BENEFIT PLANS

Our shareholders approved the 2012 Long-Term Incentive Plan (the “2012 LTIP”) effective January 1, 2012, to provide for the issuance of non-vested share awards, share option awards and performance awards (collectively "awards"). Under the 2012 LTIP, as amended, 32.0 million shares were reserved for issuance as awards to officers, non-employee directors and key employees who are in a position to contribute materially to our growth, development and long-term success. As of December 31, 2017, there were 18.2 million shares available for issuance as awards under the 2012 LTIP. Awards may be satisfied by newly issued shares, including shares held by a subsidiary or affiliated entity, or by delivery of shares held in an affiliated employee benefit trust at the Company's discretion.

In connection with the Merger, we assumed Atwood’s Amended and Restated 2007 Long-Term Incentive Plan (the “Atwood LTIP”) and the options outstanding thereunder. As of December 31, 2017, there were 1.6 million shares remaining available for future issuance as awards under the Atwood LTIP, which may be granted to employees and other service providers who were not employed or engaged with Ensco prior to the Merger.

Non-Vested Share Awards and Cash-Settled Awards

Grants of share awards and share units (collectively "share awards") and share units to be settled in cash ("cash-settled awards"), generally vest at rates of 20% or 33% per year, as determined by a committee or subcommittee of the Board of Directors at the time of grant. During 2017, we granted 5.0 million cash-settled awards and 1.4 million share awards to our employees and non-employee directors pursuant to the 2012 LTIP. Our non-vested share awards have voting and dividend rights effective on the date of grant, and our non-vested share units have dividend rights effective on the date of grant. Compensation expense for share awards is measured at fair value on the date of grant and recognized on a straight-line basis over the requisite service period (usually the vesting period). Compensation expense for cash-settled awards is remeasured each quarter with a cumulative adjustment to compensation cost during the period based on changes in our share price. Our compensation cost is reduced for forfeited awards in the period in which the forfeitures occur.

The following table summarizes share award and cash-settled award compensation expense recognized during each of the years in the three-year period ended December 31, 2017 (in millions):



	2017			2016			2015
Contract drilling	$	18.3		$	19.9		$	19.5
General and administrative	14.5			16.6			17.8
	32.8			36.5			37.3
Tax benefit	(4.8		)	(5.9		)	(4.8		)
Total	$	28.0		$	30.6		$	32.5

The following table summarizes the value of share awards and cash-settled awards granted and vested during each of the years in the three-year period ended December 31, 2017:



	Share Awards						Cash-Settled Awards
	2017		2016		2015		2017		2016		2015
Weighted-average grant-date fair value of share awards granted (per share)	$	7.90	$	10.42	$	23.95	$	6.27	$	9.64	$	—
Total fair value of share awards vested during the period (in millions)	$	8.6	$	8.8	$	18.0	$	3.9	$	—	$	—

The following table summarizes share awards and cash-settled awards activity for the year ended December 31, 2017 (shares in thousands):



	Share Awards				Cash-settled Awards
	Awards		Weighted-Average Grant-Date Fair Value		Awards		Weighted-Average Grant-Date Fair Value
Share awards and cash-settled awards as of December 31, 2016	3,073		$	26.02	3,060		$	9.64
Granted	1,433		7.90		4,968		6.27
Vested	(1,123	)	32.75		(614	)	9.64
Forfeited	(78	)	31.52		(325	)	7.77
Share awards and cash-settled awards as of December 31, 2017	3,305		$	16.06	7,089		$	7.37

As of December 31, 2017, there was $74.8 million of total unrecognized compensation cost related to share awards, which is expected to be recognized over a weighted-average period of 2.0 years.

Share Option Awards

Share option awards ("options") granted to employees generally become exercisable in 25% increments over a four-year period or 33% increments over a three-year period and, to the extent not exercised, expire on either the seventh or tenth anniversary of the date of grant. The exercise price of options granted under the 2012 LTIP equals the market value of the underlying shares on the date of grant. As of December 31, 2017, options granted to purchase 896,279 shares with a weighted-average exercise price of $25.97 were outstanding under the 2012 LTIP and predecessor or acquired plans. Excluding options assumed under the Atwood LTIP, no options have been granted since 2011, and there was no unrecognized compensation cost related to options as of December 31, 2017.

Performance Awards

Under the 2012 LTIP, performance awards may be issued to our senior executive officers. Performance awards are subject to achievement of specified performance goals based on relative total shareholder return ("TSR") and relative return on capital employed ("ROCE"). The performance goals are determined by a committee or subcommittee of the Board of Directors. Awards are payable in either Ensco shares or cash upon attainment of relative TSR and ROCE performance goals. Performance awards granted during 2017 are payable in cash while performance awards granted in 2015 and 2016 are payable in Ensco shares.

Our performance awards granted during 2017 are classified as liability awards with compensation expense measured based on the estimated probability of attainment of the specified performance goals and recognized on a straight-line basis over the requisite service period. The estimated probable outcome of attainment of the specified performance goals is based on historical experience, and any subsequent changes in this estimate are recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs.

Performance awards generally vest at the end of a three-year measurement period based on attainment of performance goals. Our performance awards granted during 2015 and 2016 are classified as equity awards with compensation expense recognized on a straight-line basis over the requisite service period. The estimated probable outcome of attainment of the specified performance goals is based on historical experience, and any subsequent changes in this estimate for the relative ROCE performance goal are recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs.

The aggregate grant-date fair value of performance awards granted during 2017, 2016 and 2015 totaled $6.7 million, $6.1 million and $8.3 million, respectively. The aggregate fair value of performance awards vested during 2017, 2016 and 2015 totaled $2.9 million, $2.8 million and $4.6 million, respectively.

During the years ended December 31, 2017, 2016 and 2015, we recognized $8.4 million, $3.1 million and $2.9 million of compensation expense for performance awards, respectively, which was included in general and administrative expense in our consolidated statements of operations. As of December 31, 2017, there was $8.2 million of total unrecognized compensation cost related to unvested performance awards, which is expected to be recognized over a weighted-average period of 1.8 years.

Savings Plans

We have profit sharing plans (the "Ensco Savings Plan," the "Ensco Multinational Savings Plan" and the "Ensco Limited Retirement Plan"), which cover eligible employees, as defined within each plan. The Ensco Savings Plan includes a 401(k) savings plan feature, which allows eligible employees to make tax-deferred contributions to the plan. The Ensco Limited Retirement Plan also allows eligible employees to make tax-deferred contributions to the plan. Contributions made to the Ensco Multinational Savings Plan may or may not qualify for tax deferral based on each plan participant's local tax requirements.

We generally make matching cash contributions to the plans. We match 100% of the amount contributed by the employee up to a maximum of 5% of eligible salary. Matching contributions totaled $12.2 million, $16.7 million and $18.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. Any additional discretionary contributions made into the plans require approval of the Board of Directors and are generally paid in cash. We recorded additional discretionary contribution provisions of $19.2 million and $27.5 million for the years ended December 31, 2016 and 2015, respectively. Matching contributions and additional discretionary contributions become vested in 33% increments upon completion of each initial year of service with all contributions becoming fully vested subsequent to achievement of three or more years of service. We have 1.0 million shares reserved for issuance as matching contributions under the Ensco Savings Plan.