STOCK OPTION AND STOCK UNIT PLANS

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

We maintain three primary vehicles under our long-term incentive plan (the Plan): ISOs, PSUs and RSUs. Total stock-based compensation expense recorded for the years ended December 31, 2023, 2022 and 2021 was $154 million, $260 million and $157 million, respectively. The number of common shares authorized for share-settled awards under the Plan was 181 million as at December 31, 2023, 2022 and 2021.

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, 2023	Number	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(number of options in thousands; weighted average exercise price in Canadian dollars; intrinsic value in millions of Canadian dollars)
Options outstanding at beginning of year	27,624	48.46
Options granted	3,053	53.11
Options exercised1	(648)	45.70
Options cancelled or expired	(1,300)	53.84
Options outstanding at end of year	28,729	50.79	5.3	45
Options vested at end of year2	20,235	50.64	4.1	36

1The total intrinsic value of ISOs exercised during the years ended December 31, 2023, 2022 and 2021 was $2 million, $66 million and $24 million, respectively, and cash received on exercise was nil, $3 million and $2 million, respectively.

2The total fair value of ISOs vested during the years ended December 31, 2023, 2022 and 2021 was $20 million, $21 million and $25 million, respectively.

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


Year ended December 31,	2023		2022		2021
Fair value per option (Canadian dollars)1	6.05		5.07		4.10
Valuation assumptions
Expected option term (years)2	6		6		6
Expected volatility3	22.2	%	21.9	%	25.5	%
Expected dividend yield4	6.7	%	6.5	%	7.6	%
Risk-free interest rate5	3.5	%	1.8	%	0.7	%

1Options granted to US employees are based on the New York Stock Exchange prices. The option value and assumptions shown are based on a weighted average of the US and the Canadian options. The fair value per option for the years ended December 31, 2023, 2022 and 2021 were $5.38, $4.78 and $3.91, respectively, for Canadian employees and US$5.23, US$4.62 and US$3.65, 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, 2023, 2022 and 2021 for ISOs was $18 million, $15 million and $16 million, respectively. As at December 31, 2023, unrecognized compensation expense related to non-vested ISOs was $11 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.

PERFORMANCE STOCK UNITS

PSUs are granted to certain key employees where 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 2.0 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 relative to a specified peer group of companies and our distributable cash flow per share, adjusted for unusual, infrequent or other non-operating factors, relative to targets established at the time of grant. Beginning in 2023, the performance multiplier also includes a greenhouse gas reduction component. To calculate the 2023 expense, a multiplier of 1.0 was used for 2023 PSU grants, 1.25 for 2022 PSU grants and 1.25 for the 2021 PSU grants.


December 31, 2023	Number	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(number of units in thousands; intrinsic value in millions of Canadian dollars)
Units outstanding at beginning of year	3,249
Units granted	2,128
Units cancelled	(214)
Units matured1	(2,218)
Dividend reinvestment	235
Units outstanding at end of year	3,180	1.1	175

1The total amount paid during the years ended December 31, 2023, 2022 and 2021 for PSUs was $123 million, $90 million and $70 million, respectively.

Compensation expense recorded for the years ended December 31, 2023, 2022 and 2021 for PSUs was $59 million, $169 million and $56 million, respectively. As at December 31, 2023, unrecognized compensation expense related to non-vested PSUs was $54 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.

RESTRICTED STOCK UNITS

Employees may also be granted cash-settled or share-settled RSUs under the Plan. Cash-settled RSUs are paid to certain key employees, vesting in equal installments on each of the first, second and third anniversaries of the grant date. Share-settled awards are given to non-executive senior management employees and vest following a three-year maturity period. Beginning in 2023, share-settled units were granted to non-senior management employees. These units vest on each of the first, second and third anniversaries of the grant date. RSU holders receive cash or shares equal to Enbridge's weighted average share price for 20 days prior to the maturity of the grant multiplied by the number of units outstanding on the maturity date.


December 31, 2023	Number	Weighted Average Grant Date Fair Value2	Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(number of units in thousands; intrinsic value in millions of Canadian dollars)
Units outstanding at beginning of year	3,565	49.64
Units granted	1,373	52.05
Units cancelled	(246)	52.06
Units matured1	(1,401)	51.05
Dividend reinvestment	280	50.88
Units outstanding at end of year	3,571	50.69	0.9	177

1The total amount paid during the years ended December 31, 2023, 2022 and 2021 for RSUs was $56 million, $32 million and $72 million, respectively.

2Weighted average grant date fair value excludes cash-settled units.

Compensation expense recorded for the years ended December 31, 2023, 2022 and 2021 for RSUs was $77 million, $76 million and $85 million, respectively. As at December 31, 2023, unrecognized compensation expense related to non-vested RSUs was $60 million. The expense is expected to be fully recognized over a weighted average period of approximately two years.