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Stock-Based Incentive Compensation Plans | 12 Months Ended
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Dec. 31, 2017
Stock-Based Incentive Compensation Plans [Abstract] |
Stock-Based Incentive Compensation Plans | ﻿ 1 8. Stock-Based Incentive Compensation Plans ﻿ LNC Stock-Based Incentive Plans ﻿ We sponsor three stock-based incentive plans for our employees and directors and for the employees and agents of our subsidiaries that provide for the issuance of stock options, performance shares (performance-vested shares as opposed to service-vested shares), stock appreciation rights (“SARs”) and restricted stock units (“RSUs”) among other types of awards. We issue new shares to satisfy option exercises and vested performance shares and RSUs. ﻿ Total compensation expense (in millions) by award type for all of our stock-based incentive plans was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ | 2017 |  | 2016 |  | 2015 |
﻿Stock options | $ | 10 |  | $ | 9 |  | $ | 7 |
﻿Performance shares |  | 13 |  |  | 11 |  |  | 12 |
﻿SARs |  | 2 |  |  | 3 |  |  | - |
﻿RSUs |  | 25 |  |  | 23 |  |  | 22 |
﻿Total | $ | 50 |  | $ | 46 |  | $ | 41 |
﻿ |  |  |  |  |  |  |  |  |
﻿Recognized tax benefit | $ | 18 |  | $ | 16 |  | $ | 14 |
﻿ Total unrecognized compensation expense (in millions) and expected weighted-average life (in years) by award type for all of our stock-based incentive plans was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ | 2017 |  | 2016 |  | 2015 |
﻿ |  |  | Weighted- |  |  |  | Weighted- |  |  |  | Weighted- |
﻿ |  |  | Average |  |  |  | Average |  |  |  | Average |
﻿ | Expense |  | Period |  | Expense |  | Period |  | Expense |  | Period |
﻿Stock options | $ | 9 |  | 1.4 |  | $ | 8 |  | 1.4 |  | $ | 8 |  | 1.4 |
﻿Performance shares |  | 12 |  | 1.2 |  |  | 12 |  | 1.4 |  |  | 11 |  | 1.0 |
﻿SARs |  | 2 |  | 3.2 |  |  | 2 |  | 3.6 |  |  | 1 |  | 3.0 |
﻿RSUs |  | 32 |  | 1.1 |  |  | 25 |  | 1.2 |  |  | 24 |  | 1.0 |
﻿Total unrecognized stock-based |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿incentive compensation expense | $ | 55 |  |  |  | $ | 47 |  |  |  | $ | 44 |  |  |
﻿ In the first quarter of 2017, a performance period from 2017-2019 was approved for our executive officers by the Compensation Committee. The award for executive officers participating in this performance period consisted of LNC RSUs representing approximately 42%, LNC stock options representing approximately 23% and LNC performance shares representing approximately 35% of the total award. LNC RSUs granted for this period cliff-vest on the third anniversary of the grant date, based solely on a service condition. LNC stock options granted for this performance period have a maximum contractual term of ten years and vest ratably over the three-year period, based solely on a service condition. Depending on the performance results for this period, the ultimate payout of performance shares could range from zero to 200% of the target award. For the 201 7-201 9 performance period, a total of 448,527 LNC RSUs, 407,637 LNC stock options and 154,351 LNC performance shares were granted. ﻿ In the first quarter of 2016, a performance period from 2016-2018 was approved for our executive officers by the Compensation Committee. The award for executive officers participating in this performance period consisted of LNC RSUs representing approximately 40%, LNC stock options representing approximately 24% and LNC performance shares representing approximately 36% of the total award. LNC RSUs granted for this period cliff-vest on the third anniversary of the grant date, based solely on a service condition. LNC stock options granted for this performance period have a maximum contractual term of ten years and vest ratably over the three-year period, based solely on a service condition. Depending on the performance results for this period, the ultimate payout of performance shares could range from zero to 200% of the target award. For the 201 6-201 8 performance period, a total of 767,733 LNC RSUs, 776,895 LNC stock options and 291,298 LNC performance shares were granted. In the first quarter of 201 5, a performance period from 201 5-201 7 was approved for our executive officers by the Compensation Committee. The award for executive officers participating in this performance period consisted of LNC RSUs representing approximately 41%, LNC stock options representing approximately 24% and LNC performance shares representing approximately 35% of the total award. LNC RSUs granted for this period cliff-vest on the third anniversary of the grant date, based solely on a service condition. LNC stock options granted for this performance period have a maximum contractual term of ten years and vest ratably over the three-year period, based solely on a service condition. Depending on the performance results for this period, the ultimate payout of performance shares could range from zero to 200% of the target award. For the 201 5-201 7 performance period, a total of 481,900 LNC RSUs, 502,664 LNC stock options and 161,255 LNC performance shares were granted. ﻿ The option price assumptions used for our stock option awards were as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ | 2017 |  | 2016 |  | 2015 |
﻿Weighted-average fair value per option granted | $ | 18.27 |  | $ | 9.32 |  | $ | 13.00 |
﻿Assumptions: |  |  |  |  |  |  |  |  |
﻿Dividend yield |  | 2.0% |  |  | 2.8% |  |  | 1.9% |
﻿Expected volatility |  | 31.5% |  |  | 35.9% |  |  | 28.0% |
﻿Risk-free interest rate |  | 1.7-2.1% |  |  | 1.0-1.6% |  |  | 1.4-1.7% |
﻿Expected life (in years) |  | 5.5 |  |  | 5.7 |  |  | 5.5 |
﻿ The fair value of options is determined using a Black-Scholes options valuation model with the assumptions disclosed in the table above. The dividend yield is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the implied volatility of exchange-traded securities and the historical volatility of the LNC stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life of the options granted represents the weighted-average period of time from the grant date to the date of exercise, expiration or cancellation based upon historical behavior. ﻿ Information with respect to our incentive plans involving stock options with performance conditions (aggregate intrinsic value shown in millions) was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  | Weighted- |  |  |  |
﻿ |  |  | Weighted- |  | Average |  |  |
﻿ |  |  | Average | Remaining | Aggregate |
﻿ |  |  | Exercise | Contractual | Intrinsic |
﻿ | Shares |  | Price |  | Term |  | Value |
﻿Outstanding as of December 31, 2016 | 779,816 |  | $ | 49.83 |  |  |  |  |  |
﻿Granted – original | 102,728 |  |  | 69.01 |  |  |  |  |  |
﻿Exercised (includes shares tendered) | (596,374 | ) |  | 51.13 |  |  |  |  |  |
﻿Forfeited or expired | (14,446 | ) |  | 47.44 |  |  |  |  |  |
﻿Outstanding as of December 31, 2017 | 271,724 |  | $ | 54.37 |  | 2.69 |  | $ | 6 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Vested or expected to vest as of December 31, 2017 (1) | 236,907 |  | $ | 53.68 |  | 2.58 |  | $ | 5 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Exercisable as of December 31, 2017 | 202,090 |  | $ | 52.75 |  | 2.43 |  | $ | 5 |
﻿
| (1) |  | Includes estimated forfeitures.
﻿ The total fair value of options with performance conditions vested during the years ended December 31, 2017, 201 6 and 2015, was $2 million, $1 million and $1 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015, was $12 million, $3 million and $2 million, respectively. ﻿ Information with respect to our incentive plans involving stock options with service conditions (aggregate intrinsic value shown in millions) was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  | Weighted- |  |  |  |
﻿ |  |  | Weighted- |  | Average |  |  |
﻿ |  |  | Average | Remaining | Aggregate |
﻿ |  |  | Exercise | Contractual | Intrinsic |
﻿ | Shares |  | Price |  | Term |  | Value |
﻿Outstanding as of December 31, 2016 | 2,713,058 |  | $ | 41.97 |  |  |  |  |  |
﻿Granted – original | 407,637 |  |  | 71.47 |  |  |  |  |  |
﻿Exercised (includes shares tendered) | (840,733 | ) |  | 44.64 |  |  |  |  |  |
﻿Forfeited or expired | (87,823 | ) |  | 52.09 |  |  |  |  |  |
﻿Outstanding as of December 31, 2017 | 2,192,139 |  | $ | 46.02 |  | 7.07 |  | $ | 68 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Vested or expected to vest as of December 31, 2017 (1) | 1,965,675 |  | $ | 45.20 |  | 6.93 |  | $ | 62 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Exercisable as of December 31, 2017 | 1,214,214 |  | $ | 40.22 |  | 5.97 |  | $ | 45 |
﻿
| (1) |  | Includes estimated forfeitures.
﻿ The total fair value of options with service conditions vested during the years ended December 31, 2017, 2016 and 2015 was $6 million, $6 million and $7 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015, was $23 million, $22 million and $25 million, respectively. ﻿ Information with respect to our performance shares was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |
﻿ |  |  |  | Weighted- |  |
﻿ |  |  |  | Average |  |
﻿ |  |  | Grant-Date |
﻿ | Shares |  |  | Fair Value |  |
﻿Nonvested as of December 31, 2016 | 577,935 |  |  | $ | 50.23 |  |
﻿Granted | 154,351 |  |  |  | 79.30 |  |
﻿Vested | (155,541 | ) |  |  | 54.68 |  |
﻿Forfeited | (19,796 | ) |  |  | 41.61 |  |
﻿Nonvested as of December 31, 2017 | 556,949 |  |  | $ | 53.65 |  |
﻿ SARs ﻿ Under our incentive compensation plan, we issue SARs to certain planners and advisors who have full-time contracts with us. The SARs under this plan are rights on our stock that are cash settled and become exercisable in increments of 25% over the four-year period following the SARs grant date. SARs are granted with an exercise price equal to the fair market value of our stock at the date of grant and, unless cancelled earlier due to certain terminations of employment, expire five years from the date of grant. Generally, such SARs are transferable only upon death. ﻿ We recognize compensation expense for SARs based on the fair value method using the Black-Scholes option-pricing model. Compensation expense and the related liability are recognized on a straight-line basis over the vesting period of the SARs. The SARs liability is marked-to-market through net income, which causes volatility in net income (loss) as a result of changes in the market value of our stock and reported within commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss). The SARs liability as of December 31, 2017 and 2016, was $3 million and $4 million, respectively, and reported within other liabilities on our Consolidated Balance Sheets. ﻿ The option price assumptions used for our SARs were as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ | 2017 |  | 2016 |  | 2015 |
﻿Weighted-average fair value per SAR granted | $ | 20.06 |  | $ | 10.25 |  | $ | 14.22 |
﻿Assumptions: |  |  |  |  |  |  |  |  |
﻿Dividend yield |  | 1.5% |  |  | 2.9% |  |  | 1.6% |
﻿Expected volatility |  | 34.4% |  |  | 35.8% |  |  | 29.8% |
﻿Risk-free interest rate |  | 2.2% |  |  | 1.4% |  |  | 1.8% |
﻿Expected life (in years) |  | 5.0 |  |  | 5.0 |  |  | 5.0 |
The assumptions above are the same as those discussed for options above, except the dividend yield is based on the current dividend rate at the date of grant, expected volatility is based on the implied volatility of exchange-traded securities and the expected life represents the contractual term. ﻿ Information with respect to our SARs plan (aggregate intrinsic value shown in millions) was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  | Weighted- |  |  |  |
﻿ |  |  | Weighted- |  | Average |  |  |
﻿ |  |  | Average | Remaining | Aggregate |
﻿ |  |  | Exercise | Contractual | Intrinsic |
﻿ | Shares |  | Price |  | Term |  | Value |
﻿Outstanding as of December 31, 2016 | 237,272 |  | $ | 42.59 |  |  |  |  |  |
﻿Granted – original | 26,494 |  |  | 69.01 |  |  |  |  |  |
﻿Exercised (includes shares tendered) | (93,159 | ) |  | 37.02 |  |  |  |  |  |
﻿Forfeited or expired | (8,419 | ) |  | 40.40 |  |  |  |  |  |
﻿Outstanding as of December 31, 2017 | 162,188 |  | $ | 50.22 |  | 2.50 |  | $ | 4 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Vested or expected to vest as of December 31, 2017 (1) | 155,300 |  | $ | 50.18 |  | 2.45 |  | $ | 4 |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Exercisable as of December 31, 2017 | 92,092 |  | $ | 48.72 |  | 1.88 |  | $ | 3 |
﻿
| (1) |  | Includes estimated forfeitures.
﻿ The payment for SARs exercised was $3 million, $2 million and $2 million during the years ended December 31, 2017, 2016 a nd 2015, respectively. ﻿ RSUs ﻿ We award RSUs under the incentive compensation plan, generally subject to a three-year vesting period. I nformation with respect to our RSUs was as follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |
﻿ |  |  |  | Weighted- |  |
﻿ |  |  |  | Average |  |
﻿ |  |  | Grant-Date |
﻿ | Shares |  |  | Fair Value |  |
﻿Outstanding as of December 31, 2016 | 1,508,367 |  |  | $ | 45.61 |  |
﻿Granted | 448,527 |  |  |  | 71.26 |  |
﻿Vested | (400,886 | ) |  |  | 51.01 |  |
﻿Forfeited | (61,276 | ) |  |  | 46.34 |  |
﻿Outstanding as of December 31, 2017 | 1,494,732 |  |  | $ | 51.83 |  |
﻿

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