Stock Incentive Plans

The Company recognized stock-based compensation expense (benefit) as follows:



	Three months ended				Nine months ended
(in millions)	December 30, 2016		January 1, 2016		December 30, 2016		January 1, 2016
Cost of services	$	7	$	8	$	19	$	6
Selling, general and administrative	14		13		37		22
Total	$	21	$	21	$	56	$	28
Total, net of tax	$	14	$	14	$	38	$	18

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 nine months ended December 30, 2016 and January 1, 2016 were $12.41 and $9.03 per share, respectively. In calculating the compensation expense for its stock incentive plans, the Company used the following weighted-average assumptions:



	Nine months ended
	December 30, 2016		January 1, 2016
Risk-free interest rate	1.55	%	1.82	%
Expected volatility	29	%	31	%
Expected term (in years)	6.19		6.25
Dividend yield	1.66	%	1.39	%

As a result of the Separation, most stock awards issued by the Company were modified, including acceleration of vesting of certain awards and the issuance of new CSRA awards under the basket method, whereby awards granted prior to fiscal year 2016 in CSC equity were converted into two awards: an adjusted CSC equity award and a CSRA equity award. In the case of stock options, the number of options and the exercise price were adjusted for the impact of the Separation. The conversions were structured to generally preserve the intrinsic value of the awards immediately prior to the Separation. There was no incremental stock compensation expense recognized as a result of the modification of the awards.

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 December 30, 2016, 14,068,488 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 1, 2016⁽¹⁾	5,366,621		$	24.83	7.06	$	51
Granted	2,109,935		49.18
Exercised	(2,240,251	)	21.50			60
Canceled/Forfeited	(359,104	)	34.90
Expired	(53,545	)	23.77
Outstanding as of December 30, 2016	4,823,656		36.28		7.97	112
Vested and expected to vest in the future as of December 30, 2016	4,541,299		35.80		7.89	107
Exercisable as of December 30, 2016	1,550,073		$	24.33	5.81	$	54

⁽¹⁾The amount of the weighted average exercise price and aggregate intrinsic value has been revised to reflect the impact of the Separation.

The total intrinsic value of options exercised during the nine months ended December 30, 2016 and January 1, 2016 was $60 million and $40 million, respectively. The cash received from stock options exercised during the nine months ended December 30, 2016 and January 1, 2016 was $47 million and $72 million, respectively. As of December 30, 2016, there was $27 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 2.13 years.

Restricted Stock Units

Information concerning RSUs granted under the Company's stock incentive plans is as follows:



	Number of Shares		Weighted Average Fair Value per share
Outstanding as of April 1, 2016⁽¹⁾	3,597,999		$	29.25
Granted	1,148,688		47.70
Released/Issued	(576,980	)	26.73
Canceled/Forfeited	(368,463	)	31.99
Outstanding as of December 30, 2016	3,801,244		$	34.94

⁽¹⁾The amount of the weighted average fair value per share has been revised to reflect the impact of the Separation.

As of December 30, 2016, there was $73 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 1.99 years.

Non-employee Director Incentives

The Company has one stock incentive plan that authorizes the issuance of stock options, restricted stock and other stock-based incentives to non-employee directors upon terms approved by the Company’s Board of Directors. As of December 30, 2016, 593,136 shares of CSC common stock remained available for grant to non-employee directors as RSUs or other stock-based incentives.

Information concerning RSUs granted to non-employee directors is as follows:



	Number of Shares		Weighted Average Fair Value per share
Outstanding as of April 1, 2016⁽¹⁾	89,046		$	27.00
Granted	33,600		47.35
Released/Issued	(32,080	)	28.58
Canceled/Forfeited	(4,800	)	30.31
Outstanding as of December 30, 2016	85,766		$	34.19

⁽¹⁾The amount of the weighted average fair value per share has been revised to reflect the impact of the Separation.