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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
The 2014 Omnibus Incentive Compensation Plan is Ameren’s long-term stock-based compensation plan for eligible employees and directors. It provides for a maximum of 8 million common shares to be available for grant to eligible employees and directors. At December 31, 2019, there were 3.1 million common shares remaining for grant. Awards may be stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, cash-based awards, and other stock-based awards. Ameren used newly issued shares to fulfill its stock-based compensation obligations for 2019 and 2018, and intends to use newly issued shares to fulfill its stock-based compensation obligations for 2020.
The following table summarizes Ameren’s nonvested performance share unit and restricted stock unit activity for the year ended December 31, 2019:
 
Performance Share Units
 
Restricted Stock Units
 
Share
Units
 
Weighted-average Fair Value per Share Unit
 
Stock
Units
 
Weighted-average Fair Value per Stock Unit
Nonvested at January 1, 2019(a)
682,811

 
$
56.58

 
155,253

 
$
57.38

Granted
304,384

 
67.42

 
132,526

 
65.89

Forfeitures
(35,120
)
 
64.40

 
(11,802
)
 
62.75

Vested and undistributed(b)
(235,275
)
 
62.28

 
(53,297
)
 
61.99

Vested and distributed
(176,923
)
 
44.13

 
(2,403
)
 
54.30

Nonvested at December 31, 2019(c)
539,877

 
$
63.79

 
220,277

 
$
61.13

(a)
Does not include 619,783 performance share units and 26,557 restricted stock units that were vested and undistributed.
(b)
Vested and undistributed units are awards that vest on a pro-rata basis due to attainment of retirement eligibility by certain employees, but have not yet been distributed. For vested and undistributed performance share units, the number of shares issued for retirement-eligible employees will vary depending on actual performance over the three-year performance period.
(c)
Does not include 503,283 of performance share units and 79,854 of restricted stock units that were vested and undistributed.
Performance Share Units
A performance share unit vests and entitles an employee to receive shares of Ameren common stock (plus accumulated dividends) if, at the end of the three-year performance period, certain specified market conditions have been met and if the individual remains employed by Ameren through the required vesting period. The vesting period for share units awarded extends beyond the three-year performance period to the payout date, which is approximately 38 months after the grant date. In the event of a participant’s death or retirement at age 55 or older with five years or more of service, awards vest on a pro-rata basis over the three-year performance period. The exact number of shares issued pursuant to a share unit varies from 0% to 200% of the target award, depending on actual company performance relative to the performance goals.
The fair value of each share unit is based on Ameren’s closing common share price at December 31st of the year prior to the award year and a Monte Carlo simulation. The Monte Carlo simulation is used to estimate expected share payout based on Ameren’s TSR for a three-year performance period relative to the designated peer group beginning January 1st of the award year. The simulation can produce a greater fair value for the share unit than the applicable closing common share price because it includes the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also include a three-year risk-free rate, Ameren’s common stock volatility, volatility for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period. The following table presents the fair value of each share unit along with the significant assumptions used to calculate the fair value of each share unit for the years ended December 31, 2019, 2018, and 2017:
 
2019
2018
2017
Fair value of share units awarded
$67.42
$62.88
$59.16
Three-year risk-free rate
2.46%
1.98%
1.47%
Ameren’s common stock volatility(a)
17%
17%
19%
Volatility range for the peer group(a)
15% – 25%
15% – 23%
15% – 21%
(a)
Based on a historical period that is equal to the remaining term of the performance period as of the grant date.
Restricted Stock Units
Restricted stock units vest and entitle an employee to receive shares of Ameren common stock (plus accumulated dividends) if the individual remains employed with Ameren through the payment date of the awards. Generally, in the event of a participant’s death or retirement at age 55 or older with five years or more of service, awards vest on a pro-rata basis. The payout date of the awards is approximately 38 months after the grant date. The fair value of each restricted stock unit is determined by Ameren’s closing common share price on the grant date.
Stock-Based Compensation Expense
The following table presents the stock-based compensation expense for the years ended December 31, 2019, 2018, and 2017:
 
2019
 
2018
 
2017
Ameren Missouri
$
4

 
$
4

 
$
4

Ameren Illinois
3

 
3

 
2

Other(a)
13

 
13

 
12

Ameren
20

 
20

 
18

Less income tax benefit
5

 
6

 
7

Stock-based compensation expense, net
$
15

 
$
14

 
$
11

(a)
Represents compensation expense for employees of Ameren Services. These amounts are not included in the Ameren Missouri and Ameren Illinois amounts above.
Ameren settled performance share units and restricted stock units of $83 million, $54 million, and $39 million for the years ended December 31, 2019, 2018, and 2017. There were no significant stock-based compensation costs capitalized during the years ended December 31, 2019, 2018, and 2017. As of December 31, 2019, total compensation cost of $28 million related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 22 months.
For the years ended December 31, 2019, 2018, and 2017, excess tax benefits associated with the settlement of stock-based compensation awards reduced income tax expense by $15 million, $6 million, and $4 million, respectively.