Stock-Based Compensation

The following table reflects the stock-based compensation expense and the related deferred income tax benefit recognized in income for the three months ended March 31:



	Three Months Ended March 31
(Millions)	2015		2014
Stock options	$	—	$	0.3
Performance stock rights	0.6		0.5
Restricted share units	3.4		2.5
Nonemployee director deferred stock units	0.2		0.2
Total stock-based compensation expense	$	4.2	$	3.5
Deferred income tax benefit	$	1.7	$	1.4

No stock-based compensation cost was capitalized during the three months ended March 31, 2015, and 2014.

Stock Options

The weighted-average fair value per stock option granted during the three months ended March 31, 2014, was $6.70. No stock options were granted during 2015.

A summary of stock option activity for the three months ended March 31, 2015, and information related to outstanding and exercisable stock options at March 31, 2015, is presented below:



	Stock Options		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value (Millions)
Outstanding at December 31, 2014	134,017		$	54.31
Exercised	(45,297	)	53.32
Outstanding at March 31, 2015	88,720		$	54.81	6.6	$	1.5
Exercisable at March 31, 2015	53,057		$	54.84	5.9	$	0.9

The aggregate intrinsic value for outstanding and exercisable options in the above table represents the total pre-tax intrinsic value that would have been received by the option holders had they all exercised their options on March 31, 2015. This is calculated as the difference between our closing stock price on March 31, 2015, and the option exercise price, multiplied by the number of in-the-money stock options. The intrinsic value of options exercised during the three months ended March 31, 2015, and 2014 was not significant. Cash received from option exercises during the three months ended March 31, 2015, was $2.7 million, and was not significant for the three months ended March 31, 2014.

Due to the accelerated vesting of all unvested stock options held by active employees in October 2014, all compensation expense related to outstanding stock options has been recognized.

Performance Stock Rights

The fair values of performance stock rights are estimated using a Monte Carlo valuation model. The risk-free interest rate is based on the United States Treasury yield curve. The expected dividend yield incorporates the current and historical dividend rate. The expected stock price volatility is estimated using two to three years of historical data. The table below reflects the assumptions used in the valuation of the outstanding grants at March 31, 2015:



Risk-free interest rate		0.42% – 0.63%
Expected dividend yield		5.25% – 5.33%
Expected volatility		18% – 19%

A summary of the activity for the three months ended March 31, 2015, related to performance stock rights accounted for as equity awards is presented below:



	Performance Stock Rights		Weighted-Average Fair Value *
Outstanding at December 31, 2014	68,263		$	58.54
Distributed	(38,639	)	78.37
Adjustment for payout	12,751		78.37
Outstanding at March 31, 2015	42,375		$	46.42


*	Reflects the weighted-average fair value used to measure equity awards. Equity awards are measured using the grant date fair value or the fair value on the modification date.

The weighted-average grant date fair value of performance stock rights awarded during the three months ended March 31, 2014, was $44.28 per performance stock right. No performance stock rights were granted during 2015.

A summary of the activity for the three months ended March 31, 2015, related to performance stock rights accounted for as liability awards is presented below:



	Performance Stock Rights
Outstanding at December 31, 2014	170,308
Distributed	(1,746	)
Adjustment for payout	831
Outstanding at March 31, 2015	169,393

The weighted-average fair value of all outstanding performance stock rights accounted for as liability awards as of March 31, 2015, was $106.95 per performance stock right.

The total intrinsic value of shares distributed during the three months ended March 31, 2015, was $3.1 million. The actual tax benefit realized for the tax deductions from the distribution of shares during the three months ended March 31, 2015, was not significant. No shares of common stock were distributed for performance stock rights during the three months ended March 31, 2014, because the performance percentage was below the threshold payout level for those rights that were eligible for distribution.

As of March 31, 2015, $3.3 million of compensation cost related to unvested and outstanding performance stock rights (equity and liability awards) was expected to be recognized over a weighted-average period of 1.4 years.

Restricted Share Units

A summary of the activity related to all restricted share unit awards (equity and liability awards) for the three months ended March 31, 2015, is presented below:



	Restricted Share Unit Awards		Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2014	427,305		$	54.45
Granted	224,784		77.17
Dividend equivalents	4,437		65.31
Vested and released	(166,545	)	53.49
Forfeited	(530	)	52.35
Outstanding at March 31, 2015	489,451		$	65.31

The weighted-average grant date fair value of restricted share units awarded during the three months ended March 31, 2015, and 2014, was $77.17 and $55.23 per unit, respectively.

The total intrinsic value of restricted share unit awards vested and released during the three months ended March 31, 2015, and 2014, was $12.8 million and $11.1 million, respectively. The actual tax benefit realized for the tax deductions from the vesting and release of restricted share units during the three months ended March 31, 2015, and 2014, was $5.1 million and $4.4 million, respectively.

As of March 31, 2015, $20.4 million of compensation cost related to unvested and outstanding restricted share units was expected to be recognized over a weighted-average period of 2.2 years.