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Share-Based Compensation (Notes) | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement, Noncash Expense [Abstract] |
Share-based Payment Arrangement [Text Block] | SHARE-BASED COMPENSATION Under our Long-Term Incentive Plans, we may issue restricted stock units (“RSUs”), restricted stock shares (“RSSs”), and stock options. RSUs and RSSs consist of time-based and performance-based awards. The number of shares that may be granted in any year is limited to 2% of our issued and outstanding Common Stock as of December 31 of the prior calendar year. The limit may be increased up to 3% in any year, with a corresponding reduction in shares available for grants in future years. Granted RSUs generally cliff vest or ratably vest over a three-year service period. Performance-based RSUs have two components: one based on internal financial performance metrics and the other based on total shareholder return relative to an industrial and automotive peer group. At the time of vest, RSU awards are net settled (i.e., shares are withheld to cover the employee tax obligation). Stock options ratably vest over a three-year service period and expire ten years from the grant date. The fair value of both the time-based and the internal performance metrics portion of the performance-based RSUs and RSSs is determined using the closing price of our Common Stock at grant date. For awards that include a market condition, we measure the fair value using a Monte Carlo simulation. The weighted average per unit grant date fair value for the years ended December 31, 2019, 2020, and 2021 was $8.99, $7.11, and $13.02, respectively. Time-based RSUs generally have a graded vesting feature whereby one-third of each grant vests after the first anniversary of the grant date, one-third after the second anniversary, and one-third after the third anniversary. The graded vesting method recognizes expense over the service period for each separately-vesting tranche, which results in accelerated recognition of expense. The fair value of time-based RSUs, RSSs, and stock options is expensed over the shorter of each separate vesting period, using the graded vesting method, or the time period an employee becomes eligible to retain the award at retirement. The fair value of performance-based RSUs and RSSs is expensed when it is probable and estimable as measured against the performance metrics over the shorter of the performance or required service periods. We measure the fair value of our stock options on the date of grant using either the Black-Scholes option-pricing model (for options without a market condition) or a Monte Carlo simulation (for options with a market condition). We have elected to recognize forfeitures as an adjustment to compensation expense for all RSUs, RSSs, and stock options in the same period as the forfeitures occur. Expense is recorded in Selling, administrative, and other expenses. Restricted Stock Units and Restricted Stock Shares The fair value of vested RSUs and RSSs as well as the compensation cost for the years ended December 31 were as follows (in millions):
| 2019 |  | 2020 |  | 2021
Fair value of vested shares | $ | 231 |  |  | $ | 264 |  |  | $ | 217 |
Compensation cost (a) | 190 |  |  | 156 |  |  | 229 |
__________ (a) Net of tax benefit of $38 million, $31 million, and $74 million in 2019, 2020, and 2021, respectively. As of December 31, 2021, there was approximately $121 million in unrecognized compensation cost related to non-vested RSUs. This expense will be recognized over a weighted average period of 1.9 years. The performance-based RSUs granted in March 2019, 2020, and 2021 include a relative Total Shareholder Return (“TSR”) metric. Inputs and assumptions used to calculate the fair value at grant date through a Monte Carlo simulation were as follows:
| 2019 |  | 2020 |  | 2021 |  |
Fair value per stock award | $ | 9.66 |  |  | $ | 7.21 |  |  | $ | 13.45 |  |  |
Grant date stock price | 8.81 |  |  | 7.08 |  |  | 11.93 |  |  |
Assumptions: |  |  |  |  |  |  |
Ford’s stock price expected volatility (a) | 24.1 | % |  | 25.4 | % |  | 39.9 | % |  |
Expected average volatility of peer companies (a) | 25.8 |  |  | 26.4 |  |  | 39.6 |  |  |
Risk-free interest rate | 2.57 |  |  | 0.68 |  |  | 0.32 |  |  |
__________ (a)Expected volatility based on three years of daily closing share price changes ending on the grant date. NOTE 6. SHARE-BASED COMPENSATION (Continued) During 2021, activity for RSUs and RSSs was as follows (in millions, except for weighted-average fair value):
| Shares |  | Weighted- Average Fair Value |  |
Outstanding, beginning of year | 72.2 |  |  | $ | 8.35 |  |  |
Granted (a) | 23.4 |  |  | 13.02 |  |  |
Vested (a) | (24.1) |  |  | 9.01 |  |  |
Forfeited | (9.0) |  |  | 10.73 |  |  |
Outstanding, end of year (b) | 62.5 |  |  | 10.31 |  |  |
__________ (a)Includes shares awarded to non-employee directors. (b)Excludes 821,082 non-employee director shares that were vested but unissued at December 31, 2021. Stock Options For the years ended December 31, 2020 and 2021, stock options outstanding were 26.9 million and 11.9 million, respectively, and stock options exercisable were 20.3 million and 7.5 million, respectively. During 2021, there were 11 million stock options exercised, with a weighted-average exercise price of $12.07. The exercised options prices ranged from $6.19 to $15.37 during 2021. We received approximately $133 million in proceeds with an equivalent of about $197 million in new issues used to settle the exercised options. For options exercised during the year ended December 31, 2021, the difference between the fair value of the Common Stock issued and the respective exercise price was $64 million. As of December 31, 2021, the intrinsic value for vested and unvested stock options was $51.6 million and $63.2 million, respectively. The average remaining terms for fully vested stock options and unvested stock options were 2.3 years and 8.5 years, respectively. Compensation cost for stock options for the year ended December 31, 2021 was $2 million. As of December 31, 2021, there was no unrecognized compensation cost related to non-vested stock options. During 2021, no new stock options were granted.

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