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Compensation and Benefit Plans
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Compensation and Benefit Plans Compensation and Benefit Plans
Employee Savings Plan
The 401(k) defined contribution savings plan is designed to supplement employees' retirement income. The employer contributions were as follows:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2019
$
82

 
$
81

2018
74

 
74

2017
70

 
69


Pension Plans and Postretirement Benefits Other Than Pensions
Pension Plans
Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting minimum service requirements. SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking. The expected contributions (all by the employer) for Edison International and SCE are approximately $54 million and $37 million, respectively, for the year ending December 31, 2020. Annual contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms.
The funded position of Edison International's pension is sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's pension are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, a regulatory asset has been recorded equal to the unfunded status. See Note 11 for further information.
Information on pension plan assets and benefit obligations for continuing and discontinued operations is shown below.
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2019
 
2018
Change in projected benefit obligation
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
3,880

 
$
4,179

 
$
3,431

 
$
3,702

Service cost
114

 
126

 
110

 
121

Interest cost
155

 
141

 
138

 
124

Actuarial loss (gain)1
240

 
(280
)
 
199

 
(273
)
Benefits paid
(250
)
 
(286
)
 
(216
)
 
(243
)
Projected benefit obligation at end of year
$
4,139

 
$
3,880

 
$
3,662

 
$
3,431

Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
3,321

 
$
3,616

 
$
3,124

 
$
3,390

Actual return on plan assets
611

 
(86
)
 
576

 
(86
)
Employer contributions
73

 
77

 
57

 
52

Benefits paid
(250
)
 
(286
)
 
(216
)
 
(232
)
Fair value of plan assets at end of year
3,755

 
3,321

 
3,541

 
3,124

Funded status at end of year
$
(384
)
 
$
(559
)
 
$
(121
)
 
$
(307
)
Amounts recognized in the consolidated balance sheets consist of 2:
 
 
 
 
 
 
 
Long-term assets
$
—

 
$
2

 
$
—

 
$
—

Current liabilities
(19
)
 
(29
)
 
(2
)
 
(5
)
Long-term liabilities
(365
)
 
(532
)
 
(119
)
 
(302
)
 
$
(384
)
 
$
(559
)
 
$
(121
)
 
$
(307
)
Amounts recognized in accumulated other comprehensive loss consist of:
 
 
 
 
 
 
 
Prior service cost
$
(1
)
 
$
(1
)
 
$
—

 
$
—

Net loss2
95

 
83

 
17

 
17

 
94

 
82

 
17

 
17

Amounts recognized as a regulatory asset
87

 
271

 
87

 
271

Total not yet recognized as expense
$
181

 
$
353

 
$
104

 
$
288

Accumulated benefit obligation at end of year
$
3,968

 
$
3,753

 
$
3,529

 
$
3,342

Pension plans with an accumulated benefit obligation in excess of plan assets:
 
 
 
 
 
 
 
Projected benefit obligation
4,139

 
3,880

 
3,662

 
3,431

Accumulated benefit obligation
3,968

 
3,753

 
3,529

 
3,342

Fair value of plan assets
3,755

 
3,321

 
3,541

 
3,124

Weighted average assumptions used to determine obligations at end of year:
 
 
 
 
 
 
 
Discount rate
3.11
%
 
4.19
%
 
3.11
%
 
4.19
%
Rate of compensation increase
4.10
%
 
4.10
%
 
4.10
%
 
4.10
%
1 
For Edison International and SCE, respectively, the 2019 actuarial losses are primarily related to $401 million and $373 million in losses from a decrease in the discount rate (from 4.19% as of December 31, 2018 to 3.11% as of December 31, 2019), partially offset by $157 million and $177 million in gains from other economic assumption changes. The 2018 actuarial gains are primarily related to $277 million and $261 million in gains from an increase in discount rate (from 3.46% as of December 31, 2017 to 4.19% as of December 31, 2018), respectively.
 

2 
The SCE liability excludes a long-term payable due to Edison International Parent of $133 million and $117 million at December 31, 2019 and 2018, respectively, related to certain SCE postretirement benefit obligations transferred to Edison International Parent. SCE's accumulated other comprehensive loss of $17 million at December 31, 2019 and 2018, excludes net losses of $37 million and $21 million related to these benefits, respectively.
Net periodic pension expense components for continuing operations are:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Service cost
$
114

 
$
126

 
$
138

 
$
111

 
$
123

 
$
133

Non-service cost
 
 
 
 
 
 
 
 
 
 
 
  Interest cost
155

 
140

 
164

 
143

 
128

 
149

  Expected return on plan assets
(205
)
 
(228
)
 
(212
)
 
(194
)
 
(214
)
 
(199
)
  Settlement costs
—

 
—

 
6

 
—

 
—

 
—

  Amortization of prior service cost
2

 
3

 
3

 
2

 
3

 
3

  Amortization of net loss1
7

 
9

 
21

 
5

 
6

 
17

  Regulatory adjustment (deferred)
(3
)
 
15

 
(28
)
 
(3
)
 
15

 
(28
)
Total non-service benefit
(44
)

(61
)

(46
)

(47
)

(62
)

(58
)
Total expense recognized
$
70

 
$
65

 
$
92

 
$
64

 
$
61

 
$
75


1 
Includes the amount of net loss reclassified from accumulated other comprehensive loss. The amount reclassified for Edison International was $7 million, $9 million and $10 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amount reclassified for SCE was $5 million, $6 million and $6 million for the years ended December 31, 2019, 2018 and 2017.
Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss for continuing operations:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Net loss
$
19

 
$
5

 
$
—

 
$
21

 
$
5

 
$
3

Settlement charges
—

 
—

 
(6
)
 
—

 
—

 
—

Amortization of net loss
(7
)
 
(9
)
 
(10
)
 
(5
)
 
(6
)
 
(6
)
Total recognized in other comprehensive loss
12

 
(4
)
 
(16
)
 
16

 
(1
)
 
(3
)
Total recognized in expense and other comprehensive loss
$
82

 
$
61

 
$
76

 
$
80

 
$
60

 
$
72


In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates.
The estimated pension amounts that will be amortized to expense in 2020 for continuing operations are as follows:
(in millions)
Edison International
 
SCE
Unrecognized net loss to be amortized1
$
11

 
$
8

Unrecognized prior service cost to be amortized
2

 
2


1 
The amount of net loss expected to be reclassified from accumulated other comprehensive loss for Edison International and SCE is $11 million and $8 million, respectively.
Edison International and SCE used the following weighted average assumptions to determine pension expense for continuing operations:
 
Years ended December 31,
 
2019
 
2018
 
2017
Discount rate
4.19
%
 
3.46
%
 
3.94
%
Rate of compensation increase
4.10
%
 
4.10
%
 
4.00
%
Expected long-term return on plan assets
6.50
%
 
6.50
%
 
6.50
%

The following benefit payments, which reflect expected future service, are expected to be paid:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2020
$
336

 
$
302

2021
332

 
295

2022
320

 
288

2023
309

 
280

2024
306

 
272

2025 – 2029
1,383

 
1,224


Postretirement Benefits Other Than Pensions ("PBOP(s)")
Employees hired prior to December 31, 2017 who are retiring at or after age 55 with at least 10 years of service may be eligible for postretirement medical, dental, and vision benefits. Eligibility for a company contribution toward the cost of these benefits in retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date. Under the terms of the Edison International Welfare Benefit Plan ("PBOP Plan"), each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of all PBOP Plan benefits with respect to its employees and former employees that exceed the participants' share of contributions. A participating employer may terminate the PBOP Plan benefits with respect to its employees and former employees, as may SCE (as PBOP Plan sponsor), and, accordingly, the participants' PBOP Plan benefits are not vested benefits.
The expected contributions (substantially all of which are expected to be made by SCE) for PBOP benefits are $11 million for the year ended December 31, 2020. Annual contributions related to SCE employees made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans.
SCE has three voluntary employees' beneficiary association trusts ("VEBA Trusts") that can only be used to pay for retiree health care benefits of SCE and its subsidiaries. Once funded into the VEBA Trusts, neither SCE nor Edison International can subsequently recover remaining amounts in the VEBA Trusts. Participants of the PBOP Plan do not have a beneficial interest in the VEBA Trusts. The VEBA Trust assets are sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's other postretirement benefits are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, the unfunded status is offset by a regulatory asset.
Information on PBOP Plan assets and benefit obligations is shown below:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2019
 
2018
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
1,986

 
$
2,337

 
$
1,977

 
$
2,325

Service cost
30

 
37

 
30

 
37

Interest cost
77

 
80

 
77

 
80

Actuarial loss (gain)1
70

 
(382
)
 
70

 
(379
)
Plan participants' contributions
29

 
28

 
29

 
28

Benefits paid
(109
)
 
(114
)
 
(109
)
 
(114
)
Benefit obligation at end of year
$
2,083

 
$
1,986

 
$
2,074

 
$
1,977

Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
2,133

 
$
2,330

 
$
2,133

 
$
2,330

Actual return on assets
401

 
(123
)
 
401

 
(123
)
Employer contributions
11

 
13

 
10

 
12

Plan participants' contributions
29

 
28

 
29

 
28

Benefits paid
(109
)
 
(115
)
 
(109
)
 
(114
)
Fair value of plan assets at end of year
2,465

 
2,133

 
2,464

 
2,133

Funded status at end of year
$
382

 
$
147

 
$
390

 
$
156

Amounts recognized in the consolidated balance sheets consist of:
 
 
 
 
 
 
 
Long-term assets
$
393

 
$
159

 
$
402

 
$
168

Current liabilities
(11
)
 
(12
)
 
(12
)
 
(12
)
Long-term liabilities
—

 
—

 
—

 
—

 
$
382

 
$
147

 
$
390

 
$
156

Amounts recognized in accumulated other comprehensive loss consist of:
 
 
 
 
 
 
 
    Net loss
$
2

 
$
1

 
$
—

 
$
—

Amounts recognized as a regulatory liability
(416
)
 
(185
)
 
(416
)
 
(185
)
Total not yet recognized as income
$
(414
)
 
$
(184
)
 
$
(416
)
 
$
(185
)
Weighted average assumptions used to determine obligations at end of year:
 
 
 
 
 
 
 
Discount rate
3.32
%
 
4.35
%
 
3.32
%
 
4.35
%
Assumed health care cost trend rates:
 
 
 
 
 
 
 
Rate assumed for following year
6.50
%
 
6.75
%
 
6.50
%
 
6.75
%
Ultimate rate
5.00
%
 
5.00
%
 
5.00
%
 
5.00
%
Year ultimate rate reached
2029

 
2029

 
2029

 
2029


1 For Edison International and SCE, respectively, the 2018 actuarial gains are primarily related to $195 million and $194 million in gains from an increase in the discount rate (from 3.70% as of December 31, 2017 to 4.35% as of December 31, 2018) and $137 million and $135 million in experience gains.






Net periodic PBOP expense components for continuing operations are:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Service cost
$
30

 
$
37

 
$
31

 
$
30

 
$
37

 
$
31

Non-service cost
 
 
 
 
 
 
 
 
 
 
 
  Interest cost
77

 
80

 
86

 
77

 
80

 
85

  Expected return on plan assets
(111
)
 
(121
)
 
(110
)
 
(111
)
 
(122
)
 
(110
)
  Special termination benefits
—

 
—

 
1

 
—

 
—

 
1

  Amortization of prior service credit
(1
)
 
(1
)
 
(3
)
 
(1
)
 
(1
)
 
(2
)
  Amortization of net loss
(17
)
 
—

 
—

 
(17
)
 
—

 
—

  Regulatory adjustment (deferred)
29

 
24

 
—

 
29

 
24

 
—

Total non-service benefit
(23
)

(18
)

(26
)

(23
)

(19
)

(26
)
Total expense
$
7

 
$
19

 
$
5

 
$
7

 
$
18

 
$
5


In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates. The estimated PBOP amounts that will be amortized to expense in 2020 for continuing operations are as follows:
(in millions)
Edison International
 
SCE
Unrecognized net gain to be amortized
$
(17
)
 
$
(17
)
Unrecognized prior service credit to be amortized
(1
)
 
(1
)

Edison International and SCE used the following weighted average assumptions to determine PBOP expense for continuing operations:
 
Years ended December 31,
 
2019
 
2018
 
2017
Discount rate
4.35
%
 
3.70
%
 
4.29
%
Expected long-term return on plan assets
5.30
%
 
5.30
%
 
5.30
%
Assumed health care cost trend rates:
 
 
 
 
 
Current year
6.75
%
 
6.75
%
 
7.00
%
Ultimate rate
5.00
%
 
5.00
%
 
5.00
%
Year ultimate rate reached
2029

 
2029

 
2022


A one-percentage-point change in assumed health care cost trend rate would have the following effects on continuing operations:
 
Edison International
 
SCE
(in millions)
One-Percentage-Point Increase
 
One-Percentage-Point Decrease
 
One-Percentage-Point Increase
 
One-Percentage-Point Decrease
Effect on accumulated benefit obligation as of December 31, 2019
$
225

 
$
(184
)
 
$
224

 
$
(183
)
Effect on annual aggregate service and interest costs
10

 
(8
)
 
10

 
(8
)

The following benefit payments (net of plan participants' contributions) are expected to be paid:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2020
$
87

 
$
87

2021
90

 
89

2022
92

 
92

2023
94

 
94

2024
97

 
96

2025 – 2029
512

 
509


Plan Assets
Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies
The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes and may have active and passive investment strategies within asset classes. Target allocations for 2019 pension plan assets were 23% for U.S. equities, 17% for non-U.S. equities, 48% for fixed income and 12% for opportunistic and/or alternative investments. Target allocations for 2019 PBOP plan assets (except for Represented VEBA which is 85% for fixed income, 5% for opportunistic/private equities and 10% for U.S. and non-U.S. equities) are 58% for U.S. and non-U.S. equities, 29% for fixed income and 13% for opportunistic and/or alternative investments. Edison International employs multiple investment management firms. Investment managers within each asset class cover a range of investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers, styles and securities. Plan asset classes and individual manager performances are measured against targets. Edison International also monitors the stability of its investment managers' organizations.
Allowable investment types include:
•
United States equities: common and preferred stocks of large, medium, and small companies which are predominantly United States-based.
•
Non-United States equities: equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies.
•
Fixed income: fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade.
Opportunistic, alternative and other investments:
•
Opportunistic: investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid.
•
Alternative: limited partnerships that invest in non-publicly traded entities.
•
Other: investments diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns.
Asset class portfolio weights are permitted to range within plus or minus 3%. Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions. Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios.
Determination of the Expected Long-Term Rate of Return on Assets
The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns are subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis.
Capital Markets Return Forecasts
SCE's capital markets return forecast methodologies primarily use a combination of historical market data, current market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts and a building block approach. The forecasts are developed using variables such as real risk-free interest, inflation and asset class specific risk premiums. For equities, the risk premium is based on an assumed average equity risk premium of 5% over cash. The forecasted return on private equity and opportunistic investments are estimated at a 4% premium above public equity, reflecting a premium for higher volatility and lower liquidity. For fixed income, the risk premium is based on a comprehensive modeling of credit spreads.
Fair Value of Plan Assets
The PBOP Plan and the Southern California Edison Company Retirement Plan Trust ("Master Trust") assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S. treasury securities, mutual and money market funds are classified as Level 1 as fair value is determined by observable, unadjusted quoted market prices in active or highly liquid and transparent markets. The fair value of the underlying investments in equity mutual funds are based on stock-exchange prices. The fair value of the underlying investments in fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Foreign exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. No investment is classified as Level 3 as of December 31, 2019 and 2018. Common/collective funds and partnerships are measured at fair value using the net asset value per share ("NAV") and have not been classified in the fair value hierarchy. Other investment entities are valued similarly to common/collective funds and are therefore classified as NAV. The Level 1 registered investment companies are either mutual or money market funds. The remaining funds in this category are readily redeemable and classified as NAV and are discussed further at Note 9 to the pension plan master trust investments table below.
Edison International reviews the process/procedures of both the pricing services and the trustee to gain an understanding of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and Edison International's validation procedures for pension and PBOP equity and fixed income securities are the same as the nuclear decommissioning trusts. For further discussion, see Note 4. The values of Level 1 mutual and money market funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's investment managers corroborate the trustee fair values.
Pension Plan
The following table sets forth the Master Trust investments for Edison International and SCE that were accounted for at fair value as of December 31, 2019 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
NAV1
 
Total
U.S. government and agency securities2
$
146

 
$
992

 
$
—

 
$
1,138

Corporate stocks3
547

 
7

 
—

 
554

Corporate bonds4
—

 
572

 
—

 
572

Common/collective funds5
—

 
—

 
693

 
693

Partnerships/joint ventures6
—

 
—

 
471

 
471

Other investment entities7
—

 
—

 
130

 
130

Registered investment companies8
133

 
—

 
—

 
133

Interest-bearing cash
7

 
—

 
—

 
7

Other
—

 
79

 
—

 
79

Total
$
833

 
$
1,650

 
$
1,294

 
$
3,777

Receivables and payables, net
 

 
 

 
 

 
(22
)
Combined net plan assets available for benefits
 

 
 

 
 

 
3,755

SCE's share of net plan assets
 
 
 
 
 
 
$
3,541

The following table sets forth the Master Trust investments that were accounted for at fair value as of December 31, 2018 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
NAV1
 
Total
U.S. government and agency securities2
$
110

 
$
937

 
$
—

 
$
1,047

Corporate stocks3
473

 
6

 
—

 
479

Corporate bonds4
—

 
582

 
—

 
582

Common/collective funds5
—

 
—

 
426

 
426

Partnerships/joint ventures6
—

 
—

 
434

 
434

Other investment entities7
—

 
—

 
236

 
236

Registered investment companies8
112

 
—

 
2

 
114

Interest-bearing cash
2

 
—

 
—

 
2

Other
—

 
73

 
—

 
73

Total
$
697

 
$
1,598

 
$
1,098

 
$
3,393

Receivables and payables, net
 

 
 

 
 

 
(72
)
Combined net plan assets available for benefits
 

 
 

 
 

 
3,321

SCE's share of net plan assets
 
 
 
 
 
 
$
3,124

1 
These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2 
Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
3 
Corporate stocks are diversified. At December 31, 2019 and 2018, respectively, performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (40%) and (43%) and Morgan Stanley Capital International (MSCI) index (60%) and (57%).
4 
Corporate bonds are diversified. At December 31, 2019 and 2018, respectively, this category includes $45 million and $60 million for collateralized mortgage obligations and other asset backed securities.
5 
At December 31, 2019 and 2018, respectively, the common/collective assets were invested in equity index funds that seek to track performance of the Standard and Poor's 500 Index (35% and 43%) and Russell 1000 indexes (17% and 14%). In addition, at December 31, 2019 and 2018, respectively, 28% and 21% of the assets in this category are in index funds which seek to track performance in the MSCI All Country World Index exUS and 12% and 15% of this category are in non-index U.S. equity fund, which is actively managed.
6 
At December 31, 2019 and 2018, respectively, 51% and 50% are invested in private equity funds with investment strategies that include branded consumer products, clean technology and California geographic focus companies, 17% and 1% are invested in ABS including distressed mortgages and commercial and residential loans, 19% and 16% are invested in publicly traded fixed income securities, and 8% and 30% are invested in a broad range of financial assets in all global markets.
7 
At both December 31, 2019 and 2018, other investment entities were invested in (1) emerging market equity securities and (2) domestic mortgage backed securities. In addition, other investment entities were also invested in a hedge fund that invests through liquid instruments in a global diversified portfolio of equity, fixed income, interest rate, foreign currency and commodities markets at December 31, 2018.
8 
Level 1 registered investment companies primarily consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index.
At December 31, 2019 and 2018, respectively, approximately 56% and 61% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.
Postretirement Benefits Other than Pensions
The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair value as of December 31, 2019 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
NAV1
 
Total
U.S. government and agency securities2
$
386

 
$
63

 
$
—

 
$
449

Corporate stocks3
242

 
2

 
—

 
244

Corporate notes and bonds4
—

 
885

 
—

 
885

Common/collective funds5
—

 
—

 
652

 
652

Partnerships6
—

 
—

 
68

 
68

Registered investment companies7
66

 
—

 
—

 
66

Interest bearing cash
—

 
17

 
—

 
17

Other8
2

 
101

 
—

 
103

Total
$
696

 
$
1,068

 
$
720

 
$
2,484

Receivables and payables, net
 

 
 

 
 

 
(19
)
Combined net plan assets available for benefits
 

 
 

 
 

 
2,465

SCE's share of net plan assets
 
 
 
 
 
 
$
2,464

The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair value as of December 31, 2018 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
NAV1
 
Total
U.S. government and agency securities2
$
322

 
$
49

 
$
—

 
$
371

Corporate stocks3
204

 
—

 
—

 
204

Corporate notes and bonds4
—

 
832

 
—

 
832

Common/collective funds5
—

 
—

 
495

 
495

Partnerships6
—

 
—

 
89

 
89

Registered investment companies7
38

 
—

 
—

 
38

Interest bearing cash
22

 
—

 
—

 
22

Other8
5

 
99

 
—

 
104

Total
$
591

 
$
980

 
$
584

 
$
2,155

Receivables and payables, net
 

 
 

 
 

 
(22
)
Combined net plan assets available for benefits
 

 
 

 
 

 
$
2,133

1 
These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2 
Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.
3 
Corporate stock performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (68% and 67%) and the MSCI All Country World Index (32% and 33%) for 2019 and 2018, respectively.
4 
Corporate notes and bonds are diversified and include approximately $49 million and $59 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2019 and 2018, respectively.
5 
At both December 31, 2019 and 2018, 74% of the common/collective assets are invested in index funds which seek to track performance in the MSCI All Country World Index Investable Market Index and 19% are invested in a non-index U.S. equity fund which is actively managed. The remaining assets in this category are primarily invested in emerging market fund.
6 
At December 31, 2019 and 2018, respectively, 55% and 48% of the partnerships are invested in private equity and venture capital funds. Investment strategies for these funds include branded consumer products, clean and information technology and healthcare. 28% and 17% of the remaining partnerships category are invested in asset backed securities including distressed mortgages, distressed companies and commercial and residential loans and debt and equity of banks. 15% and 34% are invested in a broad range of financial assets in all global markets.
7 
At both December 31, 2019 and 2018, registered investment companies were primarily invested in (1) a money market fund, (2) exchange rate trade funds which seek to track performance of MSCI Emerging Market Index, Russell 2000 Index and international small cap equities.
8 
Other includes $66 million and $58 million of municipal securities at December 31, 2019 and 2018, respectively.
At December 31, 2019 and 2018, respectively, approximately 65% and 64% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.
Stock-Based Compensation
Edison International maintains a shareholder-approved incentive plan (the "2007 Performance Incentive Plan") that includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended, is approximately 71 million shares. As of December 31, 2019, Edison International had approximately 26 million shares remaining available for new award grants under its stock-based compensation plans.
The following table summarizes total expense and tax benefits associated with stock-based compensation:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Stock-based compensation expense1:
 
 
 
 
 
 
 
 
 
 
 
   Stock options
$
13

 
$
11

 
$
14

 
$
7

 
$
6

 
$
8

   Performance shares
8

 
1

 
2

 
4

 
1

 
2

   Restricted stock units
6

 
7

 
6

 
3

 
4

 
3

   Other
2

 
2

 
1

 
—

 
—

 
—

Total stock-based compensation expense
29

 
21

 
23

 
14

 
11

 
13

Income tax benefits related to stock compensation expense
$
10

 
$
6

 
$
72

 
$
6

 
$
3

 
$
15

1 
Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income.
Stock Options
Under the 2007 Performance Incentive Plan, Edison International has granted stock options at exercise prices equal to the closing price at the grant date. Edison International may grant stock options and other awards related to, or with a value derived from, its common stock to directors and certain employees. Options generally expire 10 years after the grant date and vest over a period of four years of continuous service in equal annual increments, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.
The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires various assumptions noted in the following table:
 
Years ended December 31,
 
2019
 
2018
 
2017
Expected terms (in years)
5.5
 
5.7
 
5.7
Risk-free interest rate
1.6% - 2.3%
 
2.6% - 3.0%
 
2.1% - 2.3%
Expected dividend yield
3.3% - 4.0%
 
3.6% - 4.3%
 
2.7% - 3.8%
Weighted average expected dividend yield
3.9%
 
3.8%
 
2.7%
Expected volatility
21.7% - 24.1%
 
20.9% - 21.9%
 
17.8% - 20.9%
Weighted average volatility
21.8%
 
20.9%
 
17.9%

The expected term represents the period of time for which the options are expected to be outstanding and is primarily based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate for periods within the contractual life of the option is based on a zero-coupon U.S. Treasury STRIPS (separate trading of registered interest and principal of securities) whose maturity equals the option's expected term on the measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the length of the option's expected term for 2019. The volatility period used was 66 months, 68 months and 68 months at December 31, 2019, 2018 and 2017, respectively.
The following is a summary of the status of Edison International's stock options:
 
 
 
Weighted Average
 
 
 
Stock Options
 
Exercise
Price
 
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic Value
(in millions)
Edison International:
 
 
 
 
 
 
 
Outstanding at December 31, 2018
8,833,610

 
$
59.81

 
 
 
 

Granted
1,928,314

 
62.79

 
 
 
 

Forfeited or expired
(201,643
)
 
67.38

 
 
 
 

Exercised1
(1,281,604
)
 
45.26

 
 
 
 

Outstanding at December 31, 2019
9,278,677

 
62.27

 
6.28
 
 

Vested and expected to vest at December 31, 2019
9,151,143

 
62.27

 
6.25
 
$
125

Exercisable at December 31, 2019
5,378,183

 
$
60.32

 
4.91
 
$
84

SCE:
 
 
 
 
 
 
 
Outstanding at December 31, 2018
5,037,185

 
$
57.84

 
 
 
 

Granted
1,047,247

 
62.91

 
 
 
 

Forfeited or expired
(182,822
)
 
66.83

 
 
 
 

Exercised1
(878,084
)
 
44.67

 
 
 
 

Affiliate transfers, net
(88,824
)
 
53.14

 
 
 
 
Outstanding at December 31, 2019
4,934,702

 
61.01

 
6.05
 
 

Vested and expected to vest at December 31, 2019
4,871,685

 
60.98

 
6.01
 
$
73

Exercisable at December 31, 2019
2,945,726

 
$
58.28

 
4.62
 
$
52


1 Edison International and SCE recognized tax benefits of $7 million and $5 million, respectively, from stock options exercised in 2019.
At December 31, 2019, total unrecognized compensation cost related to stock options and the weighted average period the cost is expected to be recognized are as follows:
 
Edison International
 
SCE
Unrecognized compensation cost, net of expected forfeitures (in millions)
$
18

 
$
9

Weighted average period (in years)
2.4

 
2.4


Supplemental Data on Stock Options
 
Edison International
 
SCE
 
Years ended December 31,
(in millions, except per award amounts)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Stock options:
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value per option granted
$
8.80

 
$
8.21

 
$
10.65

 
$
8.83

 
$
8.22

 
$
10.63

Fair value of options vested
14

 
14

 
11

 
7

 
7

 
5

Value of options exercised
27

 
10

 
126

 
19

 
7

 
29


Performance Shares
A target number of contingent performance shares were awarded to executives in March 2019, 2018 and 2017 and vest at December 31, 2021, 2020 and 2019, respectively. The vesting of the grants is dependent upon market and financial performance and service conditions as defined in the grants for each of the years. The number of performance shares earned
from each year's grants could range from zero to twice the target number (plus additional units credited as dividend equivalents).
The fair value of market condition performance shares is determined using a Monte Carlo simulation valuation model for the total shareholder return. The fair value of financial performance condition performance shares is determined (i) at grant as the target number of shares (which Edison International determined to be the probable outcome) valued at the closing price on the grant date of Edison International common stock and (ii) subsequently using Edison International's earnings per share compared to pre-established targets.
The following is a summary of the status of Edison International's nonvested performance shares:
 
Equity Awards
 
Liability Awards
 
Shares
 
Weighted Average
Fair Value
 
Shares
 
Weighted Average
Fair Value
Edison International:
 
 
 
 
 
 
 
Nonvested at December 31, 2018
—

 
$
—

 
193,438

 
$
42.81

Granted
124,183

 
 
 
—

 
 
Forfeited
(4,340
)
 
 
 
(38,439
)
 
 
Vested1
—

 
 
 
(41,813
)
 


Nonvested at December 31, 2019
119,843

 
$
66.03

 
113,186

 
$
67.30

SCE:
 
 
 
 
 
 
 
Nonvested at December 31, 2018
—

 
$
—

 
101,858

 
$
42.96

Granted
67,512

 
 
 
—

 
 
Forfeited
(4,340
)
 
 
 
(21,641
)
 
 
Vested1
—

 
 
 
(21,035
)
 


Affiliate transfers, net
—

 
 
 
(783
)
 
 
Nonvested at December 31, 2019
63,172

 
$
66.27

 
58,399

 
$
67.34


1 
Relates to performance shares that will be paid in 2020 as performance targets were met at December 31, 2019.
Restricted Stock Units
Restricted stock units were awarded to executives in March 2019, 2018 and 2017 and vest and become payable on January 3, 2022, January 4, 2021 and January 2, 2020, respectively. Each restricted stock unit awarded includes a dividend equivalent feature and is a contractual right to receive one share of Edison International common stock, if vesting requirements are satisfied. The vesting of Edison International's restricted stock units is dependent upon continuous service through the end of the vesting period, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.
The following is a summary of the status of Edison International's nonvested restricted stock units:
 
Edison International
 
SCE
 
Restricted
Stock Units
 
Weighted Average
Grant Date
Fair Value
 
Restricted
Stock Units
 
Weighted Average
Grant Date
Fair Value
Nonvested at December 31, 2018
291,786

 
$
68.11

 
147,826

 
$
68.08

Granted
135,168

 
62.80

 
73,937

 
62.93

Forfeited
(10,456
)
 
65.82

 
(9,564
)
 
65.53

Vested
(104,816
)
 
67.43

 
(52,028
)
 
67.15

Affiliate transfers, net
—

 
—

 
(186
)
 
—

Nonvested at December 31, 2019
311,682

 
$
66.11

 
159,985

 
$
66.16


The fair value for each restricted stock unit awarded is determined as the closing price of Edison International common stock on the grant date.