Note 11 – Employee Compensation and Benefit Plans

On February 14, 2018, our Board of Directors adopted, and on June 13, 2018, our stockholders approved an amendment (the “Amendment”) to the 2013 Omnibus Incentive Plan (as amended, the “Plan”) which increased the number of shares authorized for issuance under the Plan by 18,500,000 shares. On June 18, 2018, we filed a Form S-8 to register a total of 19,345,005 shares of common stock pursuant to the Plan, representing those covered by the Amendment, certain other predecessor plans, and certain equity arrangements assumed in connection with the acquisition of Layer3 TV in January 2018.

During the year ended December 31, 2018, we granted or assumed an aggregate of 6,259,169 RSUs and restricted stock awards (“RSAs”) to eligible employees, certain non-employee directors, and eligible key executives, which primarily included annual awards. RSUs entitle the grantee to receive shares of our common stock at the end of a vesting period of generally up to three years, subject to continued service through the applicable vesting date.

During the year ended December 31, 2018, we granted an aggregate of 3,364,629 PRSUs to eligible key executives, which primarily included annual awards and an aggregate of 1,317,386 PRSUs to certain executive officers in connection with the entry into the Business Combination Agreement with Sprint. PRSUs entitle the holder to receive shares of our common stock at the end of a performance period of generally up to three years, based on the attainment of the applicable performance goals and generally subject to continued employment through the applicable performance period. The number of shares ultimately received by the holder of PRSUs is dependent on our business performance against the specified performance goal(s) over a pre-established performance period.

As discussed in Note 2 – Business Combinations, in January 2018 we completed our acquisition of Layer3 TV. The fair value of share-based incentive compensation awards attributable to post-combination services was approximately $30 million.

Stock-based compensation expense and related income tax benefits were as follows:



(in millions, except shares, per share and contractual life amounts)	December 31, 2018		December 31, 2017		December 31, 2016
Stock-based compensation expense	$	424	$	306	$	235
Income tax benefit related to stock-based compensation	81		73		80
Weighted average fair value per stock award granted	61.52		60.21		45.07
Unrecognized compensation expense	547		445		389
Weighted average period to be recognized (years)	1.8		1.9		2.0
Fair value of stock awards vested	471		503		354

Stock Awards

Time-Based Restricted Stock Units and Restricted Stock Awards



(in millions, except shares, per share and contractual life amounts)	Number of Units or Awards	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested, December 31, 2017	12,061,608	$	50.69	1.1	$	766
Granted	6,259,169	60.44
Vested	6,455,617	47.89
Forfeited	854,525	56.90
Nonvested, December 31, 2018	11,010,635	$	57.66	1.0	$	700

Performance-Based Restricted Stock Units and Restricted Stock Awards



(in millions, except shares, per share and contractual life amounts)	Number of Units or Awards	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested, December 31, 2017	1,633,935	$	48.06	1.1	$	104
Granted	3,364,629	63.54
Vested	1,006,769	36.47
Forfeited	140,241	64.14
Nonvested, December 31, 2018	3,851,554	$	64.03	1.6	$	245

PRSUs included in the table above are shown at target. Share payout can range from 0% to 200% based on different performance outcomes.

Payment of the underlying shares in connection with the vesting of stock awards generally triggers a tax obligation for the employee, which is required to be remitted to the relevant tax authorities. We have agreed to withhold shares of common stock otherwise issuable under the award to cover certain of these tax obligations, with the net shares issued to the employee accounted for as outstanding common stock. We withheld 2,321,827 and 2,754,721 shares of common stock to cover tax obligations associated with the payment of shares upon vesting of stock awards and remitted cash of $146 million and $166 million to the appropriate tax authorities for the years ended December 31, 2018 and 2017, respectively.

Employee Stock Purchase Plan

Our employee stock purchase plan (“ESPP”) allows eligible employees to contribute up to 15% of their eligible earnings toward the semi-annual purchase of our common stock at a discounted price, subject to an annual maximum dollar amount. Employees can purchase stock at a 15% discount applied to the closing stock price on the first or last day of the six-month offering period, whichever price is lower. The number of shares issued under our ESPP was 2,011,794 and 1,832,043 for the years ended December 31, 2018 and 2017, respectively.

Stock Options

Stock options outstanding relate to the Metro Communications, Inc. 2010 Equity Incentive Compensation Plan, the Amended and Restated Metro Communications, Inc. 2004 Equity Incentive Compensation Plan, the Second Amended and Restated 1995 Stock Option Plan and the Layer3 TV, Inc. 2013 Stock Plan (collectively, the “Stock Option Plans”). No new awards have been or may be granted under the Stock Option Plans.

The following activity occurred under the Stock Option Plans:



	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding and exercisable, December 31, 2017	373,158	$	16.36	2.8
Assumed through acquisition of Layer3 TV	118,645	15.51
Exercised	187,965	18.28
Expired/canceled	19,027	18.81
Outstanding at December 31, 2018	284,811	14.58		3.8
Exercisable at December 31, 2018	244,224	14.18		3.1

Stock options exercised under the Stock Option Plans generated proceeds of approximately $3 million and $21 million for the years ended December 31, 2018 and 2017, respectively.

Employee Retirement Savings Plan

We sponsor a retirement savings plan for the majority of our employees under Section 401(k) of the Internal Revenue Code and similar plans. The plans allow employees to contribute a portion of their pretax income in accordance with specified guidelines. The plans provide that we match a percentage of employee contributions up to certain limits. Employer matching contributions were $102 million, $87 million and $83 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Legacy Long-Term Incentive Plan

Prior to the business combination with MetroPCS Communications, Inc., we maintained a performance-based Long-Term Incentive Plan (“LTIP”) which aligned to our long-term business strategy. As of December 31, 2018 and 2017, there were no LTIP awards outstanding and no new awards are expected to be granted under the LTIP. There was no compensation expense reported within operating expenses related to our LTIP for the years ended December 31, 2018, 2017 and 2016. There were no payments to participants related to our LTIP for the years ended December 31, 2018 and 2017. Payments were $52 million for the year ended December 31, 2016.