We maintain several stock-based compensation plans, which are described below. Total compensation expense for these plans was $99 million for 2018, $104 million for 2017, and $102 million for 2016. The total income tax benefit recognized in the income statement for these plans was $23 million for 2018, $39 million for 2017, and $38 million for 2016.

Our compensation plans allow us to grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other awards which may be denominated or payable in or valued by reference to our Common Shares or other factors, discounted stock purchases, and deferred compensation to eligible employees and directors. At December 31, 2018, we had 24,147,422 Common Shares available for future grant under our compensation plans. In accordance with a resolution adopted by the Compensation and Organization Committee of KeyCorp’s Board of Directors, we may not grant options to purchase Common Shares, restricted stock or other shares under any long-term compensation plan in an aggregate amount that exceeds 6% of our outstanding Common Shares in any rolling three-year period.

Stock options granted to employees generally become exercisable at the rate of 25% per year. No option granted by KeyCorp will be exercisable less than one year after, or expire later than ten years from, the grant date. The exercise price is the closing price of our Common Shares on the grant date.

We determine the fair value of options granted using the Black-Scholes option-pricing model. This model was originally developed to determine the fair value of exchange-traded equity options, which (unlike employee stock options) have no vesting period or transferability restrictions. Because of these differences, the Black-Scholes model does not precisely value an employee stock option, but it is commonly used for this purpose. The model assumes that the estimated fair value of an option is amortized as compensation expense over the option’s vesting period.

The Black-Scholes model requires several assumptions, which we developed and update based on historical trends and current market observations. Our determination of the fair value of options is only as accurate as the underlying assumptions. The assumptions pertaining to options issued during 2018, 2017, and 2016 are shown in the following table.



Year ended December 31,	2018		2017		2016
Average option life	6.5 years		6.0 years		6.0 years
Future dividend yield	2.28	%	1.79	%	2.86	%
Historical share price volatility	.282		.287		.297
Weighted-average risk-free interest rate	2.8	%	2.1	%	1.3	%

Under KeyCorp’s 2013 Equity Compensation Plan, the Compensation and Organization Committee has authority to approve all stock option grants but may delegate some of its authority to grant awards from time to time. The committee has delegated to our Chief Executive Officer the authority to grant equity awards, including stock options, to any employee who is not designated an “officer” for purposes of Section 16 of the Exchange Act. No more than 3,000,000 Common Shares may be issued under this authority.

The following table summarizes activity, pricing and other information for our stock options for the year ended December 31, 2018:



	Number of Options		Weighted-Average Exercise Price Per Option		Weighted-Average Remaining Life	Aggregate Intrinsic Value^(a)
Outstanding at December 31, 2017	9,882,617		$	11.28	5.5 years	$	88
Granted	346,088		21.02
Exercised	(1,960,444	)	10.12
Lapsed or canceled	(144,417	)	14.37
Outstanding at December 31, 2018	8,123,844		$	11.92	5.3	31

Expected to vest	2,508,684		15.09		7.6	5
Exercisable at December 31, 2018	5,479,638		$	10.36	4.2	$	26

The weighted-average grant-date fair value of options was $5.12 for options granted during 2018, $4.6 for options granted during 2017, and $2.14 for options granted during 2016. Stock option exercises numbered 1,960,444 in 2018, 3,755,177 in 2017, and 2,849,010 in 2016. The aggregate intrinsic value of exercised options was $21 million for 2018, $31 million for 2017, and $12 million for 2016. As of December 31, 2018, unrecognized compensation cost related to nonvested options under the plans totaled $2 million. We expect to recognize this cost over a weighted-average period of 2.0 years.

Cash received from options exercised was $20 million, $25 million, and $32 million in 2018, 2017, and 2016, respectively. The actual tax benefit realized for the tax deductions from options exercised totaled $1 million for 2018, $4 million for 2017, and $2 million for 2016.

Our Long-Term Incentive Compensation Program (the “Program”) rewards senior executives critical to our long-term financial success. Awards are granted annually in a variety of forms:

During 2018, the total of performance units vested numbered 1,070,112, which were payable in stock and cash. The total fair value of the performance units that vested during 2018 was $19 million. During 2017, the performance units vested numbered 887,489 which were payable in stock and cash. The total fair value of of the performance units that vested during 2017 was $14 million.



	Vesting Contingent on Service Conditions				Vesting Contingent on Performance and Service Conditions
	Number of Nonvested Shares		Weighted- Average Grant-Date Fair Value		Number of Nonvested Shares		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2017	11,832,956		$	14.05	4,148,020		$	17.51
Granted	4,076,746		21.02		1,588,738		14.83
Vested	(5,404,616	)	13.61		(1,070,112	)	17.73
Forfeited	(930,136	)	17.01		(127,191	)	19.42
Outstanding at December 31, 2018	9,574,950		$	16.84	4,539,455		$	14.35

The compensation cost of time-lapsed and performance-based restricted stock or unit awards granted under the Program is calculated using the closing trading price of our Common Shares on the grant date.

Unlike time-lapsed and performance-based restricted stock or units, we do not pay dividends during the vesting period for performance shares or units that may become payable in excess of targeted performance.

The weighted-average grant-date fair value of awards granted under the Program was $19.28 during 2018, $19.82 during 2017, and $10.49 during 2016. As of December 31, 2018, unrecognized compensation cost related to nonvested shares under the Program totaled $73 million. We expect to recognize this cost over a weighted-average period of 2.4 years. The total fair value of shares vested was $93 million in 2018, $76 million in 2017, and $57 million in 2016.

Our deferred compensation arrangements include voluntary and mandatory deferral programs for Common Shares awarded to certain employees and directors. Mandatory deferred incentive awards vest at the rate of 25% per year

We also may grant, upon approval by the Compensation and Organization Committee (or our Chief Executive Officer with respect to her delegated authority), other time-lapsed restricted stock or unit awards under various programs to recognize outstanding performance.

The following table summarizes activity and pricing information for the nonvested shares granted under our deferred compensation plans and these other restricted stock or unit award programs for the year ended December 31, 2018.



	Number of Nonvested Shares		Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2017	4,223,774		$	15.61
Granted	724,287		20.77
Dividend equivalents	18		20.03
Vested	(1,523,387	)	14.43
Forfeited	(144,875	)	14.18
Outstanding at December 31, 2018	3,279,817		$	17.36

The weighted-average grant-date fair value of awards granted was $20.77 during 2018, $18.55 during 2017, and $11.46 during 2016. As of December 31, 2018, unrecognized compensation cost related to nonvested shares granted under our deferred compensation plans and the other restricted stock or unit award programs totaled $21 million. We expect to recognize this cost over a weighted-average period of 2.9 years. The total fair value of shares vested was $22 million in 2018, $21 million in 2017, and $16 million in 2016. Dividend equivalents presented in the preceding table represent the value of dividends accumulated during the vesting period.

Our Discounted Stock Purchase Plan provides employees the opportunity to purchase our Common Shares at a 10% discount through payroll deductions or cash payments. Purchases are limited to $10,000 in any month and $50,000 in any calendar year, and are immediately vested. To accommodate employee purchases, we issue treasury shares on or around the fifteenth day of the month following the month employee payments are received. We issued 327,435 Common Shares at a weighted-average cost to employees of $17.48 during 2018, 257,738 Common Shares at a weighted-average cost to employees of $16.61 during 2017, and 310,604 Common Shares at a weighted-average cost to employees of $11.04 during 2016.