SHARE-BASED COMPENSATION

Share-based compensation expense is charged to “salaries and benefits” expense on the consolidated statements of income. The components of share-based compensation expense for all share-based compensation plans and related tax benefits are as follows:



(in millions)
Years Ended December 31	2017		2016		2015
Total share-based compensation expense	$	39	$	34	$	38
Related tax benefits recognized in net income	$	14	$	13	$	14

The following table summarizes unrecognized compensation expense for all share-based plans.



(dollar amounts in millions)	December 31, 2017
Total unrecognized share-based compensation expense	$	40
Weighted-average expected recognition period (in years)	2.8

The Corporation has share-based compensation plans under which it awards shares of restricted stock and restricted stock units to executive officers, directors and key personnel, and stock options to executive officers and key personnel of the Corporation and its subsidiaries. Restricted stock and restricted stock units vest over periods ranging from one year to five years, and stock options vest over periods ranging from one year to four years. The maturity of each option is determined at the date of grant; however, no options may be exercised later than ten years from the date of grant. The options may have restrictions regarding exercisability. The plans originally provided for a grant of up to 19.4 million common shares, plus shares under certain plans that are forfeited, expire or are canceled, which become available for re-grant. At December 31, 2017, 9.5 million shares were available for grant.

The Corporation used a binomial model to value stock options granted in the periods presented. Option valuation models require several inputs, including the expected stock price volatility, and changes in input assumptions can materially affect the fair value estimates. The model used may not necessarily provide a reliable single measure of the fair value of employee and director stock options. The risk-free interest rate assumption used in the binomial option-pricing model as outlined in the table below was based on the federal ten-year treasury interest rate. The expected dividend yield was based on the historical and projected long-term dividend yield patterns of the Corporation’s common shares. Expected volatility assumptions considered both the historical volatility of the Corporation’s common stock over a ten-year period and implied volatility based on actively traded options on the Corporation’s common stock with pricing terms and trade dates similar to the stock options granted. Expected option life was based on historical exercise activity over the contractual term of the option grant (10 years), excluding certain forced transactions.

The estimated weighted-average grant-date fair value per option and the underlying binomial option-pricing model assumptions are summarized in the following table:



Years Ended December 31	2017			2016			2015
Weighted-average grant-date fair value per option	$	19.61		$	9.94		$	11.31
Weighted-average assumptions:
Risk-free interest rates	2.47		%	2.01		%	1.83		%
Expected dividend yield	3.00			3.00			3.00
Expected volatility factors of the market price of Comerica common stock	34			38			33
Expected option life (in years)	7.0			6.9			6.9

A summary of the Corporation’s stock option activity and related information for the year ended December 31, 2017 follows:



			Weighted-Average
	Number of Options (in thousands)		Exercise Price per Share		Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding-January 1, 2017	6,892		$	37.24
Granted	430		67.67
Forfeited or expired	(57	)	48.74
Exercised	(3,092	)	37.45
Outstanding-December 31, 2017	4,173		40.06		5.9	$	195
Exercisable-December 31, 2017	2,347		$	36.27	4.3	$	119

The aggregate intrinsic value of outstanding options shown in the table above represents the total pretax intrinsic value at December 31, 2017, based on the Corporation’s closing stock price of $86.81 at December 31, 2017.

The total intrinsic value of stock options exercised was $104 million, $46 million and $12 million for the years ended December 31, 2017, 2016 and 2015, respectively.

A summary of the Corporation’s restricted stock activity and related information for the year ended December 31, 2017 follows:



	Number of Shares (in thousands)		Weighted-Average Grant-Date Fair Value per Share
Outstanding-January 1, 2017	1,591		$	37.20
Granted	237		67.83
Forfeited	(59	)	42.53
Vested	(526	)	35.28
Outstanding-December 31, 2017	1,243		$	43.59

The total fair value of restricted stock awards that fully vested was $19 million, $22 million and $18 million for the years ended December 31, 2017, 2016 and 2015, respectively.

A summary of the Corporation's restricted stock unit activity and related information for the year ended December 31, 2017 follows:



	Service-Based Units			Performance-Based Units
	Number of Units (in thousands)	Weighted-Average Grant-Date Fair Value per Share		Number of Units (in thousands)		Weighted-Average Grant-Date Fair Value per Share
Outstanding-January 1, 2017	180	$	39.61	781		$	39.47
Granted	19	75.06		149		66.07
Vested	—	—		(212	)	48.32
Outstanding-December 31, 2017	199	43.00		718		42.39

The total fair value of restricted stock units that fully vested was $10 million and $11 million for the years ended December 31, 2017 and 2016, respectively. There were no restricted stock units that vested in 2015.

The Corporation expects to satisfy the exercise of stock options, the vesting of restricted stock units and future grants of restricted stock by issuing shares of common stock out of treasury. At December 31, 2017, the Corporation held 55.3 million shares in treasury.

For further information on the Corporation’s share-based compensation plans, refer to Note 1.