Stock-Based Compensation

Equity Classified Share-Based Awards

Stock-based compensation expense recognized for our equity classified share-based awards was $8 million and $7 million for the three months ended June 30, 2016 and 2015, respectively, and $15 million and $16 million for the six months ended June 30, 2016 and 2015, respectively. We did not record any significant tax benefits related to stock-based compensation expense in any period as we are not benefiting from a significant portion of our deferred tax assets, including deductions related to stock-based compensation expense. In addition, we did not capitalize any stock-based compensation expense as part of the cost of an asset for the six months ended June 30, 2016 and 2015. At June 30, 2016, there was unrecognized compensation cost of $38 million related to restricted stock which is expected to be recognized over a weighted average period of 1.7 years. We issue new shares from our share reserves set aside for the Calpine Equity Incentive Plans when stock options are exercised and for other share-based awards.

A summary of our restricted stock and restricted stock unit activity for the Calpine Equity Incentive Plans for the six months ended June 30, 2016, is as follows:



	Number of Restricted Stock Awards	Weighted Average Grant-Date Fair Value
Nonvested — December 31, 2015	3,528,270	$	19.91
Granted	2,941,831	$	12.40
Forfeited	166,018	$	16.32
Vested	1,275,797	$	19.01
Nonvested — June 30, 2016	5,028,286	$	15.86

The total fair value of our restricted stock and restricted stock units that vested during the six months ended June 30, 2016 and 2015 was approximately $16 million and $33 million, respectively.

Liability Classified Share-Based Awards

During the first quarter of 2016, our Board of Directors approved the award of performance share units to certain senior management employees. These performance share units will be settled in cash with payouts based on the relative performance of Calpine’s TSR over the three-year performance period of January 1, 2016 through December 31, 2018 compared with the TSR performance of the S&P 500 companies over the same period, as modified by the IPP Sector Modifier which may either increase or decrease the payout based on Calpine’s TSR within its IPP Peers. The performance share units vest on the last day of the performance period and will be settled in cash; thus, these awards are liability classified and are measured at fair value using a Monte Carlo simulation model at each reporting date until settlement. Stock-based compensation expense recognized related to our liability classified share-based awards was nil and $(6) million for the three months ended June 30, 2016 and 2015, respectively, and $2 million and $(4) million for the six months ended June 30, 2016 and 2015, respectively.

A summary of our performance share unit activity for the six months ended June 30, 2016, is as follows:



	Number of Performance Share Units	Weighted Average Grant-Date Fair Value
Nonvested — December 31, 2015	517,906	$	23.36
Granted	657,807	$	14.81
Vested⁽¹⁾	3,249	$	23.91
Nonvested — June 30, 2016	1,172,464	$	18.56

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(1)	In accordance with the applicable performance share unit agreements, performance share units granted to employees who meet the retirement eligibility requirements stipulated in the Equity Plan are fully vested upon the later of the date on which the employee becomes eligible to retire or one-year anniversary of the grant date.

For a further discussion of the Calpine Equity Incentive Plans, see Note 12 in our 2015 Form 10-K.