STOCK OPTION AND STOCK UNIT PLANS

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

We maintain three long-term incentive compensation plans: the ISO Plan, the PSU Plan and the RSU Plan. Total stock-based compensation expense recorded for the years ended December 31, 2021, 2020 and 2019 was $157 million, $145 million and $117 million, respectively. Disclosure of activity and assumptions for material stock-based compensation plans are included below.

INCENTIVE STOCK OPTIONS

Certain key employees are granted ISOs to purchase common shares at the grant date market price. ISOs vest in equal annual installments over a four-year period and expire 10 years after the issue date.


December 31, 2021	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	35,494	48.65
Options granted	4,072	43.86
Options exercised1	(4,142)	41.85
Options cancelled or expired	(1,407)	50.74
Options outstanding at end of year	34,017	49.28	5.7	128
Options vested at end of year2	22,029	49.84	4.5	64

1The total intrinsic value of ISOs exercised during the years ended December 31, 2021, 2020 and 2019 was $24 million, $13 million and $58 million, respectively, and cash received on exercise was $2 million, $4 million and $1 million, respectively.

2The total fair value of ISOs exercised during the years ended December 31, 2021, 2020 and 2019 was $25 million, $30 million and $32 million, respectively.

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,	2021		2020		2019
Fair value per option (Canadian dollars)1	4.10		4.01		4.37
Valuation assumptions
Expected option term (years)2	6		6		5
Expected volatility3	25.5	%	18.3	%	19.9	%
Expected dividend yield4	7.6	%	5.9	%	6.1	%
Risk-free interest rate5	0.7	%	1.3	%	2.0	%

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, 2021, 2020 and 2019 were $3.91, $3.75 and $4.04, respectively, for Canadian employees and US$3.65, US$3.62 and US$4.09, 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.

Compensation expense recorded for the years ended December 31, 2021, 2020 and 2019 for ISOs was $16 million, $24 million and $32 million, respectively. As at December 31, 2021, unrecognized compensation expense related to non-vested stock-based compensation arrangements granted under the ISO Plan was $11 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.

PERFORMANCE STOCK UNITS

Under PSU awards for certain key employees, cash awards are paid following a three-year performance cycle. Awards are calculated by multiplying the number of units outstanding at the end of the performance period by Enbridge's weighted average share price for 20 days prior to the maturity of the grant and by a performance multiplier. The performance multiplier ranges from zero, if our performance fails to meet threshold performance levels, to a maximum of two if we perform within the highest range of the performance targets. The performance multiplier is derived through a calculation of our Total Shareholder Return percentile rank, in each case relative to a specified peer group of companies and our distributable cash flow per share, adjusted for unusual, non-operating or non-recurring items, relative to targets established at the time of grant. To calculate the 2021 expense, a multiplier of 0.5 was used for 2021 PSU grants, 0.5 for 2020 PSU grants and 1.3 for the 2019 PSU grants.


December 31, 2021	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	3,056
Units granted	1,895
Units cancelled	(76)
Units matured1	(1,664)
Dividend reinvestment	218
Units outstanding at end of year	3,429	1.1	181

1The total amount paid during the years ended December 31, 2021, 2020 and 2019 for PSUs was $70 million, $14 million and $19 million, respectively.

Compensation expense recorded for the years ended December 31, 2021, 2020 and 2019 for PSUs was $56 million, $76 million and $40 million, respectively. As at December 31, 2021, unrecognized compensation expense related to non-vested PSUs was $31 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.

RESTRICTED STOCK UNITS

Under RSU awards, cash awards are paid to certain of our employees vesting in equal installments on each of the first, second and third anniversaries of the grant date. Share settled awards are given to certain senior management employees following a three year maturity period. RSU holders receive cash or shares equal to our weighted average share price for 20 days prior to the maturity of the grant multiplied by the units outstanding on the maturity date.


December 31, 2021	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	2,453
Units granted	1,514
Units cancelled	(75)
Units matured1	(1,433)
Dividend reinvestment	246
Units outstanding at end of year	2,705	1.1	129

1The total amount paid during the years ended December 31, 2021, 2020 and 2019 for RSUs was $72 million, $27 million and $34 million, respectively.

Compensation expense recorded for the years ended December 31, 2021, 2020 and 2019 for RSUs was $85 million, $44 million and $41 million, respectively. As at December 31, 2021, unrecognized compensation expense related to non-vested RSUs was $62 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.