SHARE-BASED COMPENSATION

The company recognized total expenses of $138.0 million, $133.1 million and $136.4 million related to equity-settled share-based payment transactions in 2014, 2013 and 2012, respectively. The total income tax benefit recognized in the Consolidated Statements of Income for share-based compensation arrangements was $39.1 million for 2014 (2013: $37.8 million; 2012: $39.1 million).

Cash received from exercise of share options granted under share-based compensation arrangements was $11.0 million in 2014 (2013: $17.9 million; 2012: $23.0 million). The total tax benefit realized from share options exercises was $7.4 million in 2014 (2013: $7.9 million; 2012: $5.4 million).

Share Awards

Share awards are broadly classified into two categories: time-vested and performance-vested. Share awards are measured at fair value at the date of grant and are expensed, based on the company's estimate of shares that will eventually vest, on a straight-line or accelerated basis over the vesting period.

Time-vested awards vest ratably over or cliff-vest at the end of a period of continued employee service. Performance-vested awards cliff-vest at the end of or vest ratably over a defined vesting period of continued employee service upon the company's attainment of certain performance criteria. Time-vested and performance-vested share awards are granted in the form of restricted share awards (RSAs) or restricted share units (RSUs). Performance-vested awards are tied to the achievement of specified levels of adjusted diluted earnings per share and adjusted operating margin. In the event that either targeted financial measure is achieved at or above a vesting threshold for a particular performance measurement period, the portion of the performance-vested award subject to targeted financial measures will vest proportionately between 0% and 100% based upon the higher achieved level for that year.

With respect to time-vested awards, dividends accrue directly to the employee holder of RSAs, and cash payments in lieu of dividends are made to employee holders of certain RSUs. With respect to performance-vested awards, dividends and cash payments in lieu of dividends are deferred and are paid at the same rate as on our shares if and to the extent the award vests.

In May 2011, the company's shareholders approved the 2011 Global Equity Incentive Plan, which authorized the issuance of up to 28 million shares under this plan. In May 2010, the board approved the 2010 Global Equity Incentive Plan (ST), which authorized the issuance of up to 3 million shares under this plan. Under the terms of the plan, shares are issued only as employment inducement awards in connection with a strategic transaction and, as a result, do not require shareholder approval under the rules of the New York Stock Exchange or otherwise.

Movements on share awards priced in U.S. dollars during the years ended December 31, are detailed below:



	2014					2013				2012
Millions of shares, except fair values	Time-Vested		Performance-Vested		Weighted Average Grant Date Fair Value ($)	Time-Vested		Performance-Vested		Time- Vested		Performance-Vested
Unvested at the beginning of year	13.9		0.4		25.00	16.5		0.3		17.3		—
Granted during the year	4.4		0.2		34.35	5.2		0.2		5.5		0.3
Forfeited during the year	(1.2	)	—		24.43	(0.9	)	—		(0.4	)	—
Vested and distributed during the year	(5.6	)	(0.1	)	24.16	(6.9	)	(0.1	)	(5.9	)	—
Unvested at the end of the year	11.5		0.5		29.00	13.9		0.4		16.5		0.3

In December 2007, in connection with the redomicile of the company from the U.K. to Bermuda, the company’s primary share listing moved from the London Stock Exchange to the New York Stock Exchange. Movements on share awards priced in Pounds Sterling, which were awarded prior to the move of the company’s primary share listing to the New York Stock Exchange, during the years ended December 31, are detailed below:



	2014			2013		2012
Millions of shares, except fair values	Time-Vested		Weighted Average Grant Date Fair Value (£ Sterling)	Time-Vested		Time-Vested
Unvested at the beginning of year	0.1		12.90	0.3		0.6
Forfeited during the year	—		—	—		—
Vested and distributed during the year	(0.1	)	12.90	(0.2	)	(0.3	)
Unvested at the end of the year	—		—	0.1		0.3

All share awards outstanding at December 31, 2014, had a weighted average remaining contractual life of 1.23 years. The total fair value of shares that vested during 2014 was $202.3 million (2013: $192.7 million; 2012: $151.6 million). The weighted average grant date fair value of the U.S. dollar share awards that were granted during 2014 was $34.35 (2013: $26.91; 2012: $24.84).

At December 31, 2014, there was $236.2 million of total unrecognized compensation cost related to non-vested share awards; that cost is expected to be recognized over a weighted average period of 2.57 years.

Share Options

The company has not granted share option awards since 2005. All share options awards, therefore, were granted prior to the December 2007 redomicile from the United Kingdom to Bermuda and re-listing from the London Stock Exchange (where the predecessor company's ordinary shares traded in Pounds Sterling) to the New York Stock Exchange (where the company's common shares now trade in U.S. Dollars). The company maintains the historical 2000 Share Option Plan which has outstanding share options. All remaining outstanding share option awards were fully vested and were expensed by the company over the applicable vesting periods (the latest of which ended prior to December 31, 2008). At the time of their grants, the exercise prices of the share options were denominated in the company's trading currency, which was the Pound Sterling. The company did not change the accounting for share options at the redomicile/re-listing date, because the share options were not modified at that date. The exercise price remains in Pounds Sterling and was not changed to U.S. Dollars. Therefore, upon exercise of the share options, the Pound Sterling exercise price will be converted into U.S. Dollars using the spot foreign exchange rate in effect on the exercise date. Upon the exercise of share options, the company either issues new shares or can utilize shares held in treasury (see Note 9, “Share Capital”) to satisfy the exercise.

The share option plans provided for a grant price equal to the quoted market price of the company's shares on the date of grant. If the options remain unexercised after a period of ten years from the date of grant, the options expire. All options outstanding at December 31, 2014 were exercisable and had an exercise price of £8.86, and weighted average remaining contractual life of 0.99 years. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013, and 2012, was $22.9 million, $28.5 million, and $19.6 million, respectively. At December 31, 2014, the aggregate intrinsic value of options outstanding and options exercisable was $7.0 million. The market price of the company's common stock at December 31, 2014 was $39.52 (December 31, 2013: $36.40).

Changes in outstanding share option awards are as follows:



	2014			2013			2012
Millions of shares, except prices	Options		Weighted Average Exercise Price (£ Sterling)	Options		Weighted Average Exercise Price (£ Sterling)	Options		Weighted Average Exercise Price (£ Sterling)
Outstanding at the beginning of year	1.1		7.32	2.6		7.31	4.5		7.85
Forfeited during the year	—		—	—		—	(0.2	)	14.80
Exercised during the year	(0.9	)	6.83	(1.5	)	7.30	(1.7	)	8.08
Outstanding at the end of the year	0.2		8.86	1.1		7.32	2.6		7.31
Exercisable at the end of the year	0.2		8.86	1.1		7.32	2.6		7.31

Employee Stock Purchase Plan (ESPP)

During 2012, the company established a nonqualified, broad-based ESPP for all eligible employees. Employees may purchase shares of our common stock generally in annual intervals at 85% of fair market value. Employee ESPP contributions may not exceed $6,000 per offering period. Upon the plan vesting date, the company either issues new shares or can utilize shares held in treasury (see Note 9, "Share Capital") to satisfy the exercise. For the year ended December 31, 2014, the company recognized $0.8 million in compensation expense related to the employee stock purchase plan (December 31, 2013: $0.9 million, December 31, 2012: $0.3 million).