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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award |
Stock-based Compensation | Stock-based Compensation The following table summarizes stock-based compensation costs for the years ended December 31, 2020, 2019 and 2018.
| Year Ended December 31
Millions of dollars | 2020 | 2019 | 2018
Stock-based compensation cost | $ | 218 |  | $ | 257 |  | $ | 274 |
Tax benefit | (35) |  | (48) |  | (51) |
Stock-based compensation cost, net of tax | $ | 183 |  | $ | 209 |  | $ | 223 |
Our Stock and Incentive Plan, as amended (Stock Plan), provides for the grant of any or all of the following types of stock-based awards: - stock options, including incentive stock options and nonqualified stock options; - restricted stock awards; - restricted stock unit awards; - stock appreciation rights; and - stock value equivalent awards. There are currently no stock appreciation rights, stock value equivalent awards, or incentive stock options outstanding. Under the terms of the Stock Plan, approximately 247 million shares of common stock have been reserved for issuance to employees and non-employee directors. At December 31, 2020, approximately 23 million shares were available for future grants under the Stock Plan. The stock to be offered pursuant to the grant of an award under the Stock Plan may be authorized but unissued common shares or treasury shares. In addition to the provisions of the Stock Plan, we also have stock-based compensation provisions under the Restricted Stock Plan for Non-Employee Directors and the Employee Stock Purchase Plan (ESPP). Each of the active stock-based compensation arrangements is discussed below. Stock options The majority of our options are generally issued during the second quarter of the year. All stock options under the Stock Plan are granted at the fair market value of our common stock at the grant date. Employee stock options generally vest ratably over a period of three years and expire 10 years from the grant date. Compensation expense for stock options is generally recognized on a straight line basis over the entire vesting period. The following table represents our stock options activity during 2020.
| Number of Shares (in millions) | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2020 | 25.3 |  | $ | 41.58 |  |  |
Granted | 2.2 |  | 24.59 |  |  |
Forfeited/expired | (1.6) |  | 37.87 |  |  |
Outstanding at December 31, 2020 | 25.9 |  | $ | 40.36 |  | 5.4 | $ | — |
Exercisable at December 31, 2020 | 19.7 |  | $ | 44.29 |  | 4.5 | $ | — |
The total intrinsic value of options exercised was $7 million in 2020, $2 million in 2019 and $25 million in 2018. As of December 31, 2020, there was $20 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options, which is expected to be recognized over a weighted average period of approximately two years. Cash received from issuance of common stock was $87 million of which none related to proceeds from exercises of stock option during 2020. Cash received from issuance of common stock was $118 million during 2019 and $195 million during 2018, of which $6 million and $88 million related to proceeds from exercises of stock options in 2019 and 2018, respectively. The remainder relates to cash proceeds from the issuance of shares related to our employee stock purchase plan. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility of options granted was a blended rate based upon implied volatility calculated on actively traded options on our common stock and upon the historical volatility of our common stock. The expected term of options granted was based upon historical observation of actual time elapsed between date of grant and exercise of options for all employees. The assumptions and resulting fair values of options granted were as follows:
| Year Ended December 31
| 2020 | 2019 | 2018
Expected term (in years) | 5.39 | 5.31 | 5.27
Expected volatility | 33% | 31% | 28%
Expected dividend yield | 2.92 - 3.23% | 2.25 - 3.88% | 1.37 - 2.29%
Risk-free interest rate | 1.43 - 1.69% | 1.35 - 2.51% | 2.27 - 2.84%
Weighted average grant-date fair value of option | $5.41 | $5.91 | $11.56
Restricted stock Restricted shares issued under the Stock Plan are restricted as to sale or disposition. These restrictions lapse periodically generally over a period of five years. Restrictions may also lapse for early retirement and other conditions in accordance with our established policies. Upon termination of employment, shares on which restrictions have not lapsed must be returned to us, resulting in restricted stock forfeitures. The fair market value of the stock on the date of grant is amortized and charged to income on a straight-line basis over the requisite service period for the entire award. In 2020, we also granted performance based restricted stock units, with the actual number of shares earned to be determined at the end of a three year performance period based on our achievement of certain predefined targets. These targets are based upon our average return on capital employed as compared to certain competitors and a modifier based upon stock performance compared to the Oilfield Services Index (OSX). A Monte Carlo simulation that uses a probabilistic approach was performed by an actuary to measure grant date fair value. The fair value of these performance based restricted stock units is recognized on a straight-line basis over the three year performance cycle. The following table represents our restricted stock awards and restricted stock units granted, vested, and forfeited during 2020.
| Number of Shares (in millions) | Weighted Average Grant-Date Fair Value per Share
Nonvested shares at January 1, 2020 | 18.1 |  | $ | 34.72 |
Granted | 8.2 |  | 16.53 |
Vested | (5.4) |  | 36.97 |
Forfeited | (1.9) |  | 33.66 |
Nonvested shares at December 31, 2020 | 19.0 |  | $ | 26.26 |
The weighted average grant-date fair value of shares granted was $16.53 during 2020, $24.75 during 2019, and $47.43 during 2018. The total fair value of shares vested was $79 million during 2020, $107 million during 2019, and $219 million during 2018. As of December 31, 2020, there was $330 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock, which is expected to be recognized over a weighted average period of three years. Employee Stock Purchase Plan Under the ESPP, eligible employees may have up to 10% of their earnings withheld, subject to some limitations, to be used to purchase shares of our common stock. The ESPP contains four three-month offering periods commencing on January 1, April 1, July 1 and October 1 of each year. The price at which common stock may be purchased under the ESPP is equal to 90% (85% for 2019 and 2018) of the lower of the fair market value of the common stock on the commencement date or last trading day of each offering period. Under the ESPP, 74 million shares of common stock have been reserved for issuance, of which 65 million shares have been sold through the ESPP since the inception of the plan through December 31, 2020 and 9 million shares are available for future issuance. The stock to be offered may be authorized but unissued common shares or treasury shares. The fair value of ESPP shares was estimated using the Black-Scholes option pricing model. The expected volatility was a one-year historical volatility of our common stock. The assumptions and resulting fair values were as follows:
| Year Ended December 31
| 2020 | 2019 | 2018
Expected volatility | 68 | % | 34 | % | 25 | %
Expected dividend yield | 4.89 | % | 3.06 | % | 1.62 | %
Risk-free interest rate | 0.65 | % | 2.20 | % | 1.92 | %
Weighted average grant-date fair value per share | $ | 3.18 |  | $ | 5.22 |  | $ | 8.86 |

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