STOCK-BASED COMPENSATION

Under the Company's 2004 Stock Incentive Plan ("2004 Plan"), the Company granted options to purchase shares of the Company's common stock at the fair market value on the date of grant. The options vested over periods up to three years and have a term of 10 years from date of grant. At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees generally vests 50% after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the first anniversary date of the grant. In February 2014, the Company's Board of Directors replaced the expired 2004 Plan by adopting the BorgWarner Inc. 2014 Stock Incentive Plan ("2014 Plan"). On April 30, 2014, the Company's stockholders approved the 2014 Plan. Under the 2014 Plan, approximately 8 million shares are authorized for grant, of which approximately 7.0 million shares are available for future issuance as of December 31, 2015.

Stock Options A summary of the plans’ shares under option at December 31, 2015, 2014 and 2013 is as follows:



	Shares (thousands)		Weighted average exercise price		Weighted average remaining contractual life (in years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2013	2,872		$	15.33	3.4	$	58.8
Exercised	(870	)	$	14.17		$	25.5
Forfeited	(5	)	$	17.48
Outstanding at December 31, 2013	1,997		$	15.82	2.6	$	80.0
Exercised	(283	)	$	14.04		$	13.8
Outstanding at December 31, 2014	1,714		$	16.11	1.7	$	66.5
Exercised	(440	)	$	14.76		$	19.2
Forfeited	(7	)	$	14.52
Outstanding at December 31, 2015	1,267		$	16.59	0.9	$	33.7

Options exercisable at December 31, 2015	1,267		$	16.59	0.9	$	33.7

Proceeds from stock option exercises for the years ended December 31, 2015, 2014 and 2013 were as follows:



	Year Ended December 31,
(millions of dollars)	2015		2014		2013
Proceeds from stock options exercised — gross	$	6.5	$	4.0	$	12.3
Tax benefit	10.3		12.9		20.7
Proceeds from stock options exercised, net of tax	$	16.8	$	16.9	$	33.0

Restricted Stock The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2015, restricted stock in the amount of 669,754 shares and 16,983 shares was granted to employees and non-employee directors, respectively. The value of the awards is recognized as compensation expense ratably over the restriction periods. As of December 31, 2015, there was $33.2 million of unrecognized compensation expense that will be recognized over a weighted average period of approximately 2 years.

Restricted stock compensation expense recorded in the Consolidated Statements of Operations is as follows:



	Year Ended December 31,
(millions of dollars, except per share data)	2015		2014		2013
Restricted stock compensation expense	$	28.0	$	20.7	$	25.8
Restricted stock compensation expense, net of tax	$	20.4	$	15.1	$	18.8

A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors at December 31, 2015, 2014 and 2013 is as follows:



	Shares subject to restriction (thousands)		Weighted average price
Nonvested at January 1, 2013	2,064		$	29.39
Granted	782		$	37.82
Vested	(1,322	)	$	24.36
Forfeited	(113	)	$	36.59
Nonvested at December 31, 2013	1,411		$	37.86
Granted	447		$	54.36
Vested	(530	)	$	37.42
Forfeited	(62	)	$	41.14
Nonvested at December 31, 2014	1,266		$	43.57
Granted	687		$	58.45
Vested	(588	)	$	39.14
Forfeited	(39	)	$	50.85
Nonvested at December 31, 2015	1,326		$	53.18

Performance Share Plans The 2004 and 2014 Plans provide for awarding of performance shares to members of senior management at the end of successive three-year periods based on the Company's performance in terms of total shareholder return relative to a peer group of automotive companies.

The Company recognizes compensation expense relating to its performance share plans ratably over the performance period. Compensation expense associated with the performance share plans is calculated using a lattice model (Monte Carlo simulation). The amounts expensed under the plan and the common stock issuances for the three-year measurement periods ended December 31, 2015, 2014 and 2013 were as follows:



	Year Ended December 31,
(millions of dollars, except share data)	2015		2014		2013*
Expense	$	12.2	$	11.4	$	10.8
Number of shares	—		—		545,375

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*Shares were issued in February of the following year.

The restricted stock and performance share compensation expense disclosed above includes $5.5 million of expense for the year ended December 31, 2013 related to the Company's fourth quarter 2012 decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring NEOs. The Company recorded this expense within Other expense, net in the Consolidated Statements of Operations.