Common Shares and Compensation Plans

The Board of Directors from time to time has authorized the repurchase of our common shares. At December 31, 2015, we are authorized to repurchase 20,000,000 common shares.

Prior to the acquisition of Jefferies, we had two share-based compensation plans: a fixed stock option plan and a senior executive warrant plan. The fixed stock option plan provided for the issuance of stock options and stock appreciation rights to non-employee directors and certain employees at not less than the fair market value of the underlying stock at the date of grant. Options granted to employees under this plan were intended to qualify as incentive stock options to the extent permitted under the Internal Revenue Code and became exercisable in five equal annual installments starting one year from date of grant. Options granted to non-employee directors became exercisable in four equal annual installments starting one year from date of grant. No stock appreciation rights have been granted. In March 2014, we terminated authorization to issue options and rights under our option plan. No shares remain available for future issuances under our option plan or warrant plan. At December 31, 2015 and 2014, 4,661,272 and 5,640,034, respectively, of our common shares were reserved for stock options and warrants.

Compensation and benefits expense included $74.1 million, $109.8 million and $87.2 million for the years ended December 31, 2015, 2014 and 2013, respectively, for share-based compensation expense relating to grants made under our share-based compensation plans. Total compensation cost includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks. The total tax benefit recognized in results of operations related to share-based compensation expenses was $27.3 million, $39.9 million and $33.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, total unrecognized compensation cost related to nonvested share-based compensation plans was $41.8 million; this cost is expected to be recognized over a weighted-average period of 1.9 years.

The net tax benefit (detriment) related to share-based compensation plans recognized in additional paid-in capital was $(5.9) million, $1.3 million and $2.9 million during the years ended December 31, 2015, 2014 and 2013, respectively. Cash flows resulting from tax deductions in excess of the grant date fair value of share-based awards are included in cash flows from financing activities; accordingly, we reflected the excess tax benefit related to share-based compensation in cash flows from financing activities. Such amounts for the years ended December 31, 2015, 2014 and 2013 were not significant.

At December 31, 2015, there were 2,004,000 shares of restricted stock outstanding with future service required, 3,388,000 RSUs outstanding with future service required, 8,583,000 RSUs outstanding with no future service required and 927,000 shares issuable under other plans. Excluding shares issuable pursuant to outstanding stock options and warrants, the maximum potential increase to common shares outstanding resulting from these outstanding awards is 12,898,000.

Senior Executive Warrant Plan. On March 7, 2011, the Compensation Committee of our Board of Directors granted warrants to purchase 2,000,000 common shares to each of our then Chairman and then President at an exercise price of $33.33 per share (105% of the closing price per share of a common share on the grant date), subject to shareholder approval. In May 2011, the required shareholder approval was received and the warrants were issued. The warrants expire in 2016 and vest in five equal tranches with 20% vesting on the date shareholder approval was received and an additional 20% vesting in each subsequent year. Compensation cost was determined as of the approval date and is recognized in the financial statements over the vesting period of the warrants. We have recorded share-based compensation expense related to this grant of warrants of $1.0 million, $5.3 million and $4.9 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Fixed Stock Option Plan. A summary of activity with respect to our stock options for the three years ended December 31, 2015 is as follows:



	Common Shares Subject to Option		Weighted- Average Exercise Prices		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value

Balance at December 31, 2012	2,577,500		$	26.10
Granted	51,432		$	26.06
Exercised	(184,276	)	$	24.65		$	603,000
Cancelled	(27,408	)	$	38.68
Balance at December 31, 2013	2,417,248		$	25.64
Granted	—		$	—
Exercised	(35,536	)	$	22.87		$	58,000
Cancelled	(741,678	)	$	27.39
Balance at December 31, 2014	1,640,034		$	24.91
Granted	—		$	—
Exercised	(2,030	)	$	21.66		$	6,000
Cancelled	(976,732	)	$	24.88
Balance at December 31, 2015	661,272		$	24.97	2.1 years	$	—
Exercisable at December 31, 2015	391,274		$	25.75	1.7 years	$	—

The following summary presents the weighted-average assumptions used for grants made during 2013. There were no grants during 2014 or 2015.



Risk free interest rate	1.26		%
Expected volatility	39.17		%
Expected dividend yield	0.85		%
Expected life	4.0 years
Weighted-average fair value per grant	$	7.67

The expected life assumptions were based on historical behavior and incorporated post-vesting forfeitures for each type of award and population identified. The expected volatility was based on the historical behavior of our stock price.

Incentive Plan. The Incentive Plan allows awards in the form of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code), nonqualified stock options, stock appreciation rights, restricted stock, unrestricted stock, performance awards, RSUs, dividend equivalents or other share-based awards.

RSUs give a participant the right to receive fully vested shares at the end of a specified deferral period allowing a participant to hold an interest tied to common stock on a tax deferred basis. Prior to settlement, RSUs carry no voting or dividend rights associated with the stock ownership, but dividend equivalents are accrued to the extent there are dividends declared on the underlying common shares as cash amounts or as deemed reinvestments in additional RSUs.

Restricted stock and RSUs may be granted to new employees as "sign-on" awards, to existing employees as "retention" awards and to certain executive officers as awards for multiple years. Sign-on and retention awards are generally subject to annual ratable vesting over a four year service period and are amortized as compensation expense on a straight line basis over the related four years. Jefferies has granted restricted stock and RSUs to certain senior executives with both performance and service conditions. The awards granted to senior executives are amortized over the service period if we have determined it is probable that the performance condition will be achieved.

The Deferred Compensation Plan (the “DCP”) has been implemented under the Incentive Plan. The DCP permits eligible executive officers and other employees to defer cash compensation, some or all of which may be deemed invested in stock units. A portion of the deferrals may also be directed to notional investments in a money market fund or certain of the employee investment opportunities. Stock units generally have been acquired at a discounted price, which encourages employee participation in the DCP and enhances long-term retention of equity interests by participants and aligns executive interests with those of shareholders. Amounts recognized as compensation cost have not been significant. The shares to be delivered in connection with DCP stock units and options are drawn from the Incentive Plan.

The Incentive Plan’s “evergreen” share reservation was terminated on March 21, 2014; the number of equity awards available under the Incentive Plan was set at 20,000,000. At December 31, 2015, 18,165,279 common shares remained available for new grants under the Incentive Plan. Shares issued pursuant to the DCP reduce the shares available under the Incentive Plan.

The following table details the activity in restricted stock during the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):



			Weighted Average Grant Date Fair Value

Balance at January 1, 2013	—		$	—
Converted in connection with the Jefferies acquisition	6,895		$	26.90
Grants	462		$	27.38
Forfeited	(144	)	$	26.90
Fulfillment of service requirement	(1,971	)	$	26.90
Balance at December 31, 2013	5,242		$	26.94
Grants	864		$	27.03
Forfeited	(202	)	$	26.90
Fulfillment of service requirement	(2,521	)	$	26.89
Balance at December 31, 2014	3,383		$	27.00
Grants	602		$	18.63
Forfeited	(94	)	$	28.12
Fulfillment of service requirement	(1,887	)	$	26.87
Balance at December 31, 2015	2,004		$	24.56

The following table details the activity in restricted stock units during the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):



	Future Service Required		No Future Service Required		Future Service Required		No Future Service Required

Balance at January 1, 2013	—		—		$	—	$	—
Converted in connection with the Jefferies acquisition	5,167		9,527		$	26.90	$	26.90
Grants	—		145		$	—	$	24.32
Distributions of underlying shares	—		(1,603	)	$	—	$	26.90
Forfeited	(106	)	(21	)	$	26.90	$	26.83
Fulfillment of service requirement	(268	)	268		$	26.90	$	26.90
Balance at December 31, 2013	4,793		8,316		$	26.90	$	26.86
Grants	—		97		$	—	$	20.89
Distributions of underlying shares	—		(366	)	$	—	$	26.85
Forfeited	(135	)	—		$	26.90	$	—
Fulfillment of service requirement	(420	)	420		$	26.90	$	26.90
Balance at December 31, 2014	4,238		8,467		$	26.90	$	26.79
Grants	—		121		$	—	$	18.95
Distributions of underlying shares	—		(229	)	$	—	$	22.34
Forfeited	(626	)	—		$	26.90	$	—
Fulfillment of service requirement	(224	)	224		$	26.90	$	26.90
Balance at December 31, 2015	3,388		8,583		$	26.90	$	26.68

At December 31, 2015 and 2014, respectively, grants include approximately 106,000 and 88,000 dividend equivalents declared on RSUs; the weighted average grant date fair values of the dividend equivalents were approximately $18.13 and $20.41, respectively.

Directors’ Plan. Under our Directors’ Plan, we will issue each nonemployee director of Leucadia $120,000 of restricted stock or restricted stock units. These grants will be made on the date directors are elected or reelected at our annual shareholders’ meeting. These shares vest over three years from the date of grant and are expensed over the requisite service period. At December 31, 2015, 289,044 common shares were issuable upon settlement of outstanding restricted stock units and 398,550 shares are available for future grants.

Other Stock-Based Plans. Historically, Jefferies also sponsored an Employee Stock Purchase Plan and an Employee Stock Ownership Plan, both of which were assumed by us in connection with the Jefferies acquisition. Amounts related to these plans have not been significant.

Restricted Cash Awards. Jefferies provides compensation to new and existing employees in the form of loans and/or other cash awards which are subject to ratable vesting terms with service requirements. These awards are amortized to compensation expense over the relevant service period. At December 31, 2015, the remaining unamortized amount of these awards was $258.3 million and is included within Other assets in the Consolidated Statements of Financial Condition.