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Stock-Based Compensation (Tables) | 12 Months Ended
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Dec. 31, 2014
Stock based compensation |
Stock-based compensation |
Year Ended December 31, | 2014 |  | 2013 |  | 2012
(Dollars in thousands) |  |  |  |  |  |  |  |
Stock option awards | $ | 15,802 |  | $ | 12,973 |  | $ | 20,884
Restricted stock unit awards |  | 17,968 |  |  | 15,535 |  |  | 19,025
Deferred compensation bonus and matching stock unit awards |  | 690 |  |  | 550 |  |  | 749
Awards under Non-Employee Director compensation plan |  | 1,333 |  |  | 1,280 |  |  | 1,213
Total stock-based compensation, before income taxes |  | 35,793 |  |  | 30,338 |  |  | 41,871
Income tax benefit |  | (13,519) |  |  | (11,459) |  |  | (15,848)
Total stock-based compensation expense, net of income taxes | $ | 22,274 |  | $ | 18,879 |  | $ | 26,023
Stock-based compensation, allocation by financial statement line item |
December 31, |  | 2014 |  |  | 2013 |  |  | 2012
(Dollars in thousands) |  |  |  |  |  |  |  |
Selling, general and administrative expense | $ | 32,505 |  | $ | 27,130 |  | $ | 38,563
Cost of services and products |  | 3,288 |  |  | 3,208 |  |  | 3,308
Total stock-based compensation | $ | 35,793 |  | $ | 30,338 |  | $ | 41,871
Stock-based compensation, fair value assumptions |
TDS estimated the fair value of stock options granted in 2014, 2013 and 2012 using the Black Scholes valuation model and the assumptions shown in the table below:
| 2014 |  | 2013 |  | 2012
Expected life | 5.8 Years |  |  | 5.7 Years |  |  | 5.5 Years |
Expected annual volatility rate | 39.6 | % |  | 41.0 | % |  | 41.1 | %
Dividend yield | 2.0 | % |  | 2.3 | % |  | 2.4 | %
Risk-free interest rate | 1.8 | % |  | 1.0 | % |  | 0.9 | %
Estimated annual forfeiture rate | 2.9 | % |  | 2.9 | % |  | 2.9 | %
U.S. Cellular estimated the fair value of stock options granted during 2014, 2013, and 2012 using the Black-Scholes valuation model and the assumptions shown in the table below.
|  | 2014 |  | 2013 |  | 2012
Expected life |  | 4.5 years |  | 4.6-9.0 years |  | 4.5 years
Expected annual volatility rate |  | 28.0%-28.1% |  | 29.2%-39.6% |  | 40.7%-42.6%
Dividend yield |  | 0% |  | 0% |  | 0%
Risk-free interest rate |  | 1.4%-1.5% |  | 0.7%-2.4% |  | 0.5%-0.9
Estimated annual forfeiture rate |  | 9.4% |  | 0.0%-8.1% |  | 0.0%-9.1%
Summary of stock options |
|  |  |  |  |  |  |  |  |  |  |  |  | Weighted
|  |  |  |  |  |  |  |  |  |  |  |  | Average
|  |  |  | Weighted |  | Weighted |  |  |  |  | Remaining
|  |  |  | Average |  | Average |  | Aggregate |  | Contractual
|  | Number of |  | Exercise |  | Grant Date |  | Intrinsic |  | Life
Common Share Options |  | Options |  | Prices |  | Fair Value |  | Value |  | (in years)
Outstanding at December 31, 2011 |  | 7,216,000 |  | $ | 33.89 |  |  |  |  |  |  |  |
(4,865,000 exercisable) |  |  |  |  | 36.67 |  |  |  |  |  |  |  |
Granted |  | 1,702,000 |  |  | 20.79 |  | $ | 6.28 |  |  |  |  |
Exercised |  | (1,000) |  |  | 20.65 |  |  |  |  | $ | 4,000 |  |
Forfeited |  | (106,000) |  |  | 23.81 |  |  |  |  |  |  |  |
Expired |  | (298,000) |  |  | 30.12 |  |  |  |  |  |  |  |
Outstanding at December 31, 2012 |  | 8,513,000 |  | $ | 31.53 |  |  |  |  |  |  |  |
(5,782,000 exercisable) |  |  |  |  | 35.12 |  |  |  |  |  |  |  |
Granted |  | 1,259,000 |  |  | 22.60 |  | $ | 7.01 |  |  |  |  |
Exercised |  | (683,000) |  |  | 25.33 |  |  |  |  | $ | 2,450,000 |  |
Forfeited |  | (81,000) |  |  | 23.75 |  |  |  |  |  |  |  |
Expired |  | (228,000) |  |  | 34.10 |  |  |  |  |  |  |  |
Outstanding at December 31, 2013 |  | 8,780,000 |  | $ | 30.74 |  |  |  |  |  |  |  |
(6,160,000 exercisable) |  |  |  |  | 34.13 |  |  |  |  |  |  |  |
Granted |  | 930,000 |  |  | 26.83 |  | $ | 8.66 |  |  |  |  |
Exercised |  | (40,000) |  |  | 21.28 |  |  |  |  | $ | 174,000 |  |
Forfeited |  | (73,000) |  |  | 23.05 |  |  |  |  |  |  |  |
Expired |  | (457,000) |  |  | 34.55 |  |  |  |  |  |  |  |
Outstanding at December 31, 2014 |  | 9,140,000 |  | $ | 30.25 |  |  |  |  | $ | 9,651,000 |  | 5.6
(6,487,000 exercisable) |  |  |  | $ | 32.93 |  |  |  |  | $ | 4,143,000 |  | 4.5
|  |  |  |  |  |  |  |  |  |  |  |  | Weighted
|  |  |  |  |  |  |  |  |  |  |  |  | Average
|  |  |  | Weighted |  | Weighted |  |  |  |  | Remaining
|  |  |  | Average |  | Average |  | Aggregate |  | Contractual
|  | Number of |  | Exercise |  | Grant Date |  | Intrinsic |  | Life
Common Share Options |  | Options |  | Price |  | Fair Value |  | Value |  | (in years)
Outstanding at December 31, 2011 |  | 2,834,000 |  | $ | 43.07 |  |  |  |  |  |  |  |
(1,533,000 exercisable) |  |  |  |  | 46.23 |  |  |  |  |  |  |  |
Granted |  | 677,000 |  |  | 34.91 |  | $ | 12.61 |  |  |  |  |
Exercised |  | (47,000) |  |  | 29.82 |  |  |  |  | $ | 205,000 |  |
Forfeited |  | (117,000) |  |  | 38.45 |  |  |  |  |  |  |  |
Expired |  | (133,000) |  |  | 46.17 |  |  |  |  |  |  |  |
Outstanding at December 31, 2012 |  | 3,214,000 |  | $ | 41.58 |  |  |  |  |  |  |  |
(1,928,000 exercisable) |  |  |  |  | 43.99 |  |  |  |  |  |  |  |
Granted |  | 1,213,000 |  |  | 32.45 |  | $ | 11.53 |  |  |  |  |
Exercised |  | (892,000) |  |  | 34.78 |  |  |  |  | $ | 6,787,000 |  |
Forfeited |  | (574,000) |  |  | 34.17 |  |  |  |  |  |  |  |
Expired |  | (247,000) |  |  | 48.35 |  |  |  |  |  |  |  |
Outstanding at December 31, 2013 |  | 2,714,000 |  | $ | 42.22 |  |  |  |  |  |  |  |
(1,359,000 exercisable) |  |  |  |  | 46.91 |  |  |  |  |  |  |  |
Granted |  | 1,116,000 |  |  | 41.21 |  | $ | 10.68 |  |  |  |  |
Exercised |  | (233,000) |  |  | 32.80 |  |  |  |  | $ | 1,966,000 |  |
Forfeited |  | (144,000) |  |  | 35.09 |  |  |  |  |  |  |  |
Expired |  | (65,000) |  |  | 45.68 |  |  |  |  |  |  |  |
Outstanding at December 31, 2014 |  | 3,388,000 |  | $ | 41.51 |  |  |  |  | $ | 7,495,000 |  | 6.70
(1,586,000 exercisable) |  |  |  | $ | 45.28 |  |  |  |  | $ | 2,984,000 |  | 4.40
Summary of nonvested restricted stock units |
A summary of TDS nonvested restricted stock units and changes during the year ended December 31, 2014 is presented in the table below:
Common Restricted Stock Units |  | Number |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013 |  | 663,000 |  | $ | 20.43
Granted |  | 355,000 |  | $ | 25.26
Vested |  | (300,000) |  | $ | 19.68
Forfeited |  | (26,000) |  | $ | 21.31
Nonvested at December 31, 2014 |  | 692,000 |  | $ | 23.20
A summary of U.S. Cellular nonvested restricted stock units at December 31, 2014 and changes during the year then ended is presented in the table below:
Common Restricted Stock Units |  | Number |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013 |  | 1,170,000 |  | $ | 36.46
Granted |  | 370,000 |  |  | 41.24
Vested |  | (274,000) |  |  | 41.92
Forfeited |  | (124,000) |  |  | 34.38
Nonvested at December 31, 2014 |  | 1,142,000 |  | $ | 35.60

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