Preferred Stock. Alcoa Corporation is authorized to issue 100,000,000 shares of preferred stock at a par value of $0.01 per share. At December 31, 2019 and 2018, the Company had no issued preferred stock.

Common Stock. Alcoa Corporation is authorized to issue 750,000,000 shares of common stock at a par value of $0.01 per share. As of December 31, 2019, and 2018, Alcoa Corporation had 185,580,166 and 184,770,249, respectively, issued and outstanding shares of common stock.

Under its employee stock-based compensation plan, the Company issued shares of 809,917 in 2019, 1,293,336 in 2018, and 2,269,718 in 2017. Also, 25,167,229 shares of common stock were available for issuance as of December 31, 2019, under Alcoa Corporation’s employee stock-based compensation plan. The Company issues new shares to satisfy the exercise of stock options and the conversion of stock units.

In October 2018, Alcoa Corporation’s Board of Directors authorized a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $200, depending on cash availability, market conditions, and other factors. Repurchases under the program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program does not have a predetermined expiration date. Alcoa Corporation intends to retire the repurchased shares of common stock. In December 2018, the Company repurchased 1,723,800 shares of its common stock for $50; these shares were immediately retired. No shares were repurchased in 2019.

Dividends on common stock are subject to authorization by Alcoa Corporation’s Board of Directors. The Company did not declare any dividends in 2019, 2018, and 2017.

Stock options and stock units are generally granted in either January or February each calendar year to eligible employees (the Company’s Board of Directors also receive certain stock units; however, these amounts are not material). Stock options are granted at the closing market price of Alcoa Corporation’s common stock on the date of grant and grade vest over a three-year service period (1/3 each year) with a ten-year contractual term. Stock units cliff vest on the third anniversary of the award grant date and certain of these units also include either a market or performance condition.

The final number of market-based and performance-based stock units earned is dependent on Alcoa Corporation’s achievement of certain targets over a three-year measurement period for grants. For market-based stock units, the award will be earned at the end of the measurement period based on the Company’s total shareholder return measured against the total shareholder return of the Standard & Poor’s 500® Index from January 1 of the grant year through December 31 of the third year in the service period. For performance-based stock units, the award will be earned at the end of the measurement period based on the Company’s performance against a pre-established return-on-capital target measured from January 1 of the grant year through December 31 of the third year in the service period.

In 2019, 2018, and 2017, Alcoa Corporation recognized stock-based compensation expense of $30, $35, and $24, respectively, of which approximately 80% to 90% was related to stock units in each period. There was no stock-based compensation expense capitalized in 2019, 2018, or 2017.

Stock-based compensation expense is based on the grant date fair value of the applicable equity grant. For both stock units with no performance or market condition and stock units with a performance condition, the fair value was equivalent to the closing market price of Alcoa Corporation’s common stock on the date of grant in the respective periods. For stock units with a market condition, the fair value was estimated on the date of grant using a Monte Carlo simulation model, which generated a result of $35.70 and $73.13 per unit in 2019 and 2018, respectively. The Monte Carlo simulation model uses certain assumptions to estimate the fair value of a market-based stock unit, including volatility (42.04% for the Company and 12.64% for the Standard & Poor’s 500® Index) and a risk-free interest rate (2.57%) (the assumptions used to estimate the fair value of stock units granted in 2018 were not materially different). For stock options, the fair value was estimated on the date of grant using a lattice-pricing model, which generated a result of $10.86, $21.32, and $12.45 per option in 2019, 2018, and 2017, respectively. The lattice-pricing model uses several assumptions to estimate the fair value of a stock option, including an average risk-free interest rate, dividend yield, volatility, annual forfeiture rate, exercise behavior, and contractual life.

Assumptions used by the Company to estimate the fair value of stock options granted in 2019 are as follows:

Based upon the assumptions used in the determination of the fair value, the lattice-pricing model resulted in an option life of 5.9 years. The assumptions and option life output for 2019 were not materially different from 2018 and 2017.

	Stock options					Stock units
	Number of options			Weighted average exercise price		Number of units			Weighted average FMV per unit
Outstanding, January 1, 2019		1,959,927		$	28.41		2,305,145		$	32.75
Granted		519,900			28.01		1,145,099			27.87
Exercised		(96,712	)		18.05		—			—
Converted		—			—		(924,826	)		15.22
Expired or forfeited		(136,552	)		34.81		(216,309	)		35.68
Performance share adjustment		—			—		(181,498	)		39.62
Outstanding, December 31, 2019		2,246,563			28.38		2,127,611			36.85

The number of Converted units includes 209,550 shares “withheld” to meet the Company’s statutory tax withholding requirements related to the income earned by the employees as a result of vesting in the units.

As of December 31, 2019, the 2,246,563 outstanding stock options had a weighted average remaining contractual life of 5.40 years and a total intrinsic value of $3. Additionally, 1,559,040 of the total outstanding stock options were fully vested and exercisable and had a weighted average remaining contractual life of 3.98 years, a weighted average exercise price of $26.19, and a total intrinsic value of $3 as of December 31, 2019. Cash received from stock option exercises was $2, $23, and $43 in 2019, 2018, and 2017, respectively, and the total intrinsic value of stock options exercised during 2019, 2018, and 2017 was $1, $26, and $24, respectively.

At December 31, 2019, there was $29 (pretax) of combined unrecognized compensation expense related to non-vested grants of both stock options and stock units. This expense is expected to be recognized over a weighted average period of 1.60 years.