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Share-based compensation plans | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Terms And Conditions Of Sharebased Payment Arrangement [Abstract] |
Share-based compensation plans | 24. Share-based compensation plans The Company has the following equity-settled plans: A. Stock option plan T he Company has established a stock option plan under which options to purchase common shares may be granted to employees of Cameco. Options granted under the stock option plan have an exercise price of not less than the closing price quoted on the Toronto Stock Exchange (TSX) for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options carry vesting periods of one to three years, and expire eight years from the date granted. The aggregate number of common shares that may be issued pursuant to the Cameco stock option plan shall not exceed 43,017,198 of which 27,875,28 9 shares have been issued. Stock option transactions for the respective years were as follows:
(Number of options) | 2019 |  | 2018
Beginning of year | 8,820,805 |  | 8,324,666
Options granted | 886,740 |  | 1,473,430
Options forfeited | (270,025) |  | (315,340)
Options expired | (815,423) |  | (661,951)
Options exercised [note 16] | (5,000) |  | -
End of year | 8,617,097 |  | 8,820,805
Exercisable | 6,290,380 |  | 6,007,557
Weighted average exercise prices were as follows: |  |  |  |  |
|  | 2019 |  |  | 2018
Beginning of year |  | $19.75 |  |  | $22.19
Options granted |  | 15.27 |  |  | 11.32
Options forfeited |  | 22.59 |  |  | 25.43
Options expired |  | 38.43 |  |  | 28.90
Options exercised |  | 16.38 |  |  | -
End of year |  | $17.44 |  |  | $19.75
Exercisable |  | $18.90 |  |  | $22.83
Total options outstanding and exercisable at December 31, 2019 were as follows:
|  |  |  |  | Options outstanding | Options exercisable
| Option price per share | Number |  | Weighted average remaining life | Weighted average exercisable price | Number | Weighted average exercisable price
| $11.32 - 15.83 | 3,733,210 |  |  | 5.7 |  | $13.50 | 1,406,493 |  | $13.52
| $15.84 - 26.81 | 4,883,887 |  |  | 1.9 |  | $20.45 | 4,883,887 |  | $20.45
|  | 8,617,097 |  |  |  |  |  | 6,290,380 |  |
The foregoing options have expiry dates ranging from May 14, 2020 to February 28, 2027.
B. Restricted share unit (RSU) The Company has established an RSU plan whereby it provides each plan participant an annual grant of RSUs in an amount determined by the bo ard. Each RSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash with an equivalent market value, at the board’s discretion. The RSUs carry vesting periods of one to three years, and the final value of the units will be based on the value of Cameco common shares at the end of the vesting periods. During the vesting period, dividend equivalents accrue to the participants in the form of additional share units as of ea ch normal cash dividend payment date of Cameco’s common shares. As of December 31, 2019, the total number of RSUs held by the participants was 443,274, (2018 - 456,704). C. Employee share ownership plan Cameco also has an employee share ownership p lan, whereby both employee and Company contributions are used to purchase shares on the open market for employees. The Company’s contributions are expensed during the year of contribution. Under the plan, employees have the opportunity to participate in th e program to a maximum of 6% of eligible earnings each year with Cameco matching the first 3% of employee-paid shares by 50%. Cameco contributes $1,000 of shares annually to each employee that is enrolled in the plan. Shares purchased with Company contribu tions and with dividends paid on such shares become unrestricted 12 months from the date on which such shares were purchased. At December 31, 2019, there were 2,253 participants in the plan (2018 - 2,317). The total number of shares purchased in 2019 with Company contributions was 235,915 (2018 - 304,147). In 2019, the Company’s contributions totaled $3,127,000 (2018 - $3,845,000). Cameco records compensation expense under its equity-settled plans with an offsetting credit to contributed s urplus, to reflect the estimated fair value of units granted to employees. During the year, the Company recognized the following expenses under these plans:
|  | 2019 |  |  | 2018
Stock option plan | $ | 4,418 |  | $ | 4,744
Performance share unit plan(a) |  | 7,245 |  |  | 7,690
Restricted share unit plan |  | 2,679 |  |  | 2,542
Employee share ownership plan |  | 3,127 |  |  | 3,845
Total | $ | 17,469 |  | $ | 18,821
(a) In the fourth quarter, the performance share unit plan was amended to allow eligible participants to elect payout of their grants in cash or shares, provided they have met their share ownership requirements. As a result, this plan is now considered cash-settled. This amount represents the expense recorded prior to the plan modification. Fair value measurement of equity-settled plans The fair value of the units granted through the performance share unit plan was determined based on Monte Carlo simulation and t he fair value of options granted under the stock option plan was measured based on the Black-Scholes option-pricing model. T he fair value of RSUs granted was determined based on their intrinsic value on the date of grant. Expected volatility was estimated by considering historic average share price volatility. The inputs used in the measurement o f the fair values at grant date of the equity-settled share-based payment plans were as follows:
| Stock option plan | PSU | RSU
Number of options granted |  |  | 886,740 |  | 477,250 |  | 212,496
Expected vesting |  |  | - |  | 106% |  | -
Average strike price |  |  | $15.27 |  | - |  | $15.33
Expected dividend |  |  | $0.08 |  | - |  | -
Expected volatility |  |  | 36% |  | 38% |  | -
Risk-free interest rate |  |  | 1.8% |  | 1.8% |  | -
Expected life of option |  |  | 4.9 years |  | 3.0 years |  | -
Expected forfeitures |  |  | 7% |  | 12% |  | 15%
Weighted average grant date fair values |  |  | $4.92 |  | $15.33 |  | $15.33
The Company has the following cash-settled plans: A. Deferred share unit (DSU) Cameco offers a DSU plan to non-employee directors. A DSU is a notional unit that reflects the market value of a single common share of Cameco. 60% of each director’s annual retainer is paid in DSUs. In addition, on an annual basis, directors can elect to receive 25%, 50%, 75% or 100% of the remaining 40% of their annual retainer and any additional fees in the form of DSUs. If a director meets their ownership requirements, the director may elect to take 25%, 50%, 75% or 100% of their annual retainer and any fees in cash, with the balance, if any, to be paid in DSUs. Each DSU fully vests upon award. Dividend equivalents accrue to the participants in the form of additional share units as of each normal cash dividend payment date of Cameco’s common shares. The DSUs will be redeemed for cash upon a director leaving the board. The redemption amount will be based upon the weighted average of the closing prices of the common shares of Cameco on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the d irector. As of December 31, 2019, the total number of DSUs held by participating direc tors was 474,266 (2018 - 528,483). B. Ex ecutive performance share unit (PSU) The Company has established a PSU plan whereby it provides each plan participant an annual grant of PSUs in an amount determined by the board. Each PSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash with an equivalent market value, at the participant’s discretion, at the end of each three-year period if certain performance and vesting criteria have been met. The final value of the PSUs will be based on the value of Cameco common shares at the end of the three-year period and the number of PSUs that ultimately vest. During the vesting period, dividend equivalents accrue to the participants in the form of additional share units as of each normal cash dividend payment date of Cameco’s common shares. Vesting of PSUs at the end of the three-year period will be based on total shareholder return over the three years, Cameco’s ability to meet its annual operating targets and whether t he participating executive remains employed by Cameco at the end of the three-year vesting period. If the participant elects a cash payout, the redemption amount will be based on the volume-weighted average trading price of Cameco’s common shares on March 1 or, if March 1 is not a trading day, on the first trading day following March 1. As of December 31, 2019, the total number of PSUs held by the participants, after adjusting for forfeitures on retirement, was 1,465,618 (2018 - 1,343,971). C. Phant om stock option Cameco makes annual grants of bonuses to eligible non-North American employees in the form of phantom stock options. Employees receive the equivalent value of shares in cash when exercised. Options granted under the phantom stock option pla n have an award value equal to the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. As of De cember 31, 2019, the number of options held by participating employees was 406,270 (2018 - 353,580) with exercise prices ranging from $11.32 to $26.81 per share (2018 - $11.32 to $39.53) and a weighted average exercise price of $16.48 (2018 - $17.74). Cameco has recognized the following expenses (recoveries) under its cash-settled plans:
|  | 2019 |  | 2018
Deferred share unit plan | $ | (1,001) | $ | 2,922
Performance share unit plan(a) |  | - |  | -
Phantom stock option plan |  | (436) |  | 675
Total | $ | (1,437) | $ | 3,597
(a) The modification to the PSU plan resulted in a reclassification, at the date of modification, of $8,369,000 from equity to liabilities. The liability recognized on the date of the modification was less than the amount previously recognized as an increase in equity. Since the plan modification did not change the performance and vesting criteria, no incremental fair value was granted. At December 31, 2019, a liability of $14,577,000 (2018 - $9,352,000) was included in the consolidated statem ents of financial position to recognize accrued but unpaid expenses for cash-settled plans. Fair value measurement of cash-settled plans The fair value of the units granted through the PSU plan was determined based on Monte Carlo simulation and the fair va lue of the phantom stock option plan was measured based on the Black-Scholes option-pricing model. Expected volatility is estimated by considering historic average share price volatility. The inputs used in the measurement of the fair values of the cash-se ttled share-based payment plans at the grant and reporting dates were as follows:
| PSUs |  | Phantom stock options
| Grant date |  | Reporting date |  | Grant date |  | Reporting date
| Mar 1, 2019 |  | Dec 31, 2019 |  | Mar 1, 2019 |  | Dec 31, 2019
Number of units | 477,250 |  | 1,465,618 |  | 68,890 |  | 406,720
Expected vesting | 106% |  | 80% |  | - |  | -
Average strike price | - |  | - |  | $15.27 |  | $16.48
Expected dividend | - |  | - |  | $0.08 |  | $0.08
Expected volatility | 38% |  | 31% |  | 37% |  | 35%
Risk-free interest rate | 1.8% |  | 1.7% |  | 1.5% |  | 1.7%
Expected life of option | 3.0 years |  | 1.4 years |  | 4.5 years |  | 4.0 years
Expected forfeitures | 12% |  | 10% |  | 8% |  | 8%
Weighted average measurement date fair values | $15.33 |  | $10.07 |  | $5.07 |  | $2.14
In addition to these inputs, other features of the PSU grant were incorporated into the measurement of fair value. The market condition based on total shareholder return was incorporated by utilizing a Monte Carlo simulation. The non-market criteria relating to realized selling prices and operating targets have been incorporated into the valuation at both grant and reporting date by reviewing prior history and corporate budgets.

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