Share-Based Compensation Plans

Federated's long-term stock-incentive compensation has been provided for under the Stock Incentive Plan (the Plan), as amended and subsequently approved by shareholders from time to time. Share-based awards are granted to reward Federated's employees and non-management directors who have contributed to the success of Federated and to provide incentive to increase their efforts on behalf of Federated. Since the Plan's inception, a total of 27.1 million shares of Class B common stock have been authorized for granting share-based awards in the form of restricted stock, stock options or other share-based awards. As of December 31, 2016, 2.5 million shares are available under the Plan.

Share-based compensation expense was $22.4 million, $22.7 million and $21.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. The associated tax benefits recorded in connection with share-based compensation expense were $8.4 million, $8.5 million and $8.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, the maximum remaining unrecognized compensation expense related to share-based awards approximated $73 million which is expected to be recognized over a weighted-average period of approximately 6 years.

(a) Restricted Stock

Federated's restricted stock awards represent shares of Federated Class B common stock that may be sold by the awardee only once the restrictions lapse, as dictated by the terms of the award. The awards are generally subject to graded vesting schedules that vary in length from three to ten years with a portion of the award vesting each year, as dictated by the terms of the award. For an award with a ten-year vesting period, the restrictions on the vested portion of the award typically lapse on the award's fifth- and tenth-year anniversaries. Certain restricted stock awards granted pursuant to a key employee bonus program have a three-year graded vesting schedule with restrictions lapsing at each vesting date. During the period of restriction, the recipient receives dividends on all shares awarded, regardless of their vesting status.

The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2016:



	Restricted Shares		Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2016	4,197,652			$	24.27
Granted¹	943,160			26.56
Vested	(919,738	)		25.24
Forfeited	(195,504	)		24.24
Non-vested at December 31, 2016	4,025,570			$	24.58

During 2016, Federated awarded 464,660 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2016, Federated awarded 478,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on the awards' fifth- and tenth-year anniversaries.

Federated awarded 943,160 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $26.56 to employees during 2016; awarded 863,137 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $31.07 to employees during 2015; and awarded 1,057,981 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $27.43 to employees during 2014.

The total fair value of restricted stock vested during 2016, 2015 and 2014 was $23.9 million, $28.8 million and $24.4 million, respectively.

(b) Stock Options

The outstanding stock options as of December 31, 2016 were granted to non-management directors with exercise prices that equaled the market price of Federated's Class B common stock on each grant date. All of these stock options were awarded with no requisite service requirement, were immediately exercisable and expire no later than ten years after the grant date. Each vested option may be exercised for the purchase of one share of Class B common stock at the exercise price.

The following table summarizes the status of and changes in Federated's stock option program for the year ended

December 31, 2016:



	Options		Weighted-Average Exercise Price			Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016	33,000			$	34.38
Expired unexercised	(9,000	)		37.73
Outstanding at December 31, 2016¹	24,000			$	33.13		1.2		$	28.3


1	All stock options outstanding at December 31, 2016 were vested and exercisable.

There were no stock options exercised during the year ended December 31, 2016. During the years ended December 31, 2015 and December 31, 2014 there were 3,000 and 6,000 options exercised, respectively.

There were no stock options granted in 2016, 2015 or 2014.

Federated awarded 5,700, 5,700 and 5,100 shares of Federated Class B common stock to non-management directors in the second quarters of 2016, 2015 and 2014, respectively. There were no additional awards to non-management directors in 2016, 2015 or 2014.