Stock-Based Compensation

The current CNAF Incentive Compensation Plan (the Plan) authorizes the grant of stock-based compensation to certain management personnel for up to 11 million shares of CNAF common stock. The Plan currently provides for awards of stock options, stock appreciation rights (SARs), restricted shares, restricted stock units (RSUs), performance-based RSUs and performance share units. The number of shares available for the granting of stock-based compensation under the Plan as of December 31, 2018 was approximately 1.8 million.

The Company recorded stock-based compensation expense related to the Plan of $32 million, $36 million and $36 million for the years ended December 31, 2018, 2017 and 2016. The related income tax benefit recognized was $8 million, $18 million and $12 million for the years ended December 31, 2018, 2017 and 2016. The compensation cost not yet recognized was $44 million, and the weighted average period over which it is expected to be recognized is 1.7 years as of December 31, 2018.

Equity based compensation that is not fully vested prior to termination is generally forfeited upon termination, except in cases of retirement, death or disability, and as otherwise provided by contractual obligations.

Share Awards

The fair value of share awards is based on the market value of the Company's common stock as of the date of grant, except for awards made to foreign participants, which is based on the current market value of the Company’s common stock. Generally, RSUs vest over a two or three-year service period following the date of grant. Performance-based RSUs generally become payable within a range of 0% to 100% of the number of shares initially granted based upon the attainment of specific annual performance goals and vest ratably over a four-year service period following the date of grant. As of December 31, 2018 and 2017, the Company does not have any outstanding performance-based RSUs.

In 2016, CNA adopted the Annual Performance Share Plan (PSP). The PSP provides officers with an opportunity to earn an award based upon attainment of specific performance goals achieved over a one-year performance period. Awards are granted at the beginning of each performance year and are generally subject to a two-year cliff vesting period after the Company’s annual performance has been determined. Prior to the PSP, CNA issued performance share units under the Long Term Incentive Plan (LTI Plan). The LTI Plan had a three-year performance period and was settled during 2018. In both plans, the performance share units become payable within a range of 0% to 200% of the number of performance share units initially granted.

In 2016, CNA granted Special Supplemental Equity Awards (SSE). The awards consisted of restricted stock units subject to both Company performance in 2016 and service-based vesting up to two years. As of December 31, 2018, the Company does not have any outstanding SSE restricted stock units.

Payments made under the PSP and SSE are made entirely in shares of common stock, except for awards made to foreign participants, which are paid in cash.

The total fair value of RSUs and performance shares that vested during the years ended December 31, 2018, 2017 and 2016 was $16 million, $34 million and $12 million, respectively.

The weighted average grant date fair value for RSUs and performance shares granted during the years ended December 31, 2018, 2017 and 2016 was $51.64, $44.20 and $32.27, respectively.

The following table presents activity for non-vested RSUs and performance share units under the Plan in 2018.



	Number of Awards		Weighted-Average Grant Date Fair Value
Balance as of January 1, 2018	2,070,737		$	38.92
Awards granted	840,961		51.64
Awards vested	(463,725	)	38.62
Awards forfeited, canceled or expired	(307,719	)	40.59
Performance-based adjustment	63,894		52.00
Balance as of December 31, 2018	2,204,148		43.98