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Stock-Based Compensation (Tables)
 12 Months Ended
Dec. 31, 2016
Share-based Compensation [Abstract]  
Stock-based compensation

The following table summarizes stock-based compensation expense recognized during 2016, 2015 and 2014:

Year Ended December 31,

2016

 

2015

 

2014

(Dollars in millions)

 

 

 

 

 

 

 

 

Stock option awards

$

16 

 

$

18 

 

$

16 

Restricted stock unit awards

 

24 

 

 

20 

 

 

18 

Performance share awards

 

– 

 

 

– 

 

 

– 

Deferred compensation bonus and matching stock unit awards

 

1 

 

 

1 

 

 

1 

Awards under Non-Employee Director compensation plan

 

1 

 

 

1 

 

 

1 

Total stock-based compensation, before income taxes

 

42 

 

 

40 

 

 

36 

Income tax benefit

 

(16)

 

 

(15)

 

 

(14)

Total stock-based compensation expense, net of income taxes

$

26 

 

$

25 

 

$

22 

 
Stock-based compensation, allocation by financial statement line item

The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,

2016

 

2015

 

2014

(Dollars in millions)

 

 

 

 

 

 

 

 

Selling, general and administrative expense

$

39 

 

$

37 

 

$

33 

Cost of services and products

 

3 

 

 

3 

 

 

3 

Total stock-based compensation

$

42 

 

$

40 

 

$

36 

 
Stock-based compensation, fair value assumptions

TDS estimated the fair value of stock options granted in 2016, 2015 and 2014 using the Black Scholes valuation model and the assumptions shown in the table below:

 

2016

 

2015

 

2014

Expected life

6.2 years

 

6.1 years

 

5.8 years

Expected annual volatility rate

30.3% 

 

30.8% 

 

39.6% 

Dividend yield

2.0% 

 

1.9% 

 

2.0% 

Risk-free interest rate

1.3% 

 

1.8% 

 

1.8% 

Estimated annual forfeiture rate

2.7% 

 

3.2% 

 

2.9% 

 

 

U.S. Cellular estimated the fair value of stock options granted during 2016, 2015 and 2014 using the Black-Scholes valuation model and the assumptions shown in the table below.

 

2016

 

2015

 

2014

Expected life

4.7 years

 

4.6 years

 

4.5 years

Expected annual volatility rate

30.5%

 

30.1%

 

28.0%-28.1%

Dividend yield

0%

 

0%

 

0%

Risk-free interest rate

1.2%

 

1.2%

 

1.4%-1.5%

Estimated annual forfeiture rate

9.4%

 

9.7%

 

9.4%

 
Summary of stock options

A summary of TDS stock options (total and portion exercisable) and changes during 2016 is presented in the tables and narrative below.

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

Weighted

 

Aggregate

 

Remaining

 

 

 

 

Average

 

Intrinsic

 

Contractual

 

 

Number of

 

Exercise

 

Value

 

Life

Common Share Options

 

Options

 

Prices

 

(in millions)

 

(in years)

Outstanding at December 31, 2015

 

9,135,000 

 

$

30.29 

 

 

 

 

 

(6,009,000 exercisable)

 

 

 

 

32.54 

 

 

 

 

 

  Granted

 

694,000 

 

 

29.45 

 

 

 

 

 

  Exercised

 

(562,000)

 

 

22.92 

 

 

 

 

 

  Forfeited

 

(67,000)

 

 

28.13 

 

 

 

 

 

  Expired

 

(523,000)

 

 

42.56 

 

 

 

 

 

Outstanding at December 31, 2016

 

8,677,000 

 

$

29.98 

 

$

19 

 

4.8 

(6,167,000 exercisable)

 

 

 

$

30.59 

 

$

17 

 

3.3 

 

A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2016 is presented in the table below:

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

Weighted

 

Aggregate

 

Remaining

 

 

 

 

Average

 

Intrinsic

 

Contractual

 

 

Number of

 

Exercise

 

Value

 

Life

Common Share Options

 

Options

 

Price

 

(in millions)

 

(in years)

Outstanding at December 31, 2015

 

4,102,000 

 

$

40.62 

 

 

 

 

 

(1,849,000 exercisable)

 

 

 

 

44.33 

 

 

 

 

 

  Granted

 

898,000 

 

 

45.87 

 

 

 

 

 

  Exercised

 

(541,000)

 

 

35.34 

 

 

 

 

 

  Forfeited

 

(197,000)

 

 

39.08 

 

 

 

 

 

  Expired

 

(289,000)

 

 

50.06 

 

 

 

 

 

Outstanding at December 31, 2016

 

3,973,000 

 

$

41.92 

 

$

14 

 

6.8 

(1,937,000 exercisable)

 

 

 

$

42.54 

 

$

7 

 

5.0 

 
Summary of nonvested restricted stock units

A summary of TDS nonvested restricted stock units and changes during 2016 is presented in the table below:

Common Restricted Stock Units

 

Number

 

Weighted Average

Grant Date

Fair Value

Nonvested at December 31, 2015

 

1,044,000 

 

$

24.70 

  Granted

 

452,000 

 

$

27.87 

  Vested

 

(341,000)

 

$

21.26 

  Forfeited

 

(25,000)

 

$

26.46 

Nonvested at December 31, 2016

 

1,130,000 

 

$

26.97 

 

 

A summary of U.S. Cellular nonvested restricted stock units at December 31, 2016 and changes during the year then ended is presented in the table below:

Common Restricted Stock Units

 

Number

 

Weighted Average

Grant Date

Fair Value

Nonvested at December 31, 2015

 

1,194,000 

 

$

36.70 

  Granted

 

571,000 

 

 

43.32 

  Vested

 

(348,000)

 

 

31.52 

  Forfeited

 

(107,000)

 

 

39.28 

Nonvested at December 31, 2016

 

1,310,000 

 

$

40.74 

 
Summary of nonvested performance share awards

A summary of TDS nonvested Performance Shares and changes during 2016 is presented in the table below:

Common Performance Shares

 

Number

 

Weighted Average

Grant Date

Fair Value

Nonvested at December 31, 2015

 

– 

 

$

– 

  Granted

 

97,000 

 

$

29.45 

Nonvested at December 31, 2016

 

97,000 

 

$

29.45