Stock Incentive Plans

For the quarters ended July 3, 2015 and July 4, 2014, the Company recognized stock-based compensation (benefit) expense as follows:



	Quarter Ended
(Amounts in millions)	July 3, 2015			July 4, 2014
Cost of services	(11		)	6
Selling, general and administrative	(1		)	13
Total	$	(12	)	$	19
Total, net of tax	$	(8	)	$	13

Stock-based compensation for the first quarter of fiscal 2016 was a benefit of $12 million as compared to an expense of $19 million in the first quarter of fiscal 2015. The decrease in stock-based compensation was due to current quarter employee terminations, forfeitures as of the annual vesting date which occurs during the first quarter, and changes in the assumed forfeiture rate. The impact of changes in forfeiture rate estimates was approximately $15 million.

The Company uses the Black-Scholes-Merton model in determining the fair value of stock options granted. The weighted average grant-date fair values of stock options granted during the quarter ended July 3, 2015 and July 4, 2014 were $20.10 and $18.35 per share, respectively. In calculating the compensation expense for its stock incentive plans, the Company used the following weighted-average assumptions:



	Quarter Ended
	July 3, 2015		July 4, 2014
Risk-free interest rate	1.80	%	2.07	%
Expected volatility	32	%	33	%
Expected term (in years)	6.22		6.20
Dividend yield	1.39	%	1.50	%

For the quarter ended July 3, 2015 and July 4, 2014, the tax benefit realized from stock option exercises and RSU settlements was $26 million and $22 million, respectively, and the excess tax benefit was $14 million and $9 million, respectively.

Employee Incentives

The Company currently has two active stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to employees upon terms approved by the Compensation Committee of the Board of Directors. The Company issues authorized but previously unissued shares upon the exercise of stock options, the granting of restricted stock and the settlement of RSUs. As of July 3, 2015, 13,530,434 shares of CSC common stock were available for the grant of future stock options, equity awards or other stock-based incentives to employees under such stock incentive plans.

Stock Options

The Company’s standard vesting schedule for stock options is one-third of the total stock option award on each of the first three anniversaries of the grant date. Stock options are generally exercisable for a term of ten years from the grant date. Information concerning stock options granted under the Company's stock incentive plans is as follows:



	Number of Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (millions)
Outstanding as of April 3, 2015	5,556,309		$	46.08	5.93	$	107
Granted	1,143,536		68.45
Exercised	(621,707	)	39.57			18
Canceled/Forfeited	(63,637	)	54.96
Expired	(29,096	)	42.86
Outstanding as of July 3, 2015	5,985,405		50.96		6.66	94
Vested and expected to vest in the future as of January 2, 2015	5,757,517		50.38		6.53	93
Exercisable as of July 3, 2015	3,659,099		$	44.21	5.03	$	81

The total intrinsic value of options exercised during the quarters ended July 3, 2015 and July 4, 2014 was $18 million and $38 million, respectively. The cash received from stock options exercised during the quarters ended July 3, 2015 and July 4, 2014 was $24 million and $88 million, respectively.

As of July 3, 2015, there was $37 million of total unrecognized compensation expense related to unvested stock options, net of expected forfeitures. The cost is expected to be recognized over a weighted-average period of 2.33 years.

Restricted Stock Units

Information concerning RSUs granted under stock incentive plans is as follows:



	Number of Shares		Weighted Average Fair Value per share
Outstanding as of April 3, 2015	2,579,675			$	48.70
Granted	938,482			52.05
Released/Issued	(784,593	)		31.43
Canceled/Forfeited	(406,536	)		53.28
Outstanding as of July 3, 2015	2,327,028			$	55.06

As of July 3, 2015, there was $84 million of total unrecognized compensation expense related to unvested RSUs, net of expected forfeitures. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.95 years.

Non-employee Director Incentives

The Company has two stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to nonemployee directors upon terms approved by the Company’s Board of Directors. As of July 3, 2015, 175,300 shares of CSC common stock remained available for grant to non-employee directors as RSUs or other stock-based incentives.

Generally, RSU awards to non-employee directors vest in full as of the next annual meeting of the Company’s stockholders following the date they are granted and are issued at a price of $0. Information concerning RSUs granted to non-employee directors is as follows:



	Number of Shares	Weighted Average Fair Value per share
Outstanding as of April 3, 2015	143,986		$	43.88
Granted	—		—
Released/Issued	—		—
Canceled/Forfeited	—		—
Outstanding as of July 3, 2015	143,986		$	43.88