XML 39 R27.htm IDEA: XBRL DOCUMENT v3.20.2
Employee Benefit Plans
 12 Months Ended
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.