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Stock Options and Other Share-Based Compensation
 12 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options and Other Share-Based Compensation
Stock Options and Other Share-Based Compensation
Compensation expense for stock options for 2015, 2014 and 2013 was $312 ($203 after tax), $287 ($186 after tax) and $292 ($190 after tax), respectively. In addition, compensation expense for stock appreciation rights, restricted stock, performance units and restricted stock units was $32 ($21 after tax), $71 ($46 after tax) and $223 ($145 after tax) for 2015, 2014 and 2013, respectively. No significant stock-based compensation cost was capitalized at December 31, 2015, or December 31, 2014.
Cash received in payment for option exercises under all share-based payment arrangements for 2015, 2014 and 2013 was $195, $527 and $553, respectively. Actual tax benefits realized for the tax deductions from option exercises were $17, $54 and $73 for 2015, 2014 and 2013, respectively.
Cash paid to settle performance units and stock appreciation rights was $104, $204 and $186 for 2015, 2014 and 2013, respectively.
Awards under the Chevron Long-Term Incentive Plan (LTIP) may take the form of, but are not limited to, stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and nonstock grants. From April 2004 through May 2023, no more than 260 million shares may be issued under the LTIP. For awards issued on or after May 29, 2013, no more than 50 million of those shares may be in a form other than a stock option, stock appreciation right or award requiring full payment for shares by the award recipient. For the major types of awards outstanding as of December 31, 2015, the contractual terms vary between three years for the performance units and restricted stock units, and 10 years for the stock options and stock appreciation rights.
Remaining awards under the Unocal Share-Based Plans expired in early 2015.
The fair market values of stock options and stock appreciation rights granted in 2015, 2014 and 2013 were measured on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions:
 
Year ended December 31
 
2015

 
 
2014

 
2013

 
Expected term in years1
6.1



6.0


6.0


Volatility2
21.9

%

30.3

%
31.3

%
Risk-free interest rate based on zero coupon U.S. treasury note
1.4

%

1.9

%
1.2

%
Dividend yield
3.6

%

3.3

%
3.3

%
Weighted-average fair value per option granted
$
13.89



$
25.86


$
24.48


1    Expected term is based on historical exercise and postvesting cancellation data.
2    Volatility rate is based on historical stock prices over an appropriate period, generally equal to the expected term.

A summary of option activity during 2015 is presented below:
 
Shares (Thousands)

Weighted-Average
 Exercise Price
 
 
Averaged Remaining Contractual Term (Years)
Aggregate Intrinsic Value
 
Outstanding at January 1, 2015
78,341

 
$
93.59

 

 

Granted
22,126

 
$
103.71

 

 

Exercised
(3,104
)
 
$
62.06

 

 

Forfeited
(3,071
)
 
$
103.70

 

 

Outstanding at December 31, 2015
94,292

 
$
96.67

 
5.83
 
$
467

Exercisable at December 31, 2015
65,657

 
$
91.85

 
4.61
 
$
467


The total intrinsic value (i.e., the difference between the exercise price and the market price) of options exercised during 2015, 2014 and 2013 was $120, $398 and $445, respectively. During this period, the company continued its practice of issuing treasury shares upon exercise of these awards.
As of December 31, 2015, there was $190 of total unrecognized before-tax compensation cost related to nonvested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.7 years.
At January 1, 2015, the number of LTIP performance units outstanding was equivalent to 2,265,952 shares. During 2015, 890,000 units were granted, 828,868 units vested with cash proceeds distributed to recipients and 134,147 units were forfeited. At December 31, 2015, units outstanding were 2,192,937. The fair value of the liability recorded for these instruments was $166, and was measured using the Monte Carlo simulation method. In addition, outstanding stock appreciation rights and other awards that were granted under various LTIP programs totaled approximately 4.5 million equivalent shares as of December 31, 2015. A liability of $51 was recorded for these awards.