NOTE 5 - SHARE-BASED COMPENSATION PLANS

UAL maintains several share-based compensation plans. These plans provide for grants of qualified and non-qualified stock options, stock appreciation rights, restricted stock awards, RSUs, performance compensation awards, performance units, cash incentive awards and other types of equity-based and equity-related awards.

All awards are recorded as equity or a liability in the Company’s consolidated balance sheets. The share-based compensation expense is directly recorded in salaries and related costs or integration-related expense.

In February 2014, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan. These share-based compensation awards include approximately 0.3 million shares of restricted stock and 0.5 million of RSUs that vest pro-rata over three years on the anniversary of the grant date. The time vested RSUs are cash-settled based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. In addition, UAL granted 0.6 million RSUs that will vest based on UAL’s return on invested capital for the three years ending December 31, 2016. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date (subject to a maximum payment valued at two times the closing stock price on the grant date). The Company accounts for the RSUs as liability awards.

The following table provides information related to UAL’s share-based compensation plan cost for the years ended December 31 (in millions):


	2014		2013		2012
Compensation cost: (a)
RSUs	$	104	$	88	$	37
Restricted stock		10		11		13
Other		—		1		7

Total	$	114	$	100	$	57

(a) All compensation cost is recorded to Salaries and related costs, with the exception of $3 million, $9 million and $9 million in 2014, 2013 and 2012, respectively, that was recorded in integration-related costs as a component of special charges.

The table below summarizes UAL’s unearned compensation and weighted-average remaining period to recognize costs for all outstanding share-based awards that are probable of being achieved for the year ended December 31, 2014 (in millions, except as noted):


	Unearned Compensation		Weighted- Average Remaining Period (in years)
RSUs	$	55		1.4
Restricted stock		7		1.4

Total	$	62

RSUs and Restricted Stock. All outstanding RSUs are settled in cash. As of December 31, 2014, UAL had recorded a liability of $136 million related to its RSUs. UAL paid $86 million, $29 million and $35 million related to its share-based liabilities during 2014, 2013 and 2012, respectively.

The table below summarizes UAL’s RSUs and restricted stock activity for the years ended December 31 (shares in millions):


	RSUs		Restricted Stock		Weighted- Average Grant Price
Non-vested at December 31, 2011		3.4		1.0	$	23.33
Granted		2.0		0.5		24.01
Vested		(0.6)		(0.6)		23.05
Surrendered		(0.5)		(0.1)		24.01

Non-vested at December 31, 2012		4.3		0.8		23.94
Granted		1.8		0.5		25.98
Vested		(0.5)		(0.3)		23.93
Surrendered		(0.2)		(0.1)		24.76

Non-vested at December 31, 2013		5.4		0.9		25.02
Granted		0.9		0.3		43.33
Vested		(2.2)		(0.4)		24.66
Surrendered		(0.3)		(0.1)		28.88

Non-vested at December 31, 2014		3.8		0.7		32.55

The fair value of RSUs and restricted stock vested in 2014, 2013 and 2012 was $97 million, $22 million and $27 million, respectively. The fair value of the restricted stock awards was primarily based upon the UAL common stock price on the date of grant. These awards are accounted for as equity awards. The fair value of the RSUs was based on the UAL common stock price as of the last day preceding the settlement date. These awards were accounted for as liability awards. Restricted stock vesting and the recognition of the expense is similar to the stock option vesting described below.

Stock Options. UAL has not granted any stock options since 2010. Historically, stock options were awarded with exercise prices equal to the fair market value of UAL’s common stock on the date of grant. UAL stock options generally vested over a period of either three or four years and have a contractual life of 10 years. Expense related to each portion of an option grant was recognized on a straight-line basis over the specific vesting period for those options. The Company determined the fair value of stock options at the grant date using a Black Scholes option pricing model. As of December 31, 2014, there were approximately 1 million outstanding stock option awards, all of which were exercisable, with a weighted-average exercise price of $29.73.