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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2019
Compensation And Retirement Disclosure [Abstract] |
Employee Benefit Plans | Note 18—Employee Benefit Plans Pension and Postretirement Plans An analysis of the projected benefit obligations for our pension plans and accumulated benefit obligations for our postretirement health and life insurance plans follows: Millions of Dollars Pension Benefits Other Benefits 2019 2018 2019 2018 U.S. Int’l. U.S. Int’l. Change in Benefit Obligation Benefit obligation at January 1 $ 2,136 3,438 3,236 3,845 218 265 Service cost 79 69 83 81 1 1 Interest cost 79 97 99 107 8 8 Plan participant contributions - 2 - 2 20 22 Plan amendments - - - 7 - - Actuarial (gain) loss 278 387 (44) (259) 27 (10) Benefits paid (253) (147) (507) (143) (59) (67) Curtailment - (69) (4) (3) - - Settlement - - (730) - - - Recognition of termination benefits - 1 3 - - - Foreign currency exchange rate change - 102 - (199) 1 (1) Benefit obligation at December 31* $ 2,319 3,880 2,136 3,438 216 218 *Accumulated benefit obligation portion of above at December 31: $ 2,161 3,594 1,969 3,066 Change in Fair Value of Plan Assets Fair value of plan assets at January 1 $ 1,336 3,358 2,541 3,647 - - Actual return on plan assets 273 529 (112) (106) - - Company contributions 235 464 144 156 39 45 Plan participant contributions - 2 - 2 20 22 Benefits paid (253) (147) (507) (143) (59) (67) Settlement - - (730) - - - Foreign currency exchange rate change - 100 - (198) - - Fair value of plan assets at December 31 $ 1,591 4,306 1,336 3,358 - - Funded Status $ (728) 426 (800) (80) (216) (218) Millions of Dollars Pension Benefits Other Benefits 2019 2018 2019 2018 U.S. Int’l. U.S. Int’l. Amounts Recognized in the Consolidated Balance Sheet at December 31 Noncurrent assets $ - 765 - 232 - - Current liabilities (21) (6) (59) (4) (42) (44) Noncurrent liabilities (707) (333) (741) (308) (174) (174) Total recognized $ (728) 426 (800) (80) (216) (218) Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31 Discount rate 3.25 % 2.35 4.25 3.05 3.10 4.05 Rate of compensation increase 4.00 3.35 4.00 3.65 - Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31 Discount rate 3.95 % 2.90 3.80 2.90 4.05 3.30 Expected return on plan assets 5.80 4.10 5.80 4.30 - Rate of compensation increase 4.00 3.65 4.00 3.75 - For both U.S. and international pensions, the overall expected long-term rate of return is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. We rely on a variety of independent market forecasts in developing the expected rate of return for each class of assets. Included in accumulated other comprehensive income (loss) at December 31 were the following before-tax amounts that had not been recognized in net periodic benefit cost: Millions of Dollars Pension Benefits Other Benefits 2019 2018 2019 2018 U.S. Int’l. U.S. Int’l. Unrecognized net actuarial (gain) loss $ 479 227 516 310 8 (21) Unrecognized prior service cost (credit) - (2) - (4) (183) (216) Millions of Dollars Pension Benefits Other Benefits 2019 2018 2019 2018 U.S. Int’l. U.S. Int’l. Sources of Change in Other Comprehensive Income (Loss) Net gain (loss) arising during the period $ (79) 51 (177) 17 (27) 10 Amortization of actuarial (gain) loss included in income (loss)* 116 32 249 31 (2) (1) Net change during the period $ 37 83 72 48 (29) 9 Prior service credit (cost) arising during the period $ - - - (7) - - Amortization of prior service cost (credit) included in income (loss) - (2) - (5) (33) (35) Net change during the period $ - (2) - (12) (33) (35) *Includes settlement losses recognized in 2019 and 2018. Included in accumulated other comprehensive loss at December 31, 2019, were the following before-tax amounts that are expected to be amortized into net periodic benefit cost during 2020: Millions of Dollars Pension Other Benefits Benefits U.S. Int’l. Unrecognized net actuarial (gain) loss $ 50 23 1 Unrecognized prior service credit - (2) (31) For our tax-qualified pension plans with projected benefit obligations in excess of plan assets, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets were $ 2,073 million, $ 1,919 million, and $ 1,635 million, respectively, at December 31, 2019, and $ 1,871 million, $ 1,737 million, and $ 1,373 million, respectively, at December 31, 2018. For our unfunded nonqualified key employee supplemental pension plans, the projected benefit obligation and the accumulated benefit obligation were $ 601 million and $ 542 million, respectively, at December 31, 2019, and were $ 586 million and $ 504 million, respectively, at December 31, 2018. The components of net periodic benefit cost of all defined benefit plans are presented in the following table: Millions of Dollars Pension Benefits Other Benefits 2019 2018 2017 2019 2018 2017 U.S. Int’l. U.S. Int’l. U.S. Int’l. Components of Net Periodic Benefit Cost Service cost $ 79 69 83 81 89 77 1 1 2 Interest cost 79 97 99 107 118 103 8 8 9 Expected return on plan assets (74) (138) (114) (155) (132) (158) - - - Amortization of prior service cost (credit) - (2) - (5) 4 (6) (33) (35) (36) Recognized net actuarial loss (gain) 54 32 53 31 69 50 (2) (1) (3) Settlements 62 - 196 - 131 - - - - Net periodic benefit cost $ 200 58 317 59 279 66 (26) (27) (28) The components of net periodic benefit cost, other than the service cost component, are included in the “Other expenses” line item on our consolidated income statement. In 2018, we purchased a group annuity contract from Prudential and transferred $ 730 million of future benefit obligations from the U.S. qualified pension plan to Prudential. The purchase of the group annuity contract was funded directly by plan assets of the U.S. qualified pension plan. Effective January 1, 2019, the Cash Balance Account (Title II) of the ConocoPhillips Retirement Plan, a U.S. qualified pension plan, was closed to new entrants. New employees and rehires on or after January 1, 2019, and employees that elected to opt out of Title II will no longer receive pay credits to their Cash Balance Account and instead will be eligible for a Company Retirement Contribution (CRC) as described in the Defined Contribution Plans section. We recognized pension settlement losses of $ 62 million in 2019, $ 196 million in 2018, and $ 131 million in 2017 as lump-sum benefit payments from certain U.S. pension plans exceeded the sum of service and interest costs for those plans and led to recognition of settlement losses. The sale of two ConocoPhillips U.K. subsidiaries completed during the third quarter of 2019 led to a significant reduction of future services of active employees in certain international pension plans, resulting in a curtailment. In conjunction with the recognition of the curtailment, the fair market values of pension plan assets were updated, the pension benefit obligation was remeasured, and the net pension asset decreased by $ 43 million, resulting in a corresponding decrease to other comprehensive income. This is primarily a result of a decrease in the discount rate from 2.90 percent at December 31, 2018 to 1.80 percent at September 30, 2019 offset by a decrease in the pension benefit obligation from curtailment. In determining net pension and other postretirement benefit costs, we amortize prior service costs on a straight- line basis over the average remaining service period of employees expected to receive benefits under the plan. For net actuarial gains and losses, we amortize 10 percent of the unamortized balance each year. We have multiple nonpension postretirement benefit plans for health and life insurance. The health care plans are contributory and subject to various cost sharing features, with participant and company contributions adjusted annually; the life insurance plans are noncontributory. The measurement of the U.S. pre-65 retiree medical accumulated postretirement benefit obligation assumes a health care cost trend rate of 7 percent in 2020 that declines to 5 percent by 2028 . The measurement of the U.S. post-65 retiree medical accumulated postretirement benefit obligation assumes an ultimate health care cost trend rate of 4 percent achieved in 2020 that increases to 5 percent by 2028 . A one-percentage-point change in the assumed health care cost trend rate would be immaterial to ConocoPhillips. Plan Assets —We follow a policy of broadly diversifying pension plan assets across asset classes and individual holdings. As a result, our plan assets have no significant concentrations of credit risk. Asset classes that are considered appropriate include U.S. equities, non-U.S. equities, U.S. fixed income, non-U.S. fixed income, real estate and private equity investments. Plan fiduciaries may consider and add other asset classes to the investment program from time to time. The target allocations for plan assets are 37 percent equity securities, 56 percent debt securities, 6 percent real estate and 1 percent other. Generally, the plan investments are publicly traded, therefore minimizing liquidity risk in the portfolio. The following is a description of the valuation methodologies used for the pension plan assets. There have been no changes in the methodologies used at December 31, 2019 and 2018. ● Fair values of equity securities and government debt securities categorized in Level 1 are primarily based on quoted market prices in active markets for identical assets and liabilities. ● Fair values of corporate debt securities, agency and mortgage-backed securities and government debt securities categorized in Level 2 are estimated using recently executed transactions and quoted market prices for similar assets and liabilities in active markets and for identical assets and liabilities in markets that are not active. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices. When observable quoted market prices are not available, fair value is based on pricing models that use something other than actual market prices (e.g., observable inputs such as benchmark yields, reported trades and issuer spreads for similar securities), and these securities are categorized in Level 3 of the fair value hierarchy. ● Fair values of investments in common/collective trusts are determined by the issuer of each fund based on the fair value of the underlying assets. ● Fair values of mutual funds are based on quoted market prices, which represent the net asset value of shares held. ● Time deposits are valued at cost, which approximates fair value. ● Cash is valued at cost, which approximates fair value. Fair values of international cash equivalents categorized in Level 2 are valued using observable yield curves, discounting and interest rates. U.S. cash balances held in the form of short-term fund units that are redeemable at the measurement date are categorized as Level 2. ● Fair values of exchange-traded derivatives classified in Level 1 are based on quoted market prices. For other derivatives classified in Level 2, the values are generally calculated from pricing models with market input parameters from third-party sources. ● Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the insurance company to the plans’ participants. ● Fair values of real estate investments are valued using real estate valuation techniques and other methods that include reference to third-party sources and sales comparables where available. ● A portion of U.S. pension plan assets is held as a participating interest in an insurance annuity contract, which is calculated as the market value of investments held under this contract, less the accumulated benefit obligation covered by the contract. The participating interest is classified as Level 3 in the fair value hierarchy as the fair value is determined via a combination of quoted market prices, recently executed transactions, and an actuarial present value computation for contract obligations. At December 31, 2019, the participating interest in the annuity contract was valued at $ 95 million and consisted of $ 235 million in debt securities, less $ 140 million for the accumulated benefit obligation covered by the contract. At December 31, 2018, the participating interest in the annuity contract was valued at $ 84 million and consisted of $ 228 million in debt securities, less $ 144 million for the accumulated benefit obligation covered by the contract. The net change from 2018 to 2019 is due to an increase in the fair value of the underlying investments of $ 7 million offset by a decrease in the present value of the contract obligation of $ 4 million. The participating interest is not available for meeting general pension benefit obligations in the near term. No future company contributions are required and no new benefits are being accrued under this insurance annuity contract. The fair values of our pension plan assets at December 31, by asset class were as follows: Millions of Dollars U.S. International Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2019 Equity securities U.S. $ 94 - 7 101 435 - - 435 International 98 - - 98 266 - - 266 Mutual funds 93 - - 93 245 267 - 512 Debt securities Government - - - - 1,412 - - 1,412 Corporate - 2 - 2 - - - - Mutual funds - - - - 392 - - 392 Cash and cash equivalents - - - - 98 - - 98 Derivatives - - - - 11 - - 11 Real estate - - - - - - 132 132 Total in fair value hierarchy $ 285 2 7 294 2,859 267 132 3,258 Investments measured at net asset value* Equity securities Common/collective trusts $ - - - 457 - - - 167 Debt securities Common/collective trusts - - - 637 - - - 760 Cash and cash equivalents - - - 25 - - - - Real estate - - - 83 - - - 112 Total** $ 285 2 7 1,496 2,859 267 132 4,297 *In accordance with FASB ASC Topic 715, “Compensation —Retirement Benefits,” certain investments that are to be measured at fair value using the net asset value per share (or its equivalent) practical expedient 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 amounts presented in the Change in Fair Value of Plan Assets. **Excludes the participating interest in the insurance annuity contract with a net asset of $ 95 million and net receivables related to security transactions of $ 9 million. The fair values of our pension plan assets at December 31, by asset class were as follows: Millions of Dollars U.S. International Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2018 Equity securities U.S. $ 74 - 20 94 371 - - 371 International 80 - - 80 241 - - 241 Mutual funds 76 - - 76 213 181 - 394 Debt securities Government - - - - 889 - - 889 Corporate - 2 - 2 - - - - Mutual funds - - - - 363 - - 363 Cash and cash equivalents - - - - 71 - - 71 Time deposits - - - - 6 - - 6 Derivatives - - - - (17) - - (17) Real estate - - - - - - 124 124 Total in fair value hierarchy $ 230 2 20 252 2,137 181 124 2,442 Investments measured at net asset value* Equity securities Common/collective trusts $ - - - 364 - - - 153 Debt securities Common/collective trusts - - - 548 - - - 641 Cash and cash equivalents - - - 5 - - - - Real estate - - - 80 - - - 109 Total** $ 230 2 20 1,249 2,137 181 124 3,345 *In accordance with FASB ASC Topic 715, “Compensation —Retirement Benefits,” certain investments that are to be measured at fair value using the net asset value per share (or its equivalent) practical expedient 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 amounts presented in the Change in Fair Value of Plan Assets. **Excludes the participating interest in the insurance annuity contract with a net asset of $ 84 million and net receivables related to security transactions of $ 16 million. Level 3 activity was not material for all periods. Our funding policy for U.S. plans is to contribute at least the minimum required by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as amended. Contributions to foreign plans are dependent upon local laws and tax regulations. In 2020, we expect to contribute approximately $ 350 million to our domestic qualified and nonqualified pension and postretirement benefit plans and $ 90 million to our international qualified and nonqualified pension and postretirement benefit plans. The following benefit payments, which are exclusive of amounts to be paid from the insurance annuity contract and which reflect expected future service, as appropriate, are expected to be paid: Millions of Dollars Pension Other Benefits Benefits U.S. Int’l. 2020 $ 447 150 32 2021 270 156 29 2022 250 158 27 2023 217 163 24 2024 220 170 22 2025–2029 822 927 64 Severance Accrual The following table summarizes our severance accrual activity for the year ended December 31, 2019: Millions of Dollars Balance at December 31, 2018 $ 48 Accruals (1) Benefit payments (24) Balance at December 31, 2019 $ 23 Of the remaining balance at December 31, 2019, $ 5 million is classified as short-term. Defined Contribution Plans Most U.S. employees are eligible to participate in the ConocoPhillips Savings Plan (CPSP). Employees can deposit up to 75 percent of their eligible pay, subject to statutory limits, in the CPSP to a choice of approximately 17 investment options. Employees who participate in the CPSP and contribute 1 percent of their eligible pay receive a 6 percent company cash match with a potential company discretionary cash contribution of up to 6 percent. Effective January 1, 2019, new employees, rehires, and employees that elected to opt out of Title II are eligible to receive a CRC of 6 percent of eligible pay into their CPSP. After three years of service with the company, the employee is 100 percent vested in any CRC. Company contributions charged to expense for the CPSP and predecessor plans were $ 82 million in 2019, $ 82 million in 2018, and $ 77 million in 2017. We have several defined contribution plans for our international employees, each with its own terms and eligibility depending on location. Total compensation expense recognized for these international plans was approximately $ 30 million in 2019, $ 31 million in 2018, and $ 35 million in 2017. Share-Based Compensation Plans The 2014 Omnibus Stock and Performance Incentive Plan of ConocoPhillips (the Plan) was approved by shareholders in May 2014. Over its 10 -year life, the Plan allows the issuance of up to 79 million shares of our common stock for compensation to our employees and directors; however, as of the effective date of the Plan, (i) any shares of common stock available for future awards under the prior plans and (ii) any shares of common stock represented by awards granted under the prior plans that are forfeited, expire or are cancelled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the company shall be available for awards under the Plan, and no new awards shall be granted under the prior plans. Of the 79 million shares available for issuance under the Plan, no more than 40 million shares of common stock are available for incentive stock options. The Human Resources and Compensation Committee of our Board of Directors is authorized to determine the types, terms, conditions and limitations of awards granted. Awards may be granted in the form of, but not limited to, stock options, restricted stock units and performance share units to employees and non-employee directors who contribute to the company’s continued success and profitability. Total share-based compensation expense is measured using the grant date fair value for our equity-classified awards and the settlement date fair value for our liability-classified awards. We recognize share-based compensation expense over the shorter of the service period (i.e., the stated period of time required to earn the award); or the period beginning at the start of the service period and ending when an employee first becomes eligible for retirement, but not less than six months, as this is the minimum period of time required for an award to not be subject to forfeiture. Our share-based compensation programs generally provide accelerated vesting (i.e., a waiver of the remaining period of service required to earn an award) for awards held by employees at the time of their retirement. Some of our share-based awards vest ratably (i.e., portions of the award vest at different times) while some of our awards cliff vest (i.e., all of the award vests at the same time). We recognize expense on a straight-line basis over the service period for the entire award, whether the award was granted with ratable or cliff vesting. Compensation Expense —Total share-based compensation expense recognized in income (loss) and the associated tax benefit for the years ended December 31 were as follows: Millions of Dollars 2019 2018 2017 Compensation cost $ 274 265 227 Tax benefit 71 64 76 Stock Options — Stock options granted under the provisions of the Plan and prior plans permit purchase of our common stock at exercise prices equivalent to the average fair market value of ConocoPhillips common stock on the date the options were granted. The options have terms of 10 years and generally vest ratably, with one- third of the options awarded vesting and becoming exercisable on each anniversary date following the date of grant. Options awarded to certain employees already eligible for retirement vest within six months of the grant date, but those options do not become exercisable until the end of the normal vesting period. Beginning in 2018, stock option grants were discontinued and replaced with three-year, time-vested restricted stock units which generally will be cash-settled. The fair market values of the options granted in 2017 were measured on the date of grant using the Black-Scholes-Merton option-pricing model. The weighted-average assumptions used were as follows: 2017 Assumptions used Risk-free interest rate 2.24 % Dividend yield 4.00 % Volatility factor 28.12 % Expected life (years) 6.39 There were no ranges in the assumptions used to determine the fair market values of our options granted in 2017. We believe our historical volatility for periods prior to the 2012 separation of our Downstream businesses is no longer relevant in estimating expected volatility. For 2017, expected volatility was based on the weighted- average blend of the company’s historical stock price volatility from May 1, 2012 (the date of separation of our Downstream businesses) through the stock option grant date and the average historical stock price volatility of a group of peer companies for the expected term of the options. The following summarizes our stock option activity for the year ended December 31, 2019: Millions of Dollars Weighted-Average Aggregate Options Exercise Price Intrinsic Value Outstanding at December 31, 2018 19,379,677 $ 52.88 $ 214 Exercised (1,339,480) 36.28 39 Forfeited - Expired or cancelled - Outstanding at December 31, 2019 18,040,197 $ 54.11 $ 206 Vested at December 31, 2019 17,922,026 $ 54.14 $ 205 Exercisable at December 31, 2019 17,172,815 $ 54.33 $ 194 The weighted-average remaining contractual term of outstanding options, vested options and exercisable options at December 31, 2019, was 4.43 years, 4.41 years and 4.29 years, respectively. The weighted-average grant date fair value of stock option awards granted during 2017 was $ 9.18 . The aggregate intrinsic value of options exercised was $ 94 million in 2018 and $ 4 million in 2017. During 2019, we received $ 49 million in cash and realized a tax benefit of $ 13 million from the exercise of options. At December 31, 2019, the remaining unrecognized compensation expense from unvested options was zero . Stock Unit Program— Generally, restricted stock units are granted annually under the provisions of the Plan and vest in an aggregate installment on the third anniversary of the grant date. In addition, restricted stock units granted under the Plan for a variable long-term incentive program vest ratably in three equal annual installments beginning on the first anniversary of the grant date. Restricted stock units are also granted ad hoc to attract or retain key personnel, and the terms and conditions under which these restricted stock units vest vary by award . Stock-Settled Upon vesting, these restricted stock units are settled by issuing one share of ConocoPhillips common stock per unit. Units awarded to retirement eligible employees vest six months from the grant date; however, those units are not issued as common stock until the earlier of separation from the company or the end of the regularly scheduled vesting period. Until issued as stock, most recipients of the restricted stock units receive a quarterly cash payment of a dividend equivalent that is charged to retained earnings. The grant date fair market value of these restricted stock units is deemed equal to the average ConocoPhillips stock price on the grant date. The grant date fair market value of units that do not receive a dividend equivalent while unvested is deemed equal to the average ConocoPhillips stock price on the grant date, less the net present value of the dividends that will not be received . The following summarizes our stock-settled stock unit activity for the year ended December 31, 2019: Weighted-Average Millions of Dollars Stock Units Grant Date Fair Value Total Fair Value Outstanding at December 31, 2018 7,546,973 $ 43.41 Granted 2,045,503 67.77 Forfeited (99,748) 62.93 Issued (3,269,682) 34.32 $ 225 Outstanding at December 31, 2019 6,223,046 $ 55.99 Not Vested at December 31, 2019 4,185,141 56.17 At December 31, 2019, the remaining unrecognized compensation cost from the unvested stock-settled units was $ 93 million, which will be recognized over a weighted-average period of 1.71 years, the longest period being 2.73 years. The weighted-average grant date fair value of stock unit awards granted during 2018 and 2017 was $ 52.45 and $ 48.77 , respectively. The total fair value of stock units issued during 2018 and 2017 was $ 154 million and $ 159 million, respectively. Cash-Settled Beginning in 2018, cash-settled executive restricted stock units replaced the stock option program. These restricted stock units, subject to elections to defer, will be settled in cash equal to the fair market value of a share of ConocoPhillips common stock per unit on the settlement date and are classified as liabilities on the balance sheet. Units awarded to retirement eligible employees vest six months from the grant date; however, those units are not settled until the earlier of separation from the company or the end of the regularly scheduled vesting period. Compensation expense is initially measured using the average fair market value of ConocoPhillips common stock and is subsequently adjusted, based on changes in the ConocoPhillips stock price through the end of each subsequent reporting period, through the settlement date. Recipients receive an accrued reinvested dividend equivalent that is charged to compensation expense. The accrued reinvested dividend is paid at the time of settlement, subject to the terms and conditions of the award. The following summarizes our cash-settled stock unit activity for the year ended December 31, 2019: Weighted-Average Millions of Dollars Stock Units Grant Date Fair Value Total Fair Value Outstanding at December 31, 2018 376,608 $ 62.21 Granted 319,552 68.20 Forfeited (6,914) 61.35 Issued (92,255) 61.61 $ 6 Outstanding at December 31, 2019 596,991 $ 64.54 Not Vested at December 31, 2019 153,457 64.54 At December 31, 2019, the remaining unrecognized compensation cost from the unvested cash-settled units was $ 5 million, which will be recognized over a weighted-average period of 1.70 years, the longest period being 2.12 years. The weighted-average grant date fair value of stock unit awards granted during 2018 was $ 53.68 . The total fair value of stock units issued during 2018 was $ 1 million. Performance Share Program —Under the Plan, we also annually grant restricted performance share units (PSUs) to senior management. These PSUs are authorized three years prior to their effective grant date (the performance period). Compensation expense is initially measured using the average fair market value of ConocoPhillips common stock and is subsequently adjusted, based on changes in the ConocoPhillips stock price through the end of each subsequent reporting period, through the grant date for stock-settled awards and the settlement date for cash-settled awards. Stock-Settled For performance periods beginning before 2009, PSUs do not vest until the employee becomes eligible for retirement by reaching age 55 with five years of service, and restrictions do not lapse until the employee separates from the company. With respect to awards for performance periods beginning in 2009 through 2012, PSUs do not vest until the earlier of the date the employee becomes eligible for retirement by reaching age 55 with five years of service or five years after the grant date of the award, and restrictions do not lapse until the earlier of the employee’s separation from the company or five years after the grant date (although recipients can elect to defer the lapsing of restrictions until separation). We recognize compensation expense for these awards beginning on the grant date and ending on the date the PSUs are scheduled to vest. Since these awards are authorized three years prior to the grant date, for employees eligible for retirement by or shortly after the grant date, we recognize compensation expense over the period beginning on the date of authorization and ending on the date of grant. Until issued as stock, recipients of the PSUs receive a quarterly cash payment of a dividend equivalent that is charged to retained earnings. Beginning in 2013, PSUs authorized for future grants will vest, absent employee election to defer, upon settlement following the conclusion of the three-year performance period. We recognize compensation expense over the period beginning on the date of authorization and ending on the conclusion of the performance period. PSUs are settled by issuing one share of ConocoPhillips common stock per unit. The following summarizes our stock-settled Performance Share Program activity for the year ended December 31, 2019: Weighted-Average Millions of Dollars Stock Units Grant Date Fair Value Total Fair Value Outstanding at December 31, 2018 2,335,542 $ 50.45 Granted 77,841 68.90 Forfeited - Issued (388,559) 53.66 $ 25 Outstanding at December 31, 2019 2,024,824 $ 50.55 Not Vested at December 31, 2019 15,616 $ 47.80 At December 31, 2019, the remaining unrecognized compensation cost from unvested stock-settled performance share awards was zero . The weighted-average grant date fair value of stock-settled PSUs granted during 2018 and 2017 was $ 53.28 and $ 49.76 , respectively. The total fair value of stock-settled PSUs issued during 2018 and 2017 was $ 29 million and $ 57 million, respectively. Cash-Settled In connection with and immediately following the separation of our Downstream businesses in 2012, grants of new PSUs, subject to a shortened performance period, were authorized. Once granted, these PSUs vest, absent employee election to defer, on the earlier of five years after the grant date of the award or the date the employee becomes eligible for retirement. For employees eligible for retirement by or shortly after the grant date, we recognize compensation expense over the period beginning on the date of authorization and ending on the date of grant. Otherwise, we recognize compensation expense beginning on the grant date and ending on the date the PSUs are scheduled to vest. These PSUs are settled in cash equal to the fair market value of a share of ConocoPhillips common stock per unit on the settlement date and thus are classified as liabilities on the balance sheet. Until settlement occurs, recipients of the PSUs receive a quarterly cash payment of a dividend equivalent that is charged to compensation expense. Beginning in 2013, PSUs authorized for future grants will vest upon settlement following the conclusion of the three-year performance period. We recognize compensation expense over the period beginning on the date of authorization and ending at the conclusion of the performance period. These PSUs will be settled in cash equal to the fair market value of a share of ConocoPhillips common stock per unit on the settlement date and are classified as liabilities on the balance sheet. For performance periods beginning before 2018, during the performance period, recipients of the PSUs do not receive a quarterly cash payment of a dividend equivalent, but after the performance period ends, until settlement in cash occurs, recipients of the PSUs receive a quarterly cash payment of a dividend equivalent that is charged to compensation expense. For the performance period beginning in 2018, recipients of the PSUs receive an accrued reinvested dividend equivalent that is charged to compensation expense. The accrued reinvested dividend is paid at the time of settlement, subject to the terms and conditions of the award. The following summarizes our cash-settled Performance Share Program activity for the year ended December 31, 2019: Weighted-Average Millions of Dollars Stock Units Grant Date Fair Value Total Fair Value Outstanding at December 31, 2018 1,131,007 $ 62.21 Granted 1,958,043 68.90 Forfeited - Settled (2,479,776) 69.10 $ 171 Outstanding at December 31, 2019 609,274 $ 64.54 Not Vested at December 31, 2019 38,487 $ 64.54 At December 31, 2019, the remaining unrecognized compensation cost from unvested cash-settled performance share awards was zero . The weighted-average grant date fair value of cash-settled PSUs granted during 2018 and 2017 was $ 53.28 and $ 49.76 , respectively. The total fair value of cash-settled performance share awards settled during 2018 and 2017 was $ 22 million and $ 24 million, respectively. From inception of the Performance Share Program through 2013, approved PSU awards were granted after the conclusion of performance periods. Beginning in February 2014, initial target PSU awards are issued near the beginning of new performance periods. These initial target PSU awards will terminate at the end of the performance periods and will be settled after the performance periods have ended. Also in 2014, initial target PSU awards were issued for open performance periods that began in prior years. For the open performance period beginning in 2012, the initial target PSU awards terminated at the end of the three-year performance period and were replaced with approved PSU awards. For the open performance period beginning in 2013, the initial target PSU awards terminated at the end of the three-year performance period and were settled after the performance period ended. There is no effect on recognition of compensation expense. Other —In addition to the above active programs, we have outstanding shares of restricted stock and restricted stock units that were either issued as part of our non-employee director compensation program for current and former members of the company’s Board of Directors or as part of an executive compensation program that has been discontinued. Generally, the recipients of the restricted shares or units receive a quarterly dividend or dividend equivalent. The following summarizes the aggregate activity of these restricted shares and units for the year ended December 31, 2019: Weighted-Average Millions of Dollars Stock Units Grant Date Fair Value Total Fair Value Outstanding at December 31, 2018 1,107,315 $ 46.57 Granted 64,063 63.58 Cancelled (2,307) 23.73 Issued (177,163) 49.23 $ 11 Outstanding at December 31, 2019 991,908 $ 47.24 At December 31, 2019, all outstanding restricted stock and restricted stock units were fully vested and there was no remaining compensation cost to be recorded. The weighted-average grant date fair value of awards granted during 2018 and 2017 was $ 62.01 and $ 48.87 , respectively. The total fair value of awards issued during 2018 and 2017 was $ 17 million and $ 4 million, respectively.

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