Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Certain key employees, officers, directors and others are eligible to receive stock awards. Awards that may be granted under the 2016 Stock Plan include stock options, restricted stock, restricted stock units, performance awards, dividend equivalents and other awards.

The compensation expense recognized related to stock-based compensation was $13 million, $11 million, and $11 million during each of the years ended December 31, 2019, 2018 and 2017, respectively.

Stock Options

No stock options have been granted by the Company since 2002. There were no stock options exercised during the years ended December 31, 2019, 2018 and 2017 as all options had negative intrinsic value. The remaining stock options expired January 22, 2020, and were not exercised.

The following table summarizes stock option activity:



	For the Years Ended December 31,
	2019				2018				2017
	Number of Shares		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Options outstanding, beginning of year	36,093		$	80.00	40,718		$	80.00	45,791		$	80.00
Options canceled, forfeited and expired	(1,894	)	80.00		(4,625	)	80.00		(5,073	)	80.00
Options outstanding, end of year	34,199		$	80.00	36,093		$	80.00	40,718		$	80.00
Options vested or expected to vest, end of year	34,199		$	80.00	36,093		$	80.00	40,718		$	80.00
Options exercisable, end of year	16,968		$	80.00	17,991		$	80.00	20,286		$	80.00


(1)	All outstanding options at December 31, 2019 are vested or expected to vest and have a weighted average remaining contractual life of 0.1 years.

Restricted Stock and Restricted Stock Units

We have issued restricted stock units to officers, directors and certain employees under our long term incentive program (LTIP). Restricted stock units generally will vest in 3 increments on each annual anniversary of the date of grant beginning with the first anniversary or vest after three years subject to service and performance conditions.

On October 20, 2015, our Board approved and adopted the Flagstar Bancorp, Inc. Executive Long-Term Incentive Program ("ExLTIP"). The ExLTIP provided for payouts to certain executives only if our stock achieved and sustained a specified market performance within ten years of the grant date, which occurred. The ExLTIP awards were made in the form of restricted stock units under and subject to the terms of the 2016 Flagstar Bancorp, Inc. Stock and Incentive Plan, which was approved at the May 24, 2016 annual shareholder meeting. With the achievement of the performance hurdles and satisfactory quality reviews, installments were paid out in May 2017, 2018, and 2019. The remaining two installments will be made annually on the vesting date anniversary subject to quality review.

With the achievement of the performance-based ExLTIP, on March 20, 2018, the Board approved the adoption of the 2018 Executive Long Term Incentive Program II ("2018 ExLTIP II"). The 2018 ExLTIP II was provided to certain executives and is comprised of RSUs which are dependent on stock performance, time-based RSUs for which vesting is based on service over a four years period and RSUs that are performance and time vested with the same terms as those granted to other employees under the existing LTIP. As of December 31, 2019 the stock performance hurdles have not been met.

At December 31, 2019, the maximum number of shares of common stock that may be issued were 1,416,986 shares. The total grant date fair value of awards vested during the years ended December 31, 2019, 2018, 2017 was $10 million, $9 million, and $7 million, respectively. As of December 31, 2019, the total unrecognized compensation cost related to non-vested awards was $23 million with a weighted average expense recognition period of 1.8 years.

The following table summarizes restricted stock activity:



	For the Years Ended December 31,
	2019				2018				2017
	Number of Shares		Weighted Average Grant-Date Fair Value per Share		Number of Shares		Weighted Average Grant-Date Fair Value per Share		Number of Shares		Weighted Average Grant-Date Fair Value per Share
Restricted Stock and Restricted Stock Units
Non-vested balance at beginning of period	1,620,568		$	27.27	1,290,450		$	20.52	1,461,910		$	17.68
Granted	338,737		32.11		875,352		34.32		357,058		28.06
Vested	(379,936	)	26.98		(401,379	)	23.04		(385,454	)	17.36
Canceled and forfeited	(180,242	)	25.66		(143,855	)	21.46		(143,064	)	18.89
Non-vested balance at end of period	1,399,127		$	28.72	1,620,568		$	27.27	1,290,450		$	20.52

2017 Employee Stock Purchase Plan

The Employee Stock Purchase Plan ("2017 ESPP") was approved on March 20, 2017 by our Board and on May 23, 2017 by our shareholders. The 2017 ESPP became effective July 1, 2017 and will remain effective until terminated by the Board. A total of 800,000 shares of the Company’s common stock are reserved and authorized for issuance for purchase under the 2017 ESPP. There were 106,881 and 114,385 shares issued under the 2017 ESPP during the years ended December 31, 2019 and 2018, respectively, and the associated compensation expense was de minimis for both periods.