15.	Benefit Plans

Stock-Based Compensation

The Company’s equity-based award plans provide for grants to Company employees and directors of incentive and non-qualified options to purchase common shares, rights to receive the appreciation in value of common shares, awards of common shares subject to restrictions on transfer, awards of common shares issuable in the future upon satisfaction of certain conditions and rights to purchase common shares and other awards based on common shares. Under the terms of the plans, awards available for grant were 6.8 million common shares at December 31, 2014.

Stock Options

Stock options may be granted at per-share prices not less than fair market value at the date of grant and must be exercised within the maximum contractual term of 10 years thereof. Options granted under the plans generally vest over three years in one-third increments, beginning one year after the date of grant.

The fair values for option awards granted in 2014, 2013 and 2012 were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	For the Year Ended December 31
	2014		2013		2012
Weighted-average fair value of grants	$	2.43	$	5.31	$	5.07
Risk-free interest rate (range) – Based upon the U.S. Treasury Strip with a maturity date that approximates the expected term of the award	1.2%–1.4%		0.9%–1.8%		0.5%–1.1%
Dividend yield (range) – Forecasted dividend yield based on the expected life	4.5%–4.6%		4.1%–4.5%		3.6%–4.7%
Expected life (range) – Derived by referring to actual exercise experience	4–5 years		5–6 years		4–5 years
Expected volatility (range) – Derived by using a 50/50 blend of implied and historical changes in the Company's historical stock prices over a time frame consistent with the expected life of the award	24.7%–28.5%		49.2%–52.5%		50.8%–66.8%

The following table reflects the stock option activity described above:

	Number of Options (Thousands)						Weighted-		Weighted- Average		Aggregate
	Employees			Directors			Average Exercise Price		Remaining Contractual Term (Years)		Intrinsic Value (Thousands)
Balance December 31, 2011		2,683			10		$	25.35
Granted		345			—			13.87
Exercised		(266	)		—			6.54
Forfeited		(166	)		(10	)		26.21
Balance December 31, 2012		2,596			—			25.70
Granted		345			—			16.91
Exercised		(87	)		—			9.25
Forfeited		(193	)		—			28.10
Balance December 31, 2013		2,661			—			24.77
Granted		774			—			16.61
Exercised		(154	)		—			10.02
Forfeited		(320	)		—			33.40
Balance December 31, 2014		2,961			—		$	22.48		5.6	$	11,088

Options exercisable at December 31,
2014		1,922			—		$	25.75		4.0	$	9,077
2013		2,052			—			27.53		4.1		6,491
2012		2,035			—			29.12		4.5		6,538

The following table summarizes the characteristics of the options outstanding at December 31, 2014 (in thousands):

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Outstanding at 12/31/14		Weighted-Average Remaining Contractual Life (Years)		Weighted-Average Exercise Price		Exercisable at 12/31/14		Weighted-Average Exercise Price
$0.00–$6.50		471		4.0	$	6.01		471	$	6.01
$6.51–$12.50		200		5.3		10.42		197		10.39
$12.51–$21.00		1,480		8.2		15.88		444		14.56
$21.01–$45.50		490		2.0		38.74		490		38.74
$45.51–$69.50		320		1.8		59.96		320		59.96
		2,961		5.7	$	22.48		1,922	$	25.75

The following table reflects the activity for unvested stock option awards for the year ended December 31, 2014 (options in thousands):

	Options			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2013	$	609		$	5.26
Granted		774			2.43
Vested		(273	)		5.28
Forfeited		(71	)		3.95
Unvested at December 31, 2014	$	1,039		$	3.23

As of December 31, 2014, total unrecognized stock option compensation cost granted under the plans was $1.9 million, which is expected to be recognized over a weighted-average 1.8-year term.

Exercises of Employee Stock Options

The Company settles employee stock option exercises primarily with newly issued common shares or with treasury shares, if available (in millions).

	For the Year Ended December 31,
	2014		2013		2012
Cash received for exercise price	$	1.5	$	0.8	$	1.7
Intrinsic value		1.1		0.7		2.2

Restricted Stock Awards

In 2014, 2013 and 2012, the Board of Directors approved grants of 0.3 million, 0.2 million and 0.3 million restricted common shares, respectively, to executives of the Company. The restricted stock grants generally vest in equal annual amounts over a four-year period. Restricted share awards have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding. These grants have a weighted-average fair value at the date of grant ranging from $9.25 to $16.92, which was equal to the market value of the Company’s common shares at the date of grant. As a component of compensation to the Company’s non-employee directors, the Company issued 0.1 million common shares to the non-employee directors in each of the three years ended December 31, 2014. These grants were issued equal to the market value of the Company’s common shares at the date of grant and immediately vested upon grant.

In 2009, the Company’s Board of Directors approved and adopted the Value Sharing Equity Program (the “2009 VSEP”) and the grant of awards to certain of the Company’s executives. These award grants are reflected as restricted stock and vest in equal annual amounts through December 31, 2016.

2013 Value Sharing Equity Program

The Company adopted the 2013 Value Sharing Equity Program (“2013 VSEP”) and on January 1, 2013, granted awards to certain officers of the Company that represent the opportunity to earn restricted stock grants through December 31, 2015 (unless terminated early pursuant to a change in control). The 2013 VSEP awards, if earned, may result in the granting of common shares of the Company to participants on measurement dates over the three-year term, subject to an additional four-year service-based vesting schedule. As a result, in general, the total compensation available to participants under the 2013 VSEP will be fully earned and vested only after seven years or December 31, 2019.

The 2013 VSEP is designed to allow DDR to reward participants for superior financial performance and allow them to share in value created based upon (1) increases in DDR’s adjusted market capitalization over pre-established periods and (2) increases in relative total shareholder return of DDR as compared to the performance of the FTSE NAREIT Equity REITs Total Return Index for the FTSE International Limited NAREIT U.S. Real Estate Index Series (the “NAREIT Index”). Under the 2013 VSEP, participants may be granted two types of performance-based awards – an “absolute performance award” and a “relative performance award” – that, if earned, are settled with DDR common shares and are subject to additional service-based vesting requirements for a period of four years.

Absolute Performance Awards. Under the absolute performance awards, on five specified measurement dates occurring through December 31, 2015, DDR will measure the “Value Created” during the period between the start of the 2013 VSEP and the applicable measurement date. Value Created is measured for each period for the absolute performance awards as the increase in DDR’s market capitalization, as adjusted for equity issuances and/or equity repurchases, between the start of the 2013 VSEP and the applicable measurement date. The share price used for purposes of determining Value Created for the absolute performance awards is capped based on an 8.0% compound annual growth rate for DDR shares from the start of the 2013 VSEP through the end of 2015 (the “Maximum Ending Share Price”), with the cap applying to each measurement period.

The total share of Value Created for all participants for the absolute performance awards is capped at $18.0 million (the aggregate percentage share for all participants for the absolute performance awards is 1.4133%). As a result, each participant’s total share of Value Created for the absolute performance awards is capped at an individual maximum limit. After the final measurement date (or, if earlier, upon a change in control, as defined in the 2013 VSEP), each participant will earn DDR common shares with an aggregate value equal to the participant’s full percentage share of the Value Created.

Relative Performance Awards. Under the relative performance awards, on December 31, 2015 (or upon a change in control, if earlier), DDR will compare its dividend-adjusted share price performance during the period between the start of the 2013 VSEP and December 31, 2015, to the performance of a comparable hypothetical investment in the NAREIT Index (in each case as adjusted for equity issuances and/or equity repurchases during the same period). No relative performance awards will be earned by participants unless and until the absolute performance awards have already been earned by DDR achieving its Maximum Ending Share Price, and thus achieving maximum performance for the absolute performance awards.

If DDR’s relative performance exceeds the NAREIT Index, then the relative performance awards may be earned provided certain conditions are met. The total share of Value Created for all participants for the relative performance awards is capped at $36.0 million (the aggregate percentage share for all participants for the relative performance awards is 1.9337%), and, as a result, each participant’s total share of Value Created for the relative performance awards is capped at an individual maximum limit. The participant must be employed with DDR on the measurement date to be granted the relative performance awards.

Unless otherwise determined by the Executive Compensation Committee of the Board of Directors, the DDR shares earned under the absolute performance awards and relative performance awards will generally be subject to additional service-based restrictions consistent with the Company’s restricted stock awards. The fair value of the 2013 VSEP awards was estimated on the date of grant using a Monte Carlo approach model based on the following assumptions:

	Range
Risk-free interest rate		0.36%
Weighted-average dividend yield		4.0%
Expected life	3 years
Expected volatility	18%–24%

Summary of Unvested Share Awards

The following table reflects the activity for the unvested awards pursuant to all restricted stock grants and grants under the 2009 VSEP and 2013 VSEP for the year ended December 31, 2014 (awards in thousands):

	Awards			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2013		1,719		$	14.35
Granted		765			17.43
Vested		(1,261	)		14.66
Forfeited		(58	)		10.59
Unvested at December 31, 2014		1,165		$	16.00

As of December 31, 2014, total unrecognized compensation for the restricted awards granted under the plans as summarized above was $12.2 million, which is expected to be recognized over a weighted-average 2.3-year term.

401(k) Plan

The Company has a 401(k) defined contribution plan covering substantially all of the officers and employees of the Company that permits participants to defer up to a maximum of 50% of their compensation subject to statutory limits. The Company matches the participant’s contribution in an amount equal to 50% of the participant’s elective deferral for the plan year up to a maximum of 6% of a participant’s base salary plus annual cash bonus, not to exceed the sum of 3% of the participant’s base salary plus annual cash bonus. The Company’s plan allows for the Company to make additional discretionary contributions. No discretionary contributions have been made. Employees’ contributions are fully vested, and the Company’s matching contributions vest 20% per year over five years. Once an employee has been employed by the Company for five years, all matching contributions are fully vested. The Company funds all matching contributions with cash. The Company’s contributions for each of the three years ended December 31, 2014, 2013 and 2012, were $1.1 million, $1.1 million and $1.0 million, respectively. The 401(k) plan was fully funded at December 31, 2014.

Elective Deferred Compensation Plan

The Company has a non-qualified elective deferred compensation plan (“Elective Deferred Compensation Plan”) for certain officers that permits participants to defer up to 100% of their base salaries, commissions and annual performance-based cash bonuses, less applicable taxes and benefits deductions. The Company provides a matching contribution in the Elective Deferred Compensation Plan to any participant who defers to the Elective Deferred Compensation Plan based upon the lesser of (1) 3% of the participant’s total cash compensation or (2) 50% of total deferrals to the 401(k) and the Elective Deferred Compensation Plans combined, less any matching contributions made to the participant’s 401(k) plan. Deferred compensation related to an employee contribution is charged to expense and is fully vested. Deferred compensation related to the Company’s matching contribution is charged to expense and vests 20% per year. Once an employee has been employed by the Company five years, all matching contributions are fully vested. The Company’s contributions were $0.1 million for each of the years ended December 31, 2014, 2013 and 2012. At December 31, 2014 and 2013, deferred compensation under the Elective Deferred Compensation Plan aggregated $3.7 million and $3.5 million, respectively. The Elective Deferred Compensation Plan was fully funded at December 31, 2014.

Equity Deferred Compensation Plan

The Company maintains the DDR Corp. Equity Deferred Compensation Plan (the “Equity Deferred Compensation Plan”), a non-qualified compensation plan for certain officers and directors of the Company to defer the receipt of restricted shares. At each of December 31, 2014 and 2013, there were 0.5 million common shares of the Company in the Equity Deferred Compensation Plan valued at $8.3 million and $7.1 million, respectively. The Equity Deferred Compensation Plan was fully funded at December 31, 2014.

Vesting of restricted share grants of approximately 0.1 million common shares in 2014, 2013 and 2012 was deferred through the Equity Deferred Compensation Plan. The Company recorded $1.1 million in 2014 and 2013 and $1.8 million in 2012, in equity as deferred compensation obligations for the vested restricted shares deferred into the Equity Deferred Compensation Plan.

In 2014, 2013 and 2012, certain officers elected to have their deferred compensation distributed, which resulted in a reduction of the deferred obligation of $1.3 million in 2014 and $1.1 million for 2013 and 2012.

Directors’ Deferred Compensation Plan

The Company maintains the Directors’ Deferred Compensation Plan (the “Directors Plan”), a non-qualified compensation plan for the directors of the Company to defer the receipt of compensation. At each of December 31, 2014 and 2013, there were 0.5 million and 0.4 million common shares of the Company in the Directors Plan valued at $8.8 million and $6.6 million, respectively. The Directors Plan was fully funded at December 31, 2014.