Stock-Based Compensation

The Company recorded stock-based compensation expense of $1 million and $7 million ($1 million and $5 million, net of tax) during the three months ended September 30, 2017 and 2016, respectively, and $6 million and $21 million ($4 million and $14 million, net of tax) during the nine months ended September 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 nine months ended September 30, 2017, the Company did not issue any stock unit awards containing a market condition. For the nine months ended September 30, 2016, the Company’s weighted average assumptions for expected stock price volatility, risk-free interest rate, valuation period and dividend yield were 46%, 0.98%, 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	915		35.32		572		35.21
	Vested ^(b)	(470	)	37.11		(146	)	36.55
	Forfeited/expired	(92	)	32.53		(304	)	38.73
Outstanding at September 30, 2017 ^(c)		1,231		$	34.50	1,045		$	33.03

__________


^(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 nine months ended September 30, 2016 was $25.92 and $23.33, respectively.


^(b)	The total grant date fair value of RSUs vested during the nine months ended September 30, 2017 and 2016 was $23 million and $27 million, respectively.

^(c)

The Company assumes 0.1 million of performance-based and market-based RSUs outstanding awards will vest over time with weighted average grate date fair value of $36.64. The Company’s outstanding time-based RSUs, and performance-based and market-based RSUs expected to vest had aggregate intrinsic values of $47 million and $4 million, respectively. Aggregate unrecognized compensation expense related to time-based RSUs, and performance-based and market-based RSUs amounted to $40 million and will be recognized over a weighted average vesting period of 1.3 years.

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	(14	)	0.79		—
	Forfeited/expired	—		—		—
Outstanding and exercisable at September 30, 2017		796		$	2.95	$	28	1.5