14. Employee Share Plans

Employee Stock Purchase Plan

The 2007 Employee Stock Purchase Plan (“ESPP”), which has a termination date of June 30, 2017, allows qualified employees to purchase shares of common stock through payroll deductions up to a limit of $25,000 of stock per calendar year. The price an employee pays for shares is 85.0% of the fair market value of CBIZ Common Stock on the last day of the purchase period. Purchase periods begin on the sixteenth day of the month and end on the fifteenth day of the subsequent month. Other than a one-year holding period from the date of purchase, there is no vesting or other restrictions on the stock purchased by employees under the ESPP. Under the ESPP, the total number of shares of Common Stock that can be purchased shall not exceed two million shares.

Stock Awards

Effective May 15, 2014, CBIZ shareholders approved a new plan, the CBIZ, Inc. 2014 Stock Incentive Plan (“2014 Plan”). Beginning in 2015, the 2014 Plan replaced and, for future grants, superseded the previous 2002 Plan. The operating terms of the 2014 Plan are substantially similar to those of the 2002 Plan.

CBIZ granted various stock-based awards through the year ended December 31, 2015 under the 2014 Plan. The terms and vesting schedules for the stock-based awards vary by type and date of grant. Under the 2014 Plan, which expires in 2024, a maximum of 9.6 million stock options, restricted stock or other stock based compensation awards may be granted. Shares subject to award under the 2014 Plan may be either authorized but unissued shares of CBIZ common stock or treasury shares. At December 31, 2015, approximately 9.1 million shares were available for future grant under the 2014 Plan.

CBIZ utilized the Black-Scholes-Merton option-pricing model to determine the fair value of stock options on the date of grant. The fair value of stock options granted during the years ended December 31, 2015, 2014 and 2013 were $2.34, $2.25, $1.96, respectively. The following weighted average assumptions were utilized:


	2015			2014			2013
Expected volatility (1)		26.65	%		28.83	%		33.46	%
Expected option life (years) (2)		4.64			4.66			4.85
Risk-free interest rate (3)		1.32	%		1.38	%		0.75	%
Expected dividend yield (4)		0.00	%		0.00	%		0.00	%

(1)	The expected volatility assumption was determined based upon the historical volatility of CBIZ’s stock price, using daily price intervals.

(2)	The expected option life was determined based upon CBIZ’s historical data using a midpoint scenario, which assumes all options are exercised halfway between the expiration date and the weighted average time it takes the option to vest.

(3)	The risk-free interest rate assumption was upon zero-coupon U.S. Treasury bonds with a term approximating the expected life of the respective options.

(4)	The expected dividend yield assumption was determined in view of CBIZ’s historical and estimated dividend payouts. CBIZ does not expect to change its dividend payout policy in the foreseeable future.

During the years ended December 31, 2015, 2014 and 2013, CBIZ recognized compensation expense for these awards as follows (in thousands):


	2015		2014		2013
Stock options	$	2,541	$	2,576	$	2,748
Restricted stock awards		3,188		3,629		2,907

Total stock-based compensation expense before income tax benefit	$	5,729	$	6,205	$	5,655

Stock Options

Stock options granted during the years ended December 31, 2015, 2014 and 2013 were generally subject to a 25% incremental vesting schedule over a four-year period commencing from the date of grant. Stock options expire six years from the date of grant and are awarded with an exercise price equal to the market value of CBIZ common stock on the date of grant. At the discretion of the Compensation Committee of the Board of Directors, options awarded under the 2014 Plan may vest in a time period shorter than four years. Under the 2014 Plan, stock options awarded to non-employee directors have generally been granted with immediate vesting. Stock options may be granted alone or in addition to other awards and may be of two types: incentive stock options and nonqualified stock options. In the event the optionee of an incentive stock option owns, at the time such stock option is awarded or granted, more than ten percent of the voting power of all classes of stock of CBIZ, the option price shall not be less than 110% of such fair market value. During the years ended December 31, 2015, 2014 and 2013, no individual who may receive options had an ownership in excess of ten percent of the voting power of all classes of CBIZ common stock. Stock option activity during the year ended December 31, 2015 was as follows (number of options in thousands):


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2014		5,602		$	7.06
Granted		900		$	9.25
Exercised		(1,548	)	$	6.93
Expired or canceled		(69	)	$	7.10

Outstanding at December 31, 2015		4,885		$	7.50		3.41 years	$	11.5

Vested and exercisable at December 31, 2015		2,204		$	6.96		2.44 years	$	6.4

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The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2015, 2014 and 2013 was $2.1 million, $3.0 million and $3.0 million, respectively.

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The aggregate intrinsic value of stock options exercised during each of the years ended December 31, 2015, 2014 and 2013 was $4.6 million, $2.3 million and $2.0 million, respectively. The intrinsic value is calculated as the difference between CBIZ’s stock price on the exercise date and the exercise price of each option exercised.

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At December 31, 2015, CBIZ had unrecognized compensation cost for non-vested stock options of $5.8 million to be recognized over a weighted average period of approximately 1.3 years.

Restricted Stock Awards

Under the 2014 Plan, certain employees and non-employee directors were granted restricted stock awards. Restricted stock awards are independent of option grants and are granted at no cost to the recipients. The awards are subject to forfeiture if employment terminates prior to the release of restrictions, generally one to four years from the date of grant. Recipients of restricted stock awards are entitled to the same dividend and voting rights as holders of other CBIZ common stock, subject to certain restrictions during the vesting period, and the awards are considered to be issued and outstanding from the date of grant. Shares granted under the 2014 Plan cannot be sold, pledged, transferred or assigned during the vesting period.

Restricted stock award activity during the year ended December 31, 2015 was as follows:


	Number of Shares (in thousands)			Weighted Average Grant-Date Fair Value (1)
Non-vested at December 31, 2014		1,039		$	7.30
Granted		362		$	9.12
Vested		(437	)	$	7.11
Forfeited		(2	)	$	6.36

Non-vested at December 31, 2015		962		$	8.08

(1)	Represents weighted average market value of the shares as the awards are granted at no cost to the recipients.

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At December 31, 2015, CBIZ had unrecognized compensation cost for restricted stock awards of $7.8 million to be recognized over a weighted average period of approximately 1.2 years.

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The total fair value of shares vested during the years ended December 31, 2015, 2014 and 2013 was approximately $3.1 million, $3.5 million and $3.0 million, respectively.

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The market value of shares awarded during the years ended December 31, 2015, 2014 and 2013 was $3.3 million, $4.1 million and $3.4 million, respectively. This market value was recorded as unearned compensation and is being expensed ratably over the periods which the restrictions lapse.

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Awards outstanding at December 31, 2015 will be released from restrictions at dates ranging from February 2016 through May 2019.