Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
The amounts of stock-based compensation expense as reflected in salaries and related expenses in our Consolidated Statements of Operations, and the related tax benefit, are listed below.
Years ended December 31,
Employee stock purchase plan
Stock-based compensation expense
Represents charges recorded for severance expense related to stock-based compensation awards.
Stock options are granted with the exercise price equal to the fair market value of our common stock on the grant date. They are generally first exercisable between two and four years from the grant date and expire ten years from the grant date (or earlier in the case of certain terminations of employment). As of December 31, 2016, all stock options granted are fully vested and exercisable.
The following table summarizes our stock option activity during 2016.
Stock options outstanding as of January 1, 2016
Stock options outstanding as of December 31, 2016
There were 1.2, 1.4 and 1.7 stock options exercised in 2016, 2015 and 2014, respectively. The total intrinsic value of stock options exercised during 2016, 2015 and 2014 was $15.2, $16.1 and $10.7, respectively. The cash received from the stock options exercised in 2016, 2015 and 2014 was $18.2, $20.4 and $25.2, respectively.
We use the Black-Scholes option-pricing model to estimate the fair value of options granted, which requires the input of subjective assumptions including the option’s expected term and the price volatility of the underlying stock. Changes in the assumptions can materially affect the estimate of fair value, and our results of operations could be materially impacted. There were no stock options granted during the years ended December 31, 2016, 2015 and 2014.
We grant other stock-based compensation awards such as stock-settled awards, cash-settled awards and performance-based awards (settled in cash or shares) to certain key employees. The number of shares or units received by an employee for performance-based awards depends on Company performance against specific performance targets and could range from 0% to 300% of the target amount of shares originally granted, except for Executive Officers of IPG, with a range of 0% to 200%. Incentive awards are subject to certain restrictions and vesting requirements as determined by the Compensation Committee. The fair value of the shares on the grant date is amortized over the vesting period, which is generally three years. Upon completion of the vesting period for cash-settled awards, the grantee is entitled to receive a payment in cash based on the fair market value of the corresponding number of shares of common stock. No monetary consideration is paid by a recipient for any incentive award. The fair value of cash-settled awards is adjusted each quarter based on our share price. The holders of stock-settled awards have absolute ownership interest in the underlying shares of common stock prior to vesting, which includes the right to vote and receive dividends. Dividends declared on common stock are accrued during the vesting period and paid when the award vests. The holders of cash-settled and performance-based awards have no ownership interest in the underlying shares of common stock until the awards vest and the shares of common stock are issued.