Stock Compensation

2017 Omnibus Incentive Plan

The 2017 Omnibus Incentive Plan (the Plan) authorizes the grant of stock options, stock appreciation rights (SARs), RSUs and performance share units (PSUs) through April 2027. Cash-settled awards do not count against the maximum aggregate number. At December 31, 2018, there were 5.6 million shares available for future grants. Shares of common stock to be issued under the Plan are made available from authorized and unissued Dana common stock.

Award activity — (shares in millions)



	Options				SARs			RSUs				PSUs
	Shares		Exercise Price*		Shares	Exercise Price*		Shares		Grant-Date Fair Value*		Shares		Grant-Date Fair Value*
December 31, 2017	0.8		$	14.58	0.1	$	14.83	1.8		$	17.38	0.6		$	15.70
Granted								0.7		26.93		0.2		27.13
Exercised or vested	(0.1	)	10.95					(0.6	)	20.45		(0.2	)	12.90
Forfeited or expired								(0.1	)	20.77		(0.1	)	17.55
December 31, 2018	0.7		15.33		0.1			1.8		20.06		0.5		22.45

* Weighted-average per share



	2018		2017		2016
Total stock compensation expense	$	16	$	23	$	17
Total grant-date fair value of awards vested	16		17		11
Cash received from exercise of stock options	2		10		2
Cash paid to settle SARs and RSUs	2		4		1
Intrinsic value of stock options and SARs exercised	3		8		1
Intrinsic value of RSUs and PSUs vested	18		20		7

Compensation expense is generally measured based on the fair value at the date of grant and is recognized on a straight-line basis over the vesting period. For options and SARs, we use an option-pricing model to estimate fair value. For RSUs and PSUs, the fair value is based on the closing market price of our common stock at the date of grant. Awards that are settled in cash are subject to liability accounting. Accordingly, the fair value of such awards is remeasured at the end of each reporting period until settled or expired. We had accrued $2 and $7 for cash-settled awards at December 31, 2018 and 2017. We issued 0.7 million and 0.2 million shares of common stock based on vesting of RSUs and PSUs during 2018. At December 31, 2018, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $20. This cost is expected to be recognized over a weighted-average period of 1.7 years.

Stock options and stock appreciation rights — The exercise price of each option or SAR equals the closing market price of our common stock on the date of grant. Options and SARs generally vest over three years and their maximum term is ten years. Shares issued upon the exercise of options are recorded as common stock and additional paid-in capital at the option price. SARs are settled in cash for the difference between the market price on the date of exercise and the exercise price. We have not granted stock options or SARs since 2013. All outstanding awards are fully vested and exercisable. At December 31, 2018, the outstanding awards have an aggregate intrinsic value of $1 and a weighted-average remaining contractual life of 3.1 years.

Restricted stock units and performance shares units — Each RSU or PSU granted represents the right to receive one share of Dana common stock or, at the election of Dana (for units awarded to board members) or for employees located outside the U.S. (for employee awarded units), cash equal to the market value per share. All RSUs contain dividend equivalent rights. RSUs granted to non-employee directors vest on the first anniversary date of the grant and those granted to employees generally cliff vest fully after three years. PSUs granted to employees vest if specified performance goals are achieved during the respective performance period, generally three years.

The number of PSUs that ultimately vest is contingent on achieving specified return on invested capital targets, specified total shareholder return targets relative to peer companies or specified margin targets. For the portion of the PSU award based on the return on invested capital performance or margin metric, we estimated the fair value at grant date based on the closing market price of our common stock at the date of grant adjusted for the value of assumed dividends over the period because the award is not dividend protected. The estimated grant date value is accrued over the performance period and adjusted as appropriate based on performance relative to the target. For the portion of the PSU award based on shareholder returns, we estimated the fair value at grant date using various assumptions as part of a Monte Carlo simulation. The expected term represents the period from the grant date to the end of the performance period. The risk-free interest rate was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield was calculated by dividing the expected annual dividend by the average stock price over the prior year. The expected volatility was based on historical volatility using daily stock price observations.



	PSUs
	2016
Expected term (in years)	3.0
Risk-free interest rate	1.00	%
Dividend yield	1.40	%
Expected volatility	33.4	%

Cash incentive awards — Our 2017 Omnibus Incentive Plan provides for cash incentive awards. We make awards annually to certain eligible employees designated by Dana, including certain executive officers. Awards under the plan are based on achieving certain financial performance goals. The performance goals of the plan are established annually by the Board of Directors.

Under the 2018 and 2017 annual incentive programs, participants were eligible to receive cash awards based on achieving earnings and cash flow performance goals. The 2016 annual incentive program is based on earnings and working capital performance goals. Our 2017 and 2016 long-term incentive programs each have a three-year contractual vesting period and include a performance-based cash component. For the 2017 and 2016 long-term incentive programs the vesting of the performance-based cash component is based on achieving a return on invested capital target measured on an average basis over the contractual period. The 2017 award also has a component that is based on achieving a margin target in the third year of the program that was established at the grant date. We accrued $33, $77 and $41 of expense in 2018, 2017 and 2016 for the expected cash payments under these programs.