Share-Based Compensation

The Company has various plans that provide for granting options, restricted stock units and restricted stock to certain employees and independent directors of the Company and its subsidiaries. The Company recognizes compensation expense for share-based payments based on the fair value of the awards at the grant date. The table below summarizes compensation expense for the Company’s non-qualified stock options based on the fair value method estimated using the Black-Scholes valuation model, and non-vested stock awards, including restricted stock units, and performance-based non-vested stock awards based on the fair value method for the years ended December 31, 2015, 2014 and 2013. The Company records compensation expense related to non-vested stock awards as a component of SG&A Expense.



	Year Ended
(in millions)	Dec 31, 2015			Dec 31, 2014			Dec 31, 2013
Non-qualified stock option expense	$	1.5		$	2.3		$	5.5
Non-vested stock awards expense	—			—			0.2
Immediately vested stock awards expense	—			0.8			—
Stock unit awards	4.5			8.0			5.2
Performance-based non-vested stock awards expense	6.1			4.7			2.0
Total pre-tax share-based compensation expense	$	12.1		$	15.8		$	12.9
Excess tax benefit (deficiency) on share-based compensation	$	(1.7	)	$	(0.5	)	$	(0.7	)

During the years ended December 31, 2015, 2014 and 2013, cash received from stock option exercises was $0.2 million, $0.3 million and $0.7 million, respectively. The total tax benefit to be realized for tax deductions from these option exercises was less than $0.1 million for the year ended December 31, 2015 and $0.1 million and $0.4 million for the years ended December 31, 2014 and 2013, respectively. The $4.3 million and $7.0 million tax deductions for all share-based compensation for the years ended December 31, 2015 and 2014, respectively, includes $(1.7) million and $(0.5) million of excess tax benefits (deficiencies). The 2015, 2014 and 2013 deficiency does not impact cash flow due to the U.S. tax loss carry forward position. The Company has elected the shortcut method to calculate the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of ASC 718.

The Company currently has share-based compensation awards outstanding under the General Cable Corporation 2005 Stock Incentive Plan (“2005 Plan”). The 2005 Plan allows the Company to fulfill its incentive award obligations generally by granting nonqualified stock options and nonvested stock awards. New shares are issued when nonqualified stock options are exercised and when non-vested stock awards are granted. The 2005 Plan was amended and restated on May 14, 2015. The amended and restated 2005 Plan authorized a maximum of 9 million shares to be granted. Shares reserved for future grants, including options, under the amended and restated 2005 Plan, approximated 3.6 million at December 31, 2015.

The 2005 Plan authorizes the following types of awards to be granted: (i) Nonqualified Stock Options; (ii) Stock Appreciation Rights; (iii) Stock Awards; and (iv) Stock Units, as more fully described in the amended and restated 2005 Plan. Stock awards, stock units and cash awards may constitute performance-based awards. Each award is subject to such terms and conditions consistent with the 2005 Plan as determined by the Compensation Committee and as set forth in an award agreement and awards under the 2005 Plan were granted at not less than the closing market price on the date of grant.

Stock Options

All options awarded under the 2005 Plan have a term not to exceed 10 years from the grant date. The majority of the options vest ratably over three years of continued employment from the grant date. A summary of stock option activity for the year ended December 31, 2015 is as follows (options in thousands and aggregate intrinsic value in millions):



			Weighted Average		Weighted Average Remaining	Aggregate
	Options Outstanding		Exercise Price		Contractual Term	Intrinsic Value
Outstanding at December 31, 2014	1,863.8		$	33.12	4.7 years	$	0.2
Granted	352.1		19.65
Exercised	(17.7	)	11.98
Forfeited or Expired	(118.3	)	24.43
Outstanding as of December 31, 2015	2,079.9		$	31.51	4.9 years	$	—
Exercisable at December 31, 2015	1,635.1		$	33.85	3.8 years	$	—
Options expected to vest in the next twelve months	210.0		$	26.53	8.5 years	$	—

During the years ended December 31, 2015 and 2013 there were 352.1 thousand and 334.0 thousand stock options granted, respectively. During the year ended December 31, 2014 there were no stock options granted. During the years ended December 31, 2015 and 2013, the weighted average grant date fair value of options granted was $19.65 and $35.24, respectively. During the years ended December 31, 2015, 2014 and 2013, the total intrinsic value of options exercised was $0.1 million, $0.2 million, and $1.0 million, respectively, and the total fair value of options vested during the periods was $27.7 million, $25.7 million, and $20.8 million, respectively. At December 31, 2015, 2014 and 2013, the total compensation cost related to nonvested options not yet recognized was $1.5 million, $1.1 million and $4.1 million with a weighted average expense recognition period of 2.3 years, 1.2 years and 1.9 years, respectively.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model using the following weighted-average assumptions:



	Year Ended
	Dec 31, 2015			Dec 31, 2013
Risk-free interest rate ⁽¹⁾	1.4		%	0.6		%
Expected dividend yield ⁽²⁾	3.7		%	—		%
Expected option life ⁽³⁾	4.0 years			4.4 years
Expected stock price volatility ⁽⁴⁾	47.2		%	67.8		%
Weighted average fair value of options granted	$	5.68		$	18.60


(1)	Risk-free interest rate — This is the U.S. Treasury rate at the grant date having a term approximately equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.


(2)	Expected dividend yield — The assumptions for the compensation expense were set at the beginning of the year prior to the Company deciding to pay dividends in 2013; as the Company did not expect to pay dividends in 2013 there was no effect on compensation expense in the year ended December 31, 2013.


(3)	Expected option life — This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted have a maximum term of ten years. An increase in expected life will increase compensation expense.

(4)

Expected stock price volatility — This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of the Company’s stock to calculate the volatility assumption as it is management’s belief that this is the best indicator of future volatility. An increase in the expected volatility will increase compensation expense.

Additional information regarding options outstanding as of December 31, 2015 is as follows (options in thousands):



Range of Option Prices	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Options Exercisable	Weighted Average Exercise Price
$0 -$14	—	$	—	0.0	—	$	—
$14 - $28	1,042.4	$	20.79	5.0	690.3	$	21.37
$28 -$42	584.0	$	33.87	6.3	491.3	$	33.61
$42 - $56	265.0	$	45.08	3.7	265.0	$	45.08
$56 - $70	188.5	$	64.42	1.9	188.5	$	64.42

Nonvested Stock

The majority of the nonvested stock and stock unit awards issued under the 2005 Plan are restricted as to transferability and salability with these restrictions being removed in equal annual installments over the five-year period following the grant date. A minimal amount of immediately vesting restricted stock held by certain members of the Company’s Board of Directors in the Deferred Compensation Plan is included in this presentation as nonvested stock.

A summary of all nonvested stock and restricted stock units activity for the year ended December 31, 2015, is as follows (shares in thousands):



	Shares Outstanding		Weighted Average Grant Date Fair Value
Balance, December 31, 2014	1,137.2		$	32.26
Granted	949.0		15.97
Vested	(290.6	)	29.84
Forfeited	(205.5	)	27.15
Balance, December 31, 2015	1,590.1		$	23.64

The weighted-average grant date fair value of all nonvested shares and restricted stock units granted, the total fair value (in millions) of all nonvested shares and restricted stock units granted, and the fair value (in millions) of all nonvested shares and restricted stock units that have vested during each of the past three years is as follows:



	Year Ended
	Dec 31, 2015		Dec 31, 2014		Dec 31, 2013
Weighted-average grant date fair value of nonvested shares granted	$	15.97	$	30.27	$	34.83
Fair value of nonvested shares granted	$	15.2	$	20.0	$	10.5
Fair value of shares vested	$	8.7	$	8.1	$	6.2

As of December 31, 2015, there was $9.3 million of total unrecognized compensation cost related to all nonvested stock and restricted stock units. The cost is expected to be recognized over a weighted average period of 1.8 years. There are 538 thousand nonvested stock and restricted stock units with a weighted average grant price of $26.52 and a fair value of $14.3 million expected to vest in 2016.