The Hartford 2015 Annual Report Download - page 226

Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
17. Stock Compensation Plans (continued)
F-95
For the years ended December 31,
2015 2014 2013
Expected dividend yield 1.8% 1.7% 1.7%
Expected annualized spot volatility 22.1% - 39.4% 25.9% - 57.8% 31.1% - 48.1%
Weighted average annualized volatility 32.7% 35.1% 47.3%
Risk-free spot rate —% - 2.6% 0.1% - 2.8% 0.1% - 1.9%
Expected term 5.0 years 5.0 years 5.0 years
A summary of non-qualified stock option activity under the Company’s Incentive Stock Plan is presented below.
Number of
Options
(in thousands)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
For the year ended December 31, 2015
Outstanding at beginning of year 3,745 $ 29.64
Granted 862 $ 41.25
Exercised (754) $ 22.18
Forfeited — $ —
Expired (53) $ 76.80
Outstanding at end of year 3,800 $ 33.09 6.5 years $ 45
Outstanding, fully vested and expected to vest 3,749 $ 33.53 6.5 years $ 42
Exercisable at end of year 2,351 $ 30.34 5.2 years $ 36
Aggregate intrinsic value represents the value of the Company's closing stock price on the last trading day of the period in excess of the
exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock
options that have a zero or negative intrinsic value. The weighted average grant-date fair value per share of options granted during the
years ended December 31, 2015, 2014, and 2013 was $10.60, $10.59 and $7.78, respectively. The total intrinsic value of options
exercised during the years ended December 31, 2015, 2014 and 2013 was $16, $10, and $5, respectively.
Share Awards
Share awards granted under the Incentive Stock Plan and outstanding include restricted stock units, restricted stock and performance
shares.
Restricted Stock and Restricted Stock Units
Restricted stock units are share equivalents that are credited with dividend equivalents. Dividend equivalents are accumulated and paid
in incremental shares when the underlying units vest. Restricted stock are shares of The Hartford's common stock with restrictions as to
transferability until vested. Restricted stock units and restricted stock awards are valued equal to the market price of the Company’s
common stock on the date of grant. Generally, restricted stock units vest at the end of or over three years; certain restricted stock units
vest at the end of 5 years. Equity awards granted to non-employee directors generally vest in one year and were made in the form of
restricted stock in 2014 and restricted stock units in 2015.
Performance Shares
Performance shares become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment
of specific performance goals achieved at the end of or over three years. While most performance shares vest at the end of or over three
years, certain performance shares vest at the end of five years.
Performance share awards that are not dependent on market conditions are valued equal to the market price of the Company's common
stock on the date of grant less a discount for the absence of dividends. Stock-compensation expense for these performance share awards
without market conditions is based on a current estimate of the number of awards expected to vest and, therefore, may change during the
performance period as new estimates of performance are available.