NOTE 19—STOCKHOLDERS’ EQUITY AND EQUITY-BASED INCENTIVE PLANS

Stockholders’ Equity

On May 2, 2018, stockholders of McDermott approved an amendment to McDermott’s Amended and Restated Articles of Incorporation to effect a three-to-one reverse stock split of McDermott shares of common stock with par value of $1.00 per share, which became effective May 9, 2018. All comparable periods presented have been retrospectively revised to reflect this change.

Shares Outstanding and Treasury Shares―The changes in the number of shares outstanding and treasury shares held by us for the nine months ended September 30, 2018 and 2017 are as follows (in millions):

	Nine Months Ended September 30,
	2018			2017
Shares outstanding
Beginning balance		95			80
Common stock issued		2			15
Shares issued in the Combination (Note 3, Business Combination)		85			-
Purchase of common stock		(1	)		-
Ending balance		181			95

Shares held as Treasury shares
Beginning balance		3			3
Purchase of common stock		1			-
Retirement of common stock		(1	)		-
Ending balance		3			3
Ordinary shares issued at the end of the period		183			98

Combination—As discussed in Note 3, Business Combination, we issued 84.5 million shares of McDermott common stock to the former CB&I shareholders. Additionally, effective as of the Combination Date, unvested and unexercised stock-settled equity-based awards (which included 2.1 million restricted stock units and 0.1 million stock options) relating to shares of CB&I’s common stock were canceled and converted into comparable McDermott stock-settled awards with generally the same terms and conditions as those prior to the Combination Date. The restricted stock units generally vest over a period ranging from three to four years from the original grant date.

Stock-Based Compensation Expense―During the three months ended September 30, 2018 and 2017, we recognized $9 million and $8 million, respectively, of stock-based compensation expense, and during the nine months ended September 30, 2018 and 2017, we recognized $24 million and $20 million, respectively, primarily within SG&A in our Statements of Operations. In addition, we recognized $26 million of expense in the second quarter of 2018 as a result of accelerated vesting for employees terminated in connection with the Combination, which was recorded within Restructuring and integration costs in our Statements of Operations.

AOCI

The components of AOCI included in stockholders’ equity are as follows:

	September 30, 2018			December 31, 2017
	(In millions)
Foreign currency translation adjustments ("CTA")	$	(69	)	$	(49	)
Net unrealized loss on derivative financial instruments		(15	)		(2	)
Accumulated other comprehensive loss	$	(84	)	$	(51	)

The following table presents the components of AOCI and the amounts that were reclassified during the periods indicated:

	Foreign currency translation adjustments			Gain (loss) on derivative ⁽¹⁾			TOTAL
	(In millions)
For the Nine Months Ended September 30, 2018
Balance at January 1, 2018	$	(49	)	$	(2	)		(51	)
Other comprehensive income before reclassification		(20	)		(16	)		(36	)
Amounts reclassified from AOCI ⁽²⁾		-			3			3
Net current period other comprehensive income		(20	)		(13	)		(33	)
Balance at September 30, 2018	$	(69	)	$	(15	)	$	(84	)

For the Nine Months Ended September 30, 2017
Balance at January 1, 2017	$	(42	)	$	(25	)	$	(67	)
Other comprehensive income before reclassification		(1	)		15			14
Acquisition of NCI		-			2			2
Amounts reclassified from AOCI ⁽²⁾		(6	)		3			(3	)
Net current period other comprehensive income		(7	)		20			13
Balance at September 30, 2017	$	(49	)	$	(5	)	$	(54	)

⁽¹⁾	Refer to Note 17, Derivative Financial Instruments for additional details.

⁽²⁾	Amounts are net of tax, which was not material for the three- and nine-month periods ended September 30, 2018 and 2017.