Stock-Based Compensation

The Company recorded stock-based compensation expense of $4 million and $6 million ($3 million and $4 million, net of tax) during the three months ended June 30, 2017 and 2016, respectively, and $5 million and $14 million ($3 million and $9 million, net of tax) during the six months ended June 30, 2017 and 2016, respectively.

The Company uses a Monte Carlo simulation model to calculate the fair value of stock unit awards containing a market condition. For the six months ended June 30, 2017, the Company did not issue any stock unit awards containing a market condition. For the six months ended June 30, 2016, the Company’s weighted average assumptions for expected stock price volatility, risk-free interest rate, valuation period and dividend yield were 46%, 0.99%, 3 years, and 0.0%, respectively.

The activity related to the Company’s restricted stock units (“RSUs”) consisted of (in thousands of shares):



		Time-Based RSUs				Performance-Based and Market-Based RSUs
		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017 ^(a)		878		$	34.83	923		$	34.11
	Granted	528		34.41		572		34.41
	Vested ^(b)	(447	)	36.69		(146	)	36.55
	Forfeited/expired	(50	)	32.49		(276	)	39.51
Outstanding at June 30, 2017 ^(c)		909		$	33.80	1,073		$	32.55

__________


^(a)	Reflects the maximum number of stock units assuming achievement of all time-, performance- and market-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs, and performance-based and market-based RSUs granted during the six months ended June 30, 2016 was $25.86 and $23.29, respectively.


^(b)	The total grant date fair value of RSUs vested during the six months ended June 30, 2017 and 2016 was $22 million and $25 million, respectively.

^(c)

The Company’s outstanding time-based RSUs, and performance-based and market-based RSUs had aggregate intrinsic values of $25 million and $29 million, respectively. Aggregate unrecognized compensation expense related to time-based RSUs, and performance-based and market-based RSUs, at target, amounted to $45 million and will be recognized over a weighted average vesting period of 1.5 years. The Company assumes that substantially all outstanding awards will vest over time.

The stock option activity consisted of (in thousands of shares):



		Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1, 2017		810		$	2.91	$	27	2.3
	Granted	—		—		—
	Exercised	(9	)	0.79		—
	Forfeited/expired	—		—		—
Outstanding and exercisable at June 30, 2017		801		$	2.94	$	19	1.8