Corning maintains long-term incentive plans (the “Plans”) for key employees and non-employee members of our Board of Directors. The Plans allow us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards or a combination of awards (collectively, share-based awards). At June 30, 2020, there were approximately 39 million unissued common shares available for future grants authorized under the Plans.

Beginning in 2020, Corning increased the equity component in our Long-Term Incentive (“LTI”) Plan from 40% to 75% of an executive’s annual targeted compensation opportunity.

On May 20, 2020, Corning Incorporated (the “Company”) announced temporary compensation actions in response to the impact of the global COVID-19 pandemic on the Company. Effective June 1, 2020, the base salary of the Company’s CEO was reduced by 40% and each of the other named executive officers’ salaries were reduced by 30%. Each non-employee director’s cash compensation was reduced by 40%. Additionally, the Company reduced salaries, from 5% to 30%, for all other salaried employees in the United States from June 1, 2020 through December 31, 2020. The Company has taken similar actions outside the United States based on local regulations and mutual consent requirements. The Company has taken these and other actions to preserve cash in 2020, and has issued equity to each employee, including the named executive officers, in the form of restricted stock units and stock options, in an amount equivalent to the employee’s salary reduction on the grant date, which vest over a period of three years. Similarly, each non-employee director received restricted stock units in an amount equivalent to the director’s fee reduction.

Share-based compensation expense is allocated to the selling, general and administrative and research, development and engineering expenses lines in the consolidated statements of (loss) income.

Stock Compensation Plans

The Company measures and recognizes compensation cost for all share-based payment awards made to employees and directors based on estimated fair values.

Total share-based compensation expense was approximately $55 million and $21 million, respectively, and $65 million and $30 million, respectively, for the three and six months ended June 30, 2020 and 2019. The incremental change in expense was approximately $35 million for both periods, primarily driven by a larger equity component for Director and Executive compensation and issuance of employee share-based compensation awards, as discussed above.

The income tax benefit realized from share-based compensation was not significant for the three and six months ended June 30, 2020 and 2019. Refer to Note 6 (Income Taxes) to the consolidated financial statements for additional information.

Stock Options

Corning’s stock option plans provide non-qualified and incentive stock options to purchase authorized but unissued common shares, or treasury shares, at the market price on the grant date and generally become exercisable in installments from one year to five years from the grant date. The maximum term of non-qualified and incentive stock options is 10 years from the grant date. An award is considered vested when the employee’s retention of the award is no longer contingent on providing subsequent service (the “non-substantive vesting period approach”).

The following table summarizes information concerning stock options outstanding, including the related transactions under the stock option plans for the six months ended June 30, 2020:



				Weighted-
				average
		Weighted-		remaining	Aggregate
	Number	average		contractual	intrinsic
	of shares	exercise		term in	value
	(in thousands)	price		years	(in thousands)
Options outstanding as of December 31, 2019	13,172	$	21.94
Granted	10,653		19.65
Exercised	(681)		17.99
Forfeited and expired	(69)		20.41
Options outstanding as of June 30, 2020	23,075		21.00	7.12	$	128,954
Options expected to vest as of June 30, 2020	22,612		21.02	7.06		126,208
Options exercisable as of June 30, 2020	9,273		19.34	3.59		62,467

Corning uses a multiple-point Black-Scholes valuation model to estimate the fair value of stock option grants. Corning utilizes a blended approach for calculating the volatility assumption used in the multiple-point Black-Scholes valuation model defined as the weighted average of the short-term implied volatility, the most recent volatility for the period equal to the expected term, and the most recent 15-year historical volatility. The expected term is the period the options are expected to be outstanding and is calculated using a combination of historical exercise experience adjusted to reflect the current vesting period of options being valued, and partial life cycles of outstanding options. The risk-free rates used in the multiple-point Black-Scholes valuation model are the implied rates for a zero-coupon U.S. Treasury bond with a term equal to the option’s expected term. The ranges given below reflect results from separate groups of employees exhibiting different exercise behavior.

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The following inputs were used for the valuation of option grants under our stock option plans (1):



	Three months ended
	June 30,
	2020	2019
Expected volatility	32.9%	29.9%
Weighted-average volatility	32.9%	29.9%
Expected dividends	4.48%	2.36%
Risk-free rate	0.5%	2.4%
Average risk-free rate	0.5%	2.4%
Expected term (in years)	7.4	7.4
Pre-vesting executive departure rate	0.6%	0.6%
Pre-vesting non-executive departure rate	2.5%

(1)Stock options were granted during the three months ended June 30, 2020 and 2019. There were no stock options granted during the three months ended March 31, 2020 and 2019.

The Corning Incentive Stock Plan permits restricted stock and restricted stock unit grants, either determined by specific performance goals or issued directly, in most instances, subject to the possibility of forfeiture and without cash consideration. Restricted stock and restricted stock units under the Incentive Stock Plan are granted at the closing market price on the grant date, contingently vest over a period of generally one year to ten years, and generally have contractual lives of one year to ten years. The fair value of each restricted stock grant or restricted stock unit awarded under the Incentive Stock Plan is based on the grant date closing price of the Company’s stock.

The following table represents a summary of the status of the Company’s non-vested time-based restricted stock and restricted stock units as of December 31, 2019 and changes which occurred during the six months ended June 30, 2020:



		Weighted
	Number	average
	of shares	grant-date
	(in thousands)	fair value
Non-vested shares and share units at December 31, 2019	5,189	$	27.58
Granted	9,104		20.54
Vested	(1,025)		27.58
Forfeited	(93)		27.57
Non-vested shares and share units at June 30, 2020	13,175	$	22.72