the Board of Directors determines the number of awards granted to the Chief Executive Officer and other senior executives. Stock-based compensation is granted to other officers and employees as determined by the Chief Executive Officer.

These awards include stock options subject to vesting requirements and non-vested shares. Generally, one-seventh of the options awarded vest annually and expire 3 years after vesting. Additionally, stock options that vest in two years and expire 45 days after vesting have been awarded. Non-vested shares vest 3 to 5 years after the grant date. The holders of these non-vested shares may be required to retain the shares for 2 years after vesting.

The Chief Executive Officer and other senior executives participate in an Executive Incentive Plan ("EIP"). The number of options and non-vested shares may increase or decrease based upon the Company’s growth in earnings per share over a three-year period compared to the median growth in earnings per share for a designated peer group of financial institutions and other individual performance factors.

The following table presents stock options outstanding during 2013, 2012 and 2011 under these plans (in thousands, except for per share data):



	Number		Weighted- Average Exercise Price	Aggregate Intrinsic Value
Options outstanding at December 31, 2010	3,135,334		$45.62	$	24,405
Options awarded	185,007		55.94
Options exercised	(576,518	)	44.35
Options forfeited	(60,005	)	47.93
Options expired	(62,471	)	54.13
Options outstanding at December 31, 2011	2,621,347		$47.01	$	20,769
Options awarded	67,155		58.76
Options exercised	(708,295	)	45.32
Options forfeited	(22,559	)	50.36
Options expired	(66,862	)	45.97
Options outstanding at December 31, 2012	1,890,786		$48.29	$	11,748
Options awarded	81,492		55.74
Options exercised	(608,663	)	48.00
Options forfeited	(219,342	)	47.65
Options expired	(9,168	)	50.61
Options outstanding at December 31, 2013	1,135,105		$49.09	$	19,564
Options vested at:
December 31, 2011	825,682		$46.72	$	6,779
December 31, 2012	601,367		47.99	3,890
December 31, 2013	424,459		49.49	7,146

The following table summarizes information concerning currently outstanding and vested stock options:



Options Outstanding				Options Vested
		Weighted				Weighted
		Average	Weighted		Weighted	Average
Range of		Remaining	Average		Average	Remaining
Exercise	Number	Contractual	Exercise	Number	Exercise	Contractual
Prices	Outstanding	Life (years)	Price	Vested	Price	Life (years)
$37.74	1,267	0.02	$37.74	1,267	$37.74	0.02
45.15 - 47.34	84,725	1.42	47.12	84,725	47.12	1.42
54.33	134,485	2.11	54.33	74,447	54.33	1.37
48.46	233,739	2.88	48.46	80,747	48.46	1.66
55.94	214,483	2.99	55.94	102,311	55.94	0.74
36.65	253,607	3.44	36.65	61,449	36.65	1.64
48.30	47,581	3.84	48.30	11,007	48.30	1.51
58.76	83,726	5.18	58.76	8,506	58.76	2.03
55.74	81,492	6.03	55.74	—	—	0

The aggregate intrinsic value of options exercised was $8.5 million for 2013, $8.3 million for 2012 and $5.5 million for 2011. Compensation expense for stock options is generally recognized based on the fair value of options granted over the options’ vesting period.

The fair value of options was determined as of the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:



	2013			2012			2011
Average risk-free interest rate¹	0.89		%	0.93		%	1.87		%
Dividend yield	2.80		%	2.20		%	1.80		%
Volatility factors	0.272			0.280			0.268
Weighted average expected life	4.9 years			4.9 years			4.9 years
Weighted average fair value	$	9.67		$	11.48		$	11.92


¹	Average risk-free interest rate represents U.S. Treasury rates matched to the expected life of the options.

Compensation expense recognized on stock options totaled $1.3 million for 2013, $4.1 million for 2012 and $4.3 million for 2011. Compensation cost of stock options granted that may be recognized as compensation expense in future years totaled $1.9 million at December 31, 2013. Subject to adjustments for forfeitures, we expect to recognize compensation expense for current outstanding options of $865 thousand in 2014, $504 thousand in 2015, $299 thousand in 2016, $166 thousand in 2017, $66 thousand in 2018 and $20 thousand thereafter.

The following represents a summary of the non-vested stock awards as of December 31, 2013 (in thousands):



	Shares		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2013	592,831
Granted	211,791		$55.84
Lapsed	(66,648	)	35.93
Forfeited	(89,985	)	49.95
Non-vested at December 31, 2013	647,989

Compensation expense recognized on non-vested shares totaled $6.9 million for 2013, $5.6 million for 2012 and $5.7 million for 2011. Unrecognized compensation cost of non-vested shares totaled $15.3 million at December 31, 2013. Subject to adjustment for forfeitures, we expect to recognize compensation expense of $7.0 million in 2014, $6.3 million in 2015, $1.8 million in 2016, $175 thousand in 2017 and none thereafter.

BOK Financial permits certain executive officers to defer recognition of taxable income from their stock-based compensation. Deferred compensation may also be diversified into investments other than BOK Financial common stock.

Stock-based compensation subject to these deferral plans is recognized as a liability award rather than as an equity award. Compensation expense is based on the fair value of the award recognized over the vesting period. The recorded obligation for liability awards totaled $120 thousand at December 31, 2013 and $87 thousand at December 31, 2012. Compensation cost of liability awards was an expense of $343 thousand in 2013, $530 thousand in 2012 and $760 thousand in 2011.

On April 26, 2011 shareholders approved the BOK Financial Corporation 2011 True-Up Plan. The True-Up Plan was intended to address inequality in the EIP which had been approved by shareholders in 2003 as a result of certain peer banks that performed poorly during the most recent economic cycle. Performance goals for the EIP are based on the Company's earnings per share growth compared to peers and business unit performance. As the economy improves and credit losses normalize, peer banks were expected to experience significant comparative earnings per share percentile increases. This "bounce-back" effect would have resulted in the unanticipated result of no annual bonuses in the years 2011, 2012 and 2013 and the forfeiture of long-term incentive awards for 2010 and 2011 in their entirety, despite BOK Financial's strong annual earnings growth through the economic cycle while many peers experienced negative or declining earnings. The True-Up Plan was designed to adjust annual and long-term performance-based incentive compensation for certain senior executives either upward or downward based on the earnings per share performance and compensation of comparable senior executives at peer banks for 2006 through 2013. Compensation expense is determined by ranking BOK Financial's earnings per share to peer banks and then aligning compensation with the peer bank that most closely relates to BOK Financial's earnings per share performance. Based on currently available information, the Company has accrued $69 million for the True-Up Plan liability. The final amount due under the 2011 True-Up Plan will be determined as of December 31, 2013 based on information that will be published by peer banks during the first quarter of 2014. The final amounts due under the 2011 True-Up Plan will be distributed in May, 2014.

During January 2014, BOK Financial awarded 206,546 share of non-vested stock with a fair value per award of $64.37. The aggregate compensation cost of these awards totaled approximately $13.3 million. This cost will be recognized over the vesting periods, subject to adjustments for forfeitures. Non-vested shares awarded in January, 2014 generally cliff vest in 3 years and are subject to a 2 year holding period after vesting.