In May 2007, our shareholders approved the establishment of the AXIS Capital Holdings Limited 2007 Long-Term Equity Compensation Plan (“2007 Plan”). The 2007 Plan provides for, among other things, the grant of restricted stock, restricted stock units, non-qualified and incentive stock options, and other equity-based awards to our employees and directors. The 2007 Plan authorized the issuance of a total of 5,000,000 shares. In May of 2009 and 2012, our shareholders approved amendments to the 2007 Plan to increase the number of common shares authorized for issuance by 4,000,000 and 6,000,000 respectively, to bring the total number of common shares authorized for issuance to 15,000,000. As a result of the adoption of the 2007 Plan, the 2003 Long-Term Equity Compensation and 2003 Directors Long-Term Equity Compensation Plan were terminated, except that all related outstanding awards will remain in effect. At December 31, 2015, 6,007,637 equity-based awards remained available for grant under the 2007 Plan.

We currently issue restricted stock and restricted stock units to our employees with service conditions, vesting generally over a period of 3 or 4 years. The 3 year awards are subject to cliff vesting at the end of the 3 year period. With the 4 year awards, 25% of the award vests annually. We also grant performance-based stock awards to certain employees in order to promote long-term growth and profitability. Performance-based awards represent the right to receive a specified number of common shares in the future, based upon the achievement of established performance criteria during the applicable performance period. Some awards have a scaled performance metric, but the actual award could be higher or lower than target. At December 31, 2015, we anticipate that the established performance based criterion for these awards are likely to be achieved.

Grants provided under the 2007 Plan generally allow for accelerated vesting provisions upon the employee’s death, permanent disability, or certain terminations following a change in control of the Company occurring within two years of the change in control event. Notwithstanding these vesting provisions, the Compensation Committee of our Board has broad authority to accelerate vesting at its own discretion.

The total fair value of restricted stock and cash settled awards vested during 2015 was $75 million (2014: $68 million; 2013: $70 million). At December 31, 2015, we had unrecognized compensation costs of $95 million (2014: $112 million) which are expected to be recognized over the weighted average period of 1.8 years (2014: 2.3 years).

Between January 1, 2016 and February 24, 2016, a total of 1,046,299 service-based restricted stock units and 121,278 performance-based restricted stock units were approved for grant. Included in the total restricted stock awards approved for grant subsequent to December 31, 2015 were 495,195 awards which will be settled in cash upon vesting.

We have granted stock options under the 2003 Plans; however, none have been issued since 2005. Stock options expire ten years from the date of the grant. All outstanding options were exercised on or before January 12, 2015.


a)	Restricted Stock

The following table provides a reconciliation of the beginning and ending balance of nonvested restricted stock (including restricted stock units) for the year ended December 31, 2015:




	Performance-based Stock Awards				Service-based Stock Awards
	Number of Restricted Stock		Weighted Average Grant Date Fair Value		Number of Restricted Stock		Weighted Average Grant Date Fair Value (1)

Nonvested restricted stock - beginning of year	347		$	37.34	2,768		$	38.70
Granted	104		53.32		557		51.70
Vested	—		—		(1,156	)	36.31
Forfeited	(250	)	34.42		(215	)	43.02
Nonvested restricted stock - end of year	201		$	49.24	1,954		$	43.34

(1) Fair value is based on the closing price of our common shares on the New York Stock Exchange on the day of the grant.

During 2015, we granted 661,398 restricted stock awards (2014: 1,121,066; 2013: 1,007,425) to our employees with a weighted average grant-date fair value per share of $51.95 (2014: $44.46; 2013: $39.52).

During 2015, we incurred a compensation cost of $59 million (2014: $73 million; 2013: $57 million) in respect of all restricted stock, restricted stock units, and cash awards, and recorded tax benefits thereon of $15 million (2014: $14 million; 2013: $10 million).


b)	Cash-settled Awards

During 2015, we also granted 487,758 restricted stock units that will settle in cash rather than shares when the awards ultimately vest (2014: 1,018,083); of which 18,659 restricted stock units are performance based and 469,099 restricted stock units are service based. At December 31, 2015, there were 1,503,264 outstanding restricted stock units that will settle in cash when the awards ultimately vest (2014: 1,503,380), and the corresponding liability for cash-settled units, included in other liabilities on the Consolidated Balance Sheets, was $33 million (2014: $21 million).


c)	Stock options

The following is a summary of stock options outstanding and exercisable at December 31, 2015 and related activity for the year ended:




	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value

Outstanding and exercisable - beginning of year	20		$	28.02
Granted	—		—
Exercised	(20	)	28.02
Expired	—		—
Outstanding and exercisable - end of year	—		$	—	0.0	$	—

The total intrinsic value of stock options exercised during 2015 was less than $1 million (2014: $4 million) and we received proceeds of $1 million (2014: $5 million).