Stock-Based Compensation (Table)

12 Months Ended

Dec. 31, 2016

Stock-based compensation

Stock-based compensation, fair value assumptions

U.S. Cellular estimated the fair value of stock options granted during 2016, 2015 and 2014 using the Black-Scholes valuation model and the assumptions shown in the table below.

	2016	2015	2014
Expected life	4.7 years	4.6 years	4.5 years
Expected annual volatility rate	30.5%	30.1%	28.0%-28.1%
Dividend yield	0%	0%	0%
Risk-free interest rate	1.2%	1.2%	1.4%-1.5%
Estimated annual forfeiture rate	9.4%	9.7%	9.4%

Summary of stock options

A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2016 is presented in the table below:

Common Share Options		Numberof Options	Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2015		4,102,000	$	40.62
(1,849,000 exercisable)			$	44.33
	Granted	898,000		45.87
	Exercised	(541,000)		35.34
	Forfeited	(197,000)		39.08
	Expired	(289,000)		50.06
Outstanding at December 31, 2016		3,973,000	$	41.92	$	14	6.8
(1,937,000 exercisable)			$	42.54	$	7	5.0

Summary of nonvested restricted stock units

A summary of U.S. Cellular nonvested restricted stock units at December 31, 2016 and changes during the year then ended is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average
		Grant Date
		Fair Value
Nonvested at December 31, 2015	1,194,000	$	36.70
Granted	571,000		43.32
Vested	(348,000)		31.52
Forfeited	(107,000)		39.28
Nonvested at December 31, 2016	1,310,000	$	40.74

Stock-based compensation

The following table summarizes stock‑based compensation expense recognized during 2016, 2015 and 2014:

Year Ended December 31,	2016		2015		2014
(Dollars in millions)
Stock option awards	$	11	$	11	$	10
Restricted stock unit awards		14		13		11
Deferred compensation bonus and matching stock unit awards		–		–		–
Awards under Non-Employee Director compensation plan		1		1		1
Total stock-based compensation, before income taxes		26		25		22
Income tax benefit		(10)		(10)		(8)
Total stock-based compensation expense, net of income taxes	$	16	$	15	$	14

Stock-based compensation, allocation by financial statement line item

The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,	2016		2015		2014
(Dollars in millions)
Selling, general and administrative expense	$	23	$	22	$	19
System operations		3		3		3
Total stock-based compensation expense	$	26	$	25	$	22