Stock-Based Employee Compensation

The Company has two equity award plans, the 2004 Plan and the SCL Equity Plan, which are described below. The plans provide for the granting of equity awards pursuant to the applicable provisions of the Internal Revenue Code and regulations.

Las Vegas Sands Corp. 2004 Equity Award Plan

The Company adopted the 2004 Plan for grants of options to purchase its common stock. The purpose of the 2004 Plan is to give the Company a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide the Company with a stock plan providing incentives directly related to increases in its stockholder value. Any of the Company's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the 2004 Plan. The 2004 Plan provides for an aggregate of 26,344,000 shares of the Company's common stock to be available for awards. The 2004 Plan originally had a term of ten years, but in June 2014, the Company's Board of Directors approved an amendment to the 2004 Plan, extending the term to December 2019. The compensation committee may grant awards of nonqualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. As of December 31, 2017, there were 3,601,138 shares available for grant under the 2004 Plan.

Stock option awards are granted with an exercise price equal to the fair market value (as defined in the 2004 Plan) of the Company's stock on the date of grant. The outstanding stock options generally vest over three to four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting, is recognized on a straight-line basis over the awards' respective requisite service periods. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on the Company's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.

Sands China Ltd. Equity Award Plan

The Company's subsidiary, SCL, adopted an equity award plan (the "SCL Equity Plan") in November 2009 for grants of options to purchase ordinary shares of SCL. The purpose of the SCL Equity Plan is to give SCL a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide SCL with a stock plan providing incentives directly related to increases in its stockholder value. Subject to certain criteria as defined in the SCL Equity Plan, SCL's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the SCL Equity Plan. The SCL Equity Plan provides for an aggregate of 804,786,508 shares of SCL's common stock to be available for awards. The SCL Equity Plan has a term of ten years and no further awards may be granted after the expiration of the term. SCL's remuneration committee may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. As of December 31, 2017, there were 729,981,851 shares available for grant under the SCL Equity Plan.

Stock option awards are granted with an exercise price not less than (i) the closing price of SCL's stock on the date of grant or (ii) the average closing price of SCL's stock for the five business days immediately preceding the date of grant. The outstanding stock options generally vest over four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting is recognized on a straight-line basis over the awards' respective requisite service periods. SCL estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on SCL's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the Hong Kong Government Bond rate in effect at the time of the grant for stock options granted subsequent to March 31, 2015 and based on the Hong Kong Exchange Fund Note rate in effect at the time of the grant for stock options granted on or before March 31, 2015. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.

Stock-Based Employee Compensation Activity

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:



	Year Ended December 31,
	2017		2016		2015
LVSC 2004 Plan:
Weighted average volatility	26.7	%	33.5	%	37.3	%
Expected term (in years)	5.1		5.6		5.8
Risk-free rate	1.9	%	1.4	%	1.3	%
Expected dividend yield	4.7	%	5.7	%	4.7	%
SCL Equity Plan:
Weighted average volatility	36.9	%	40.8	%	40.4	%
Expected term (in years)	4.4		4.4		4.0
Risk-free rate	1.3	%	1.2	%	0.7	%
Expected dividend yield	6.6	%	5.5	%	5.6	%

A summary of the stock option activity for the Company's equity award plans for the year ended December 31, 2017, is presented below:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
LVSC 2004 Plan:
Outstanding as of January 1, 2017	7,302,364		$	59.80
Granted	1,027,108		61.96
Exercised	(617,612	)	45.98
Forfeited or expired	(1,421,113	)	77.88
Outstanding as of December 31, 2017	6,290,747		$	57.43	6.46	$	81
Exercisable as of December 31, 2017	2,463,572		$	59.08	3.89	$	31
SCL Equity Plan:
Outstanding as of January 1, 2017	38,185,021		$	4.48
Granted	17,364,000		4.23
Exercised	(3,287,521	)	3.61
Forfeited or expired	(4,009,525	)	5.20
Outstanding as of December 31, 2017	48,251,975		$	4.39	7.82	$	54
Exercisable as of December 31, 2017	14,607,550		$	5.02	6.20	$	14

A summary of the unvested restricted stock and stock units under the Company's equity award plans for the year ended December 31, 2017, is presented below:



	Shares		Weighted Average Grant Date Fair Value
LVSC 2004 Plan:
Unvested Restricted Stock
Balance as of January 1, 2017	97,053		$	51.11
Granted	37,270		58.51
Vested	(60,042	)	55.64
Forfeited	—		—
Balance as of December 31, 2017	74,281		$	51.17
Unvested Restricted Stock Units
Balance as of January 1, 2017	73,150		$	61.59
Granted	—		—
Vested	(64,150	)	60.77
Forfeited	(4,000	)	60.24
Balance as of December 31, 2017	5,000		$	73.20
SCL Equity Plan:
Unvested Restricted Stock Units, Equity-Settled
Balance as of January 1, 2017	852,000		$	7.51
Granted	—		—
Vested	—		—
Modified to cash-settled	(852,000	)	7.51
Forfeited	—		—
Balance as of December 31, 2017	—		$	—
Unvested Restricted Stock Units, Cash-Settled
Balance as of January 1, 2017	235,636		$	7.13
Granted	—		—
Modified from equity-settled	852,000		7.51
Vested	(235,636	)	7.13
Forfeited	—		—
Balance as of December 31, 2017	852,000		$	7.51

As a result of SCL cash-settling and planning to cash-settle certain future unvested restricted share units on their vesting dates, 852,000 outstanding restricted stock units under the SCL Equity Plan were modified from equity awards to cash-settled liability awards during the year ended December 31, 2017. The modification affected four employees and resulted in no additional compensation expense. The fair value of these awards is remeasured each reporting period until the vesting dates. Upon settlement, SCL will pay the grantees an amount in cash calculated based on the higher of (i) the closing price of SCL's shares on the vesting date, and (ii) the average closing price of SCL's shares for the five trading days immediately preceding the vesting date. During the year ended December 31, 2017, SCL paid $3 million to settle vested restricted share units that were previously classified as equity awards. The accrued liability associated with these cash-settled restricted stock units was $4 million as of December 31, 2017.

As of December 31, 2017, under the 2004 Plan there was $32 million of unrecognized compensation cost related to unvested stock options. The stock option and restricted stock and stock unit costs are expected to be recognized over a weighted average period of 2.2 years and 0.4 years, respectively.

As of December 31, 2017, under the SCL Equity Plan there was $20 million of unrecognized compensation cost related to unvested stock options. The stock option and restricted stock unit costs are expected to be recognized over a weighted average period of 2.6 years and 0.2 years, respectively.

The stock-based compensation activity for the 2004 Plan and SCL Equity Plan is as follows for the three years ended December 31, 2017:



	Year Ended December 31,
	2017		2016		2015
	(Dollars in millions, except weighted average grant date fair values)
Compensation expense:
Stock options	$	29	$	25	$	26
Restricted stock and stock units	5		10		20
	$	34	$	35	$	46
Income tax benefit recognized in the consolidated statements of operations	$	7	$	6	$	7
LVSC 2004 Plan:
Stock options granted	1,027,108		1,672,458		441,809
Weighted average grant date fair value	$	8.95	$	8.62	$	11.97
Restricted stock granted	37,270		61,546		49,438
Weighted average grant date fair value	$	58.51	$	42.50	$	59.57
Stock options exercised:
Intrinsic value	$	11	$	3	$	25
Cash received	$	28	$	11	$	13
SCL Equity Plan:
Stock options granted	17,364,000		18,407,200		6,744,000
Weighted average grant date fair value	$	0.71	$	0.73	$	0.76
Equity-settled restricted stock units granted	—		—		118,800
Weighted average grant date fair value	$	—	$	—	$	4.90
Stock options exercised:
Intrinsic value	$	4	$	2	$	3
Cash received	$	12	$	6	$	4