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Share-Based Compensation (Tables)
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation and Related Income Tax Benefit
Total pre-tax expense associated with share-based compensation and its related income tax benefit is shown in the table below. The year over year increase in expense related to performance units and stock options is primarily due to modifications to the terms of awards (see Equity Award Modifications below) and higher expected award payouts.
 
 
Third Quarters
 
Nine Months
(Dollars in millions)
2017
2016
 
2017
2016
 
 
 
 
 
 
Share-Based Compensation Expense
 
 
 
 
 
Performance Units
$
3

$
5

 
$
41

$
9

Stock Options
14

2

 
47

5

Restricted Stock Units and Awards
2

2

 
11

8

Stock Awards for Directors


 
2

2

Total Share-Based Compensation Expense
$
19

$
9

 
$
101

$
24

Income Tax Benefit
$
7

$
3

 
$
32

$
9

Summary of Fair Value Assumptions for Stock Option Awards
The fair values of all stock option awards during the nine months ended September 30, 2017, including those granted along with 2017 - 2019 LTIP and the CEO stock option award, were estimated at the grant date with the following weighted average assumptions:
 
 
Nine Months
 
 
2017
2016
Weighted-average grant date fair value
 
$
12.83

$
4.68

 
 
 
 
Stock options valuation assumptions:
 
 
 
Annual dividend yield
 
1.5
%
3.0
%
Risk-free interest rate
 
2.2
%
1.4
%
Annualized volatility
 
27.1
%
27.3
%
Expected life (in years)
 
6.3

6.5

 
 
 
 
Other pricing model inputs:
 
 
 
Weighted-average grant-date market price of CSX stock (strike price)
 
$
49.60

$
24.13