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STOCK OPTION AND STOCK UNIT PLANS (Tables)

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement, Performance Shares, Activity [Table Text Block]


December 31, 2020	Number	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(units in thousands; intrinsic value in millions of Canadian dollars)
Units outstanding at beginning of year	2,189
Units granted	1,034
Units cancelled	(154)
Units matured1	(219)
Dividend reinvestment	206
Units outstanding at end of year	3,056	2.2	129

1The total amount paid during the years ended December 31, 2020, 2019 and 2018 for PSUs was $14 million, $19 million and $18 million, respectively.

INCENTIVE STOCK OPTIONS

STOCK OPTION AND STOCK UNIT PLANS

Schedule of outstanding stock options


December 31, 2020	Number	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(options in thousands; intrinsic value in millions of Canadian dollars; weighted average exercise price in Canadian dollars)
Options outstanding at beginning of year	35,047	47.73
Options granted	4,783	55.50
Options exercised1	(2,656)	37.12
Options cancelled or expired	(1,680)	52.43
Options outstanding at end of year	35,494	49.35	6.0	54
Options vested at end of year2	22,005	48.65	4.6	34

1The total intrinsic value of ISOs exercised during the years ended December 31, 2020, 2019 and 2018 was $13 million, $58 million and $42 million, respectively, and cash received on exercise was $4 million, $1 million and $15 million, respectively.

2The total fair value of ISOs vested during the years ended December 31, 2020, 2019 and 2018 was $30 million, $32 million and $36 million, respectively.

Schedule of weighted average assumptions used to determine the fair value of stock options granted

Weighted average assumptions used to determine the fair value of ISOs granted using the Black-Scholes-Merton option pricing model are as follows:


Year ended December 31,	2020		2019		2018
Fair value per option (Canadian dollars)1	4.01		4.37		3.86
Valuation assumptions
Expected option term (years)2	6		5		5
Expected volatility3	18.3	%	19.9	%	21.9	%
Expected dividend yield4	5.9	%	6.1	%	6.4	%
Risk-free interest rate5	1.3	%	2.0	%	2.2	%

1Options granted to US employees are based on NYSE prices. The option value and assumptions shown are based on a weighted average of the US and the Canadian options. The fair values per option for the years ended December 31, 2020, 2019 and 2018 were $3.75, $4.04 and $3.75, respectively, for Canadian employees and US$3.62, US$4.09 and US$3.30, respectively, for US employees.

2The expected option term is six years based on historical exercise practice and five years for retirement eligible employees.

3Expected volatility is determined with reference to historic daily share price volatility and consideration of the implied volatility observable in call option values near the grant date.

4The expected dividend yield is the current annual dividend at the grant date divided by the current stock price.

5The risk-free interest rate is based on the Government of Canada’s Canadian Bond Yields and the US Treasury Bond Yields.

Restricted Stock Units (RSU)

STOCK OPTION AND STOCK UNIT PLANS

Schedule of outstanding stock units


December 31, 2020	Number	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(units in thousands; intrinsic value in millions of Canadian dollars)
Units outstanding at beginning of year	1,624
Units granted	1,281
Units cancelled	(87)
Units matured1	(561)
Dividend reinvestment	196
Units outstanding at end of year	2,453	2.5	104

1The total amount paid during the years ended December 31, 2020, 2019 and 2018 for RSUs was $27 million, $34 million and $41 million, respectively.