5.	Share-Based Compensation

In the second quarter of 2017, Devon’s stockholders approved the 2017 Plan. The 2017 Plan replaces the 2015 Plan. From the effective date of the 2017 Plan, no further awards may be made under the 2015 Plan, and awards previously granted will continue to be governed by the terms of the respective award documents. Subject to the terms of the 2017 Plan, awards may be made for a total of 33.5 million shares of Devon common stock, plus the number of shares available for issuance under the 2015 Plan (including shares subject to outstanding awards that were transferred to the 2017 Plan in accordance with its terms). The 2017 Plan authorizes the Compensation Committee, which consists of independent, non-management members of Devon’s Board of Directors, to grant nonqualified and incentive stock options, restricted stock awards or units, Canadian restricted stock units, performance units and stock appreciation rights to eligible employees. The 2017 Plan also authorizes the grant of nonqualified stock options, restricted stock awards or units and stock appreciation rights to non-employee directors. To calculate the number of shares that may be granted in awards under the 2017 Plan, options and stock appreciation rights represent one share and other awards represent 2.3 shares.

The vesting for certain share-based awards was accelerated in 2016 in conjunction with the reduction of workforce described in Note 7. Approximately $60 million of associated expense for these accelerated awards is included in other expenses in the accompanying consolidated comprehensive statements of earnings.

The table below presents the share-based compensation expense included in Devon’s accompanying consolidated comprehensive statements of earnings.

	Year Ended December 31,
	2017		2016		2015
G&A	$	141	$	124	$	185
Exploration expenses		7		6		9
Total Devon		148		130		194
G&A		37		24		31
Marketing and midstream expenses		11		7		5
Total EnLink		48		31		36
Total	$	196	$	161	$	230
Related income tax benefit	$	6	$	6	$	67

The following table presents a summary of Devon’s unvested restricted stock awards and units, performance-based restricted stock awards and performance share units granted under the plans.

	Restricted Stock					Performance-Based					Performance
	Awards and Units					Restricted Stock Awards					Share Units
	Awards and Units			Weighted Average Grant-Date Fair Value		Awards			Weighted Average Grant-Date Fair Value		Units					Weighted Average Grant-Date Fair Value
	(Thousands, except fair value data)
Unvested at 12/31/16		6,407		$	34.40		585		$	37.60		2,604				$	46.66
Granted		2,691		$	44.87		223		$	44.85		1,010				$	52.58
Vested		(2,431	)	$	39.51		(233	)	$	41.27		(832	)			$	78.19
Forfeited		(339	)	$	35.92		—		$	—		(24	)			$	40.70
Unvested at 12/31/17		6,328		$	36.81		575		$	38.92		2,758		⁽¹	⁾	$	41.21

(1)	A maximum of 5.5 million common shares could be awarded based upon Devon’s final TSR ranking.

The following table presents the aggregate fair value of awards and units that vested during the indicated period.

	2017		2016		2015
Restricted Stock Awards and Units	$	105	$	73	$	101
Performance-Based Restricted Stock Awards	$	10	$	5	$	8
Performance Share Units	$	38	$	13	$	22

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of December 31, 2017.

			Performance-Based
	Restricted Stock		Restricted Stock		Performance
	Awards and Units		Awards		Share Units
Unrecognized compensation cost	$	135	$	5	$	28
Weighted average period for recognition (years)		2.4		1.6		1.9

Restricted Stock Awards and Units

Restricted stock awards and units are subject to the terms, conditions, restrictions and limitations, if any, that the Compensation Committee deems appropriate, including restrictions on continued employment. Generally, the service requirement for vesting ranges from one to four years. During the vesting period, recipients of restricted stock awards made under the 2015 Plan or 2009 Plan receive dividends that are not subject to restrictions or other limitations. However, dividends declared during the vesting period with respect to restricted stock awards made under the 2017 Plan and all restricted stock units will not be paid until the underlying award vests. Devon estimates the fair values of restricted stock awards and units as the closing price of Devon’s common stock on the grant date of the award or unit, which is expensed over the applicable vesting period.

Performance-Based Restricted Stock Awards

Performance-based restricted stock awards are granted to certain members of Devon’s senior management. Vesting of the awards is dependent on Devon meeting certain internal performance targets and the recipient meeting certain service requirements. Generally, the service requirement for vesting ranges from one to four years. In order for awards to vest, the performance target must be met in the first year. If the performance target is met, the recipient is entitled to dividends under the same terms described above for nonperformance-based restricted stock. If the performance target and service period requirements are not met, the award does not vest. Devon estimates the fair values of the awards as the closing price of Devon’s common stock on the grant date of the award, which is expensed over the applicable vesting period.

Performance Share Units

Performance share units are granted to certain members of Devon’s management and senior employees. Each unit that vests entitles the recipient to one share of Devon common stock. The vesting of these units is based on comparing Devon’s TSR to the TSR of a predetermined group of fourteen peer companies over the specified three-year performance period. The vesting of units may be between zero and 200% of the units granted depending on Devon’s TSR as compared to the peer group on the vesting date.

At the end of the vesting period, recipients receive dividend equivalents with respect to the number of units vested. The fair value of each performance share unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all grants made under the plan: (i) a risk-free interest rate based on U.S. Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of Devon and the designated peer group; and (iii) an estimated ranking of Devon among the designated peer group. The fair value of the unit on the date of grant is expensed over the applicable vesting period. The following table presents the assumptions related to performance share units granted.

	2017					2016					2015
Grant-date fair value	$	51.05	—	$	53.12	$	9.24	—	$	10.61	$	81.99	—	$	85.05
Risk-free interest rate	1.50%					0.94%					1.06%
Volatility factor	45.8%					37.7%					26.2%
Contractual term (years)	2.89					2.83					2.89

Stock Options

In accordance with Devon’s incentive plans, the exercise price of stock options granted may not be less than the market value of the stock at the date of grant. In addition, options granted are exercisable during a period established for each grant, which may not exceed eight years from the date of grant. The recipient must pay the exercise price in cash or in common stock, or a combination thereof, at the time that the option is exercised. Generally, the service requirement for vesting ranges from one to four years. The fair value of stock options on the date of grant is expensed over the applicable vesting period. No stock options were granted in 2017, 2016 and 2015. The following table presents a summary of Devon’s outstanding stock options.

				Weighted Average
	Options			Exercise Price		Remaining Term		Intrinsic Value
	(Thousands)					(Years)
Outstanding at December 31, 2016		2,532		$	68.06
Expired		(786	)	$	63.67
Outstanding at December 31, 2017		1,746		$	70.04		1.33	$	—
Exercisable at December 31, 2017		1,746		$	70.04		1.33	$	—

The aggregate intrinsic value of stock options that were exercised during 2015 was $0.2 million. As of December 31, 2017, Devon had no unrecognized compensation cost related to unvested stock options.

EnLink Share-Based Awards

In March 2017, the General Partner and EnLink issued restricted incentive units as bonus payments to officers and certain employees. The combined grant date fair value was $10 million, and the total cost was recognized in the first quarter of 2017 due to the awards vesting immediately.

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with the General Partner’s and EnLink’s unvested restricted incentive units and performance units as of December 31, 2017.

	General Partner				EnLink
	Restricted		Performance		Restricted		Performance
	Incentive Units		Units		Incentive Units		Units
Unrecognized compensation cost	$	11	$	5	$	12	$	5
Weighted average period for recognition (years)		1.7		1.8		1.7		1.8