9. STOCK COMPENSATION PLANS

The Company recognizes all share-based payments, including grants of stock options, as compensation expense in its financial statements based on their fair value.

As of December 31, 2015, the Company’s stock-based compensation consisted of restricted stock units and stock options. The Company recorded stock-based compensation expense, the components of which are further described below, for the years ended December 31 as follows:



In millions	2015	2014	2013
Restricted stock units	$42	$31	$39
Stock options	—	—	2
Total stock-based compensation (pre-tax)	42	31	41
Tax benefit	(13)	(10)	(13)
Total stock-based compensation (net of tax)	$29	$21	$28

Approximately 16 million shares remain authorized to be issued under the 2013 Stock Incentive Plan (SIP). Details of the Company's stock-based compensation plans are discussed below.

Restricted Stock Units

The SIP provides for the grant of several different forms of stock-based compensation, including restricted stock units. Restricted stock units can have service-based and/or performance-based vesting with performance goals being established by the Compensation and Human Resource Committee of the Company’s Board of Directors. Any grant of restricted stock units is generally subject to a vesting period of 12 months to 44 months, to the extent permitted by the SIP. Performance-based grants conditionally vest upon achievement of future performance goals based on performance criteria such as the Company’s achievement of specific return on capital and/or other financial metrics (as defined in the SIP) during the performance period. Performance-based grants must be earned, based on performance, before the actual number of shares to be awarded is known. The Compensation and Human Resource Committee considers the likelihood of meeting the performance criteria based upon estimates and other relevant data, and certifies performance based on its analysis of achievement against the performance criteria. A recipient of restricted stock units does not have the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. Other terms and conditions applicable to any award of restricted stock units will be determined by the Compensation and Human Resource Committee and set forth in the agreement relating to that award.

The following table reports restricted stock unit activity during the year ended December 31, 2015:



Shares in thousands	Number of Units		Weighted Average Grant-Date Fair Value per Unit
Unvested shares as of January 1	4,550		$	27.78
Shares granted	2,473		$	29.40
Shares vested	(1,556	)	$	22.27
Shares forfeited	(512	)	$	30.03
Unvested shares as of December 31	4,955		$	30.08

Stock-based compensation expense is recognized in the financial statements based upon fair value. The total fair value of units vested and distributed in the form of NCR common stock was $44 million in 2015, $66 million in 2014, and $33 million in 2013. As of December 31, 2015, there was $79 million of unrecognized compensation cost related to unvested restricted stock unit grants. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 1.1 years. The weighted average grant date fair value for restricted stock unit awards granted in 2014 and 2013 was $31.85 and $25.64, respectively.

The following table represents the composition of restricted stock unit grants in 2015:



Shares in thousands	Number of Units	Weighted Average Grant-Date Fair Value
Service-based units	1,401	$	29.05
Performance-based units	1,072	$	29.86
Total restricted stock units	2,473	$	29.40

The 2015 performance-based restricted stock unit activity above includes 1.0 million units related to the 2015 to 2016 performance period. The remaining performance-based restricted stock unit activity in 2015 relates to the achievement of performance goals in 2015 associated with performance-based restricted stock units granted in a prior period.

Stock Options

The SIP also provides for the grant of stock options to purchase shares of NCR common stock. The Compensation and Human Resource Committee of the Company's Board of Directors has discretion to determine the material terms and conditions of option awards under the SIP, provided that (i) the exercise price must be no less than the fair market value of NCR common stock (defined as the closing price) on the date of grant, (ii) the term must be no longer than ten years, and (iii) in no event shall the normal vesting schedule provide for vesting in less than one year. Other terms and conditions of an award of stock options will be determined by the Compensation and Human Resource Committee as set forth in the agreement relating to that award. The Compensation and Human Resource Committee has authority to administer the SIP, except that the Committee on Directors and Governance of the Company’s Board of Directors will administer the SIP with respect to non-employee members of the Board of Directors. New shares of the Company’s common stock are issued as a result of stock option exercises.

Stock-based compensation expense for options was computed using the Black-Scholes option-pricing model. During the years ended December 31, 2015, 2014 and 2013, the Company did not grant any stock options.

The following table summarizes the Company’s stock option activity for the year ended December 31, 2015:



Shares in thousands	Shares Under Option		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of January 1	1,480		$	17.86
Exercised	(476	)	$	17.28
Outstanding as of December 31	1,004		$	18.14	3.03	$	6
Fully vested and expected to vest as of December 31	1,004		$	18.14	3.03	$	6
Exercisable as of December 31	1,004		$	18.14	3.03	$	6

The total intrinsic value of all options exercised was $6 million in 2015, $8 million in 2014, and $37 million in 2013. Cash received from option exercises under all share-based payment arrangements was $8 million in 2015, $7 million in 2014, and $51 million in 2013. The tax benefit realized from these exercises was $2 million in 2015, $2 million in 2014, and $12 million in 2013.

Other Share-based Plans

The Employee Stock Purchase Plan (ESPP) enables eligible employees to purchase NCR’s common stock at a discount to the average of the highest and lowest sale prices on the last trading day of each month. The ESPP discount is 5% of the average market price. Accordingly, this plan is considered non-compensatory. Employees may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases. Employees purchased approximately 0.3 million shares in 2015, 0.2 million shares in 2014, and 0.2 million shares in 2013, for approximately $7 million in 2015, and $6 million in 2014 and 2013. A total of 4 million shares were originally authorized to be issued under the new ESPP and approximately 1.2 million authorized shares remain unissued as of December 31, 2015.