STOCK-BASED COMPENSATION

The 2014 Incentive Plan is Ameren’s long-term stock-based compensation plan for eligible employees and directors. The 2014 Incentive Plan provides for a maximum of 8 million common shares to be available for grant to eligible employees and directors. At December 31, 2018, there were 3.8 million common shares remaining for grant under the 2014 Incentive Plan. The 2014 Incentive Plan awards may be stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, cash-based awards, and other stock-based awards. Ameren used newly issued shares to fulfill its stock-based compensation obligations for 2018 and intends to use newly issued shares to fulfill its stock-based compensation obligations for 2019.

The following table summarizes Ameren’s nonvested performance share unit and restricted stock unit activity for the year ended December 31, 2018:



	Performance Share Units				Restricted Stock Units
	Share Units		Weighted-average Fair Value per Share Unit		Stock Units		Weighted-average Fair Value per Stock Unit
Nonvested at January 1, 2018^(a)	895,489		$	52.28	—		$	—
Granted	316,875		62.88		187,273		57.66
Forfeitures	(65,106	)	51.11		(5,463	)	58.99
Vested and undistributed^(b)	(288,404	)	53.63		(26,557	)	59.02
Vested and distributed	(176,043	)	52.88		—		—
Nonvested at December 31, 2018^(c)	682,811		$	56.58	155,253		$	57.38


(a)	Does not include 712,572 undistributed vested performance share units.


(b)	Vested and undistributed units are awards that vested due to attainment of retirement eligibility by certain employees, but have not yet been distributed. For vested and undistributed performance share units, the number of shares issued for retirement-eligible employees will vary depending on actual performance over the three-year performance period.


(c)	Does not include 619,783 of vested and undistributed performance share units and 26,557 of vested and undistributed restricted stock units.

Performance Share Units

A performance share unit vests and entitles an employee to receive shares of Ameren common stock (plus accumulated dividends) if, at the end of the three-year performance period, certain specified market conditions have been met and if the individual remains employed by Ameren through the required vesting period. The vesting period for share units awarded extends beyond the three-year performance period to the payout date, which is approximately 38 months after the grant date. In the event of a participant’s death or retirement at age 55 or older with five or more years of service, awards vest on a pro rata basis over the three-year performance period. The exact number of shares issued pursuant to a share unit varies from 0% to 200% of the target award, depending on actual company performance relative to the performance goals.

The fair value of each share unit awarded under the 2014 Incentive Plan is based on Ameren’s closing common share price at December 31st of the year prior to the award year and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total shareholder return for a three-year performance period relative to the designated peer group beginning January 1st of the award year. The simulations can produce a greater fair value for the share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also include a three-year risk-free rate, volatility for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period. The following table presents the fair value of each share unit awarded under the 2014 Incentive Plan along with the significant assumptions used to calculate the fair value of each share unit for the years ended December 31, 2018, 2017, and 2016:



	2018	2017	2016
Fair value of share units awarded	$62.88	$59.16	$44.13
Ameren’s closing common share price at December 31 of the prior year	$61.69	$52.46	$43.23
Three-year risk-free rate	1.98%	1.47%	1.31%
Volatility range for the peer group^(a)	15% – 23%	15% – 21%	15% – 20%


(a)	Based on a historical period that is equal to the remaining term of the performance period as of the grant date.

Restricted Stock Units

Restricted stock units vest and entitle an employee to receive shares of Ameren common stock (plus accumulated dividends) if the individual remains employed with Ameren through the payment date of the awards. Generally, in the event of a participant’s death or retirement at age 55 or older with five or more years of service, awards vest on a pro rata basis. The payout date of the awards is approximately 38 months after the grant date. The fair value of each restricted stock unit is determined by Ameren’s closing common share price on the grant date.

Stock-Based Compensation Expense

The following table presents the stock-based compensation expense for the years ended December 31, 2018, 2017, and 2016:



	2018		2017		2016
Ameren Missouri	$	4	$	4	$	4
Ameren Illinois	3		2		2
Other^(a)	13		12		11
Ameren	20		18		17
Less income tax benefit	6		7		6
Stock-based compensation expense, net	$	14	$	11	$	11


(a)	Represents compensation expense of employees of Ameren Services. These amounts are not included in the Ameren Missouri and Ameren Illinois amounts above.

Ameren settled performance share units and restricted stock units of $54 million, $39 million, and $83 million for the years ended December 31, 2018, 2017, and 2016. There were no significant stock-based compensation costs capitalized during the years ended December 31, 2018, 2017, and 2016. As of December 31, 2018, total compensation cost of $29 million related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 22 months.

Ameren realized income tax benefits for settled performance share units of $13 million, $15 million, and $31 million for the years ended December 31, 2018, 2017, and 2016.