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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2018
SHARE BASED COMPENSATION |
SHARE BASED COMPENSATION | 24. SHARE-BASED COMPENSATION Share-Based Compensation Expense Reflected in the Consolidated Statements of Comprehensive Income within Operating, Selling and General expense are the following share-based compensation amounts:
($ millions) |  | 2018 |  | 2017 |
Equity-settled plans |  | 46 |  | 48 |
Cash-settled plans |  | 181 |  | 334 |
Total share-based compensation expense |  | 227 |  | 382 |
Liability Recognized for Share-Based Compensation Reflected in the Consolidated Balance Sheets within accounts payable and accrued liabilities and other long-term liabilities are the following fair value amounts for the company's cash-settled plans:
($ millions) |  | 2018 |  | 2017 |
Current liability |  | 286 |  | 344 |
Long-term liability (note 20) |  | 259 |  | 361 |
Total Liability |  | 545 |  | 705 |
The intrinsic value of the vested awards at December 31, 2018 was $328 million (December 31, 2017 – $399 million). Stock Option Plans Suncor grants stock option awards as a form of retention and incentive compensation. (a) Active Stock Option Plan Stock options granted by the company on or after August 1, 2010 provide the holder with the right to purchase common shares at the market price on the grant date, subject to fulfilling vesting terms. This plan replaced the pre-merger stock option plan of legacy Suncor and legacy Petro-Canada. Options granted have a seven-year life, vest annually over a three-year period and are accounted for as equity-settled awards. The weighted average fair value of options granted during the period and the weighted average assumptions used in their determination are as noted below:
|  | 2018 |  | 2017 |
Annual dividend per share |  | $ 1.44 |  | $ 1.28 |
Risk-free interest rate |  | 2.03% |  | 1.09% |
Expected life |  | 5 years |  | 5 years |
Expected volatility |  | 24% |  | 25% |
Weighted average fair value per option |  | $ 6.73 |  | $ 6.42 |
The expected life is based on historical stock option exercise data and current expectations. The expected volatility considers the historical volatility in the price of Suncor's common shares over a period similar to the life of the options, and is indicative of future trends. (b) Discontinued Stock Option Plans Executive and Key Contributor Stock Options Options granted under these plans generally have a seven- to ten-year life and vest over a three-year period. These plans were in place prior to August 1, 2009, at the time of the merger between Petro-Canada and Suncor, and are accounted for as equity-settled awards. Suncor Energy Inc. Stock Options with Tandem Stock Appreciation Rights Options granted between August 1, 2009 and July 31, 2010, have a seven-year life and vest annually over a three-year period. Each option included a tandem stock appreciation right (TSAR), allowing the option holder the right to receive a cash payment equal to the excess of the market price of Suncor's common shares at the time of exercise over the exercise price of the option. These awards are accounted for as cash-settled. All options granted under this plan expired at December 31, 2017. The following table presents a summary of the activity related to Suncor's stock option plans:
|  | 2018 |  | 2017 |
|  | Number (thousands) |  | Weighted Average Exercise Price ($) |  | Number (thousands) |  | Weighted Average Exercise Price ($) |
Outstanding, beginning of year |  | 31 110 |  | 36.96 |  | 31 442 |  | 35.98 |
Granted |  | 7 231 |  | 43.19 |  | 7 401 |  | 42.04 |
Exercised for cash payment |  | — |  | — |  | (6 | ) | 32.00 |
Exercised as options for common shares |  | (7 927 | ) | 35.95 |  | (6 223 | ) | 36.65 |
Forfeited/expired |  | (1 479 | ) | 47.88 |  | (1 504 | ) | 42.21 |
Outstanding, end of year |  | 28 935 |  | 38.25 |  | 31 110 |  | 36.96 |
Exercisable, end of year |  | 15 374 |  | 36.10 |  | 17 363 |  | 36.53 |
Options are exercised regularly throughout the year. Therefore, the weighted average share price during the year of $46.99 (2017 – $41.09) is representative of the weighted average share price at the date of exercise. For the options outstanding at December 31, 2018, the exercise price ranges and weighted average remaining contractual lives are shown below:
|  | Outstanding |  | Exercisable |
Exercise Prices ($) |  | Number (thousands) |  | Weighted Average Remaining Contractual Life (years) |  | Weighted Average Exercise Price ($) |  | Number (thousands) |  | Weighted Average Exercise Price ($) |
24.50-34.99 |  | 7 821 |  | 3 |  | 30.90 |  | 5 589 |  | 31.16 |
35.00-39.99 |  | 7 214 |  | 3 |  | 37.74 |  | 7 195 |  | 37.74 |
40.00-44.99 |  | 13 714 |  | 6 |  | 42.53 |  | 2 590 |  | 42.19 |
45.00-49.99 |  | 58 |  | 7 |  | 47.82 |  | — |  | — |
50.00-54.27 |  | 128 |  | 7 |  | 52.40 |  | — |  | — |
Total |  | 28 935 |  | 4 |  | 38.25 |  | 15 374 |  | 36.10 |
Common shares authorized for issuance by the Board of Directors that remain available for the granting of future options:
(thousands) |  | 2018 |  | 2017 |
|  | 21 929 |  | 28 972 |
Share Unit Plans Suncor grants share units as a form of retention and incentive compensation. Share unit plans are accounted for as cash-settled awards. (a) Performance Share Units (PSUs) A PSU is a time-vested award entitling employees to receive varying degrees of cash (0% – 200% of the company's share price at time of vesting) contingent upon Suncor's total shareholder return (stock price appreciation and dividend income) relative to a peer group of companies. PSUs vest approximately three years after the grant date. (b) Restricted Share Units (RSUs) A RSU is a time-vested award entitling employees to receive cash calculated based on an average of the company's share price leading up to vesting. RSUs vest approximately three years after the grant date. (c) Deferred Share Units (DSUs) A DSU is redeemable for cash or a common share for a period of time after a unitholder ceases employment or Board membership. The DSU Plan is limited to executives and members of the Board of Directors. Members of the Board of Directors receive an annual grant of DSUs as part of their compensation and may elect to receive their fees in cash only or in increments of 50% or 100% allocated to DSUs. Executives may elect to receive their annual incentive bonus in cash only or in increments of 25%, 50%, 75% or 100% allocated to DSUs. The following table presents a summary of the activity related to Suncor's share unit plans:
(thousands) |  | PSU |  | RSU |  | DSU |  |
Outstanding, December 31, 2016 |  | 2 413 |  | 18 158 |  | 1 218 |  |
| Granted |  | 1 570 |  | 5 009 |  | 202 |  |
| Redeemed for cash |  | (1 663 | ) | (6 354 | ) | (118 | ) |
| Forfeited/expired |  | (53 | ) | (741 | ) | — |  |
Outstanding, December 31, 2017 |  | 2 267 |  | 16 072 |  | 1 302 |  |
| Granted |  | 1 553 |  | 4 796 |  | 192 |  |
| Redeemed for cash |  | (1 623 | ) | (5 962 | ) | (189 | ) |
| Forfeited/expired |  | — |  | (314 | ) | — |  |
Outstanding, December 31, 2018 |  | 2 197 |  | 14 592 |  | 1 305 |  |
Stock Appreciation Rights (SARs) A SAR entitles the holder to receive a cash payment equal to the difference between the stated exercise price and the market price of the company's common shares on the date the SAR is exercised, and is accounted for as a cash-settled award. SARs have a seven-year life and vest annually over a three-year period. The following table presents a summary of the activity related to Suncor's SARs plan:
|  | 2018 |  | 2017 |
|  | Number (thousands) |  | Weighted Average Exercise Price ($) |  | Number (thousands) |  | Weighted Average Exercise Price ($) |
Outstanding, beginning of year |  | 387 |  | 36.38 |  | 485 |  | 34.90 |
Granted |  | 108 |  | 43.09 |  | 107 |  | 42.05 |
Exercised |  | (126 | ) | 35.65 |  | (176 | ) | 35.59 |
Forfeited/expired |  | (6 | ) | 38.36 |  | (29 | ) | 37.32 |
Outstanding, end of year |  | 363 |  | 38.60 |  | 387 |  | 36.38 |
Exercisable, end of year |  | 170 |  | 36.57 |  | 162 |  | 35.39 |

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