Stock-Based Compensation

On March 18, 2014, our board of directors approved the Omnibus Stock Incentive Plan (the “Stock Plan”) and reserved 8,000,000 shares of our common stock for stock-based awards. Under the Stock Plan, the board of directors is authorized to grant awards of options to purchase shares of our common stock (the “Outdoor Options”), stock appreciation rights, restricted and unrestricted stock, restricted share units (“RSUs”), dividend equivalents, performance awards, including performance-based restricted share units (“PRSUs”), and other equity-related awards and cash payments to all of our employees and non-employee directors and employees of our subsidiaries. In addition, consultants and advisors who perform services for us and our subsidiaries may, under certain conditions, receive grants under our Stock Plan.

RSUs and PRSUs accrue dividend equivalents in amounts equal to the regular cash dividends paid on our common stock and will be paid in either cash or stock. Accrued dividend equivalents payable in stock shall convert to shares of our common stock on the date of vesting.

The Stock Plan also provides for the treatment of awards held by our employees that were originally granted under various CBS stock plans. Prior to our IPO, certain of our employees were granted awards of RSUs, PRSUs and stock options for CBS Class B common stock under the CBS equity incentive plans. At the time of the IPO, substantially all outstanding RSUs and PRSUs for CBS Class B common stock (the “CBS RSUs”) were converted into RSUs and PRSUs for our common stock (the “Outdoor RSUs”) under the Stock Plan.

Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant and expensed over the vesting period, which is generally a three- to four-year service period. For PRSU awards, the number of shares an employee earns may range from 0% to 120% based on the outcome of a one year performance condition. Compensation expense is recorded based on the probable outcome of the performance condition. On an annual basis, the board of directors will review actual performance and certify the degree to which performance goals applicable to the award have been met. Forfeitures of RSUs are estimated on the date of grant based on historical forfeiture rates. On an annual basis, adjustments are made to compensation expense based on actual forfeitures and the forfeiture rates are revised as necessary.

The following table summarizes our stock-based compensation expense for the three months and nine months ended September 30, 2014 and 2013.



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2014			2013			2014			2013
RSUs and PRSUs	$	4.7		$	2.5		$	9.0		$	5.4
Stock options	1.5			0.1			1.9			0.4
Stock-based compensation expense, before income taxes	6.2			2.6			10.9			5.8
Tax benefit	(0.7		)	(1.1		)	(2.8		)	(2.4		)
Stock-based compensation expense, net of tax	$	5.5		$	1.5		$	8.1		$	3.4

As of September 30, 2014, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $20.6 million, which is expected to be recognized over a weighted average period of 2.9 years, and total unrecognized compensation cost related to non-vested stock options was $0.9 million, which is expected to be recognized over a weighted average period of 2.6 years.

RSUs and PRSUs

On March 27, 2014, 256,172 non-vested CBS RSUs held by our employees were converted into 561,021 non-vested Outdoor RSUs. The number of RSUs was converted at a ratio of approximately 2.2 to 1.0 to preserve the fair value of the awards both before and after conversion.

The following table summarizes the activity of the RSUs and PRSUs issued to our employees.



	CBS RSUs				Outdoor RSUs
	Activity		Weighted Average Per Share Grant Date Fair Market Value		Activity		Weighted Average Per Share Grant Date Fair Market Value		RSU and PRSU Dividend Equivalents
Non-vested as of December 31, 2013	472,490		$	32.09
Employee transfers and grants	11,875		34.66
Vested	(157,723	)	22.51
Forfeited	(2,909	)	37.67
Non-vested before conversion	323,733		36.80
CBS RSUs converted to Outdoor RSUs	(256,172	)	37.77
Non-vested Outdoor RSUs converted from CBS RSUs					561,021		$	17.24
Non-vested CBS RSUs not converted to Outdoor RSUs^(a)	67,561		33.16
Granted:
RSUs					478,311		29.59
PRSUs					168,468		29.70
Dividend equivalents									10,032
Vested:
RSUs	(67,561	)	33.16		(5,848	)	25.91
PRSUs					(6,955	)	25.88
Forfeitures:
RSUs					(27,965	)	24.39
PRSUs					(15,289	)	26.39
Dividend equivalents									(2	)
Non-vested as of September 30, 2014	—		—		1,151,743		23.78		10,030


(a)	Reflects CBS RSUs which vested in April 2014.

Stock Options

On July 16, 2014, 219,741 outstanding CBS stock options held by our active employees were converted into 409,207 Outdoor Options. Vested outstanding CBS stock options held by former employees of the Company were not converted into Outdoor Options. The CBS stock options were converted at a ratio of approximately 1.9 to 1.0 to preserve the intrinsic value of the award at the time of conversion.

The following table summarizes the activity of CBS’ stock options issued to our employees.



	CBS Stock Options		CBS Weighted Average Exercise Price		Outdoor Stock Options		Outdoor Weighted Average Exercise Price
Outstanding as of December 31, 2013	399,581		$	29.30
Exercised	(123,260	)	22.04
Forfeited or expired	(38,523	)	30.75
CBS stock options converted to Outdoor stock options	(219,741	)	33.27
Outstanding Outdoor stock options converted from CBS stock options					409,207		$	17.87
Exercised					(2,426	)	14.71
Forfeited or expired					(16,170	)	23.08
Outstanding as of September 30, 2014	18,057		27.38		390,611		17.67

Exercisable as of September 30, 2014	18,057		27.38		166,234		12.29