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Stock-Based Compensation (Tables) | 12 Months Ended
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Dec. 31, 2015
Stock based compensation |
Stock-based compensation | The following table summarizes stock-based compensation expense recognized during 2015, 2014 and 2013:
Year Ended December 31, | 2015 |  | 2014 |  | 2013
(Dollars in thousands) |  |  |  |  |  |  |  |
Stock option awards | $ | 18,431 |  | $ | 15,802 |  | $ | 12,973
Restricted stock unit awards |  | 20,067 |  |  | 17,968 |  |  | 15,535
Deferred compensation bonus and matching stock unit awards |  | 622 |  |  | 690 |  |  | 550
Awards under Non-Employee Director compensation plan |  | 1,280 |  |  | 1,333 |  |  | 1,280
Total stock-based compensation, before income taxes |  | 40,400 |  |  | 35,793 |  |  | 30,338
Income tax benefit |  | (15,267) |  |  | (13,519) |  |  | (11,459)
Total stock-based compensation expense, net of income taxes | $ | 25,133 |  | $ | 22,274 |  | $ | 18,879
Stock-based compensation, allocation by financial statement line item | The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:
December 31, | 2015 |  | 2014 |  | 2013
(Dollars in thousands) |  |  |  |  |  |  |  |
Selling, general and administrative expense | $ | 37,465 |  | $ | 32,505 |  | $ | 27,130
Cost of services and products |  | 2,935 |  |  | 3,288 |  |  | 3,208
Total stock-based compensation | $ | 40,400 |  | $ | 35,793 |  | $ | 30,338
Stock-based compensation, fair value assumptions | TDS estimated the fair value of stock options granted in 2015, 2014 and 2013 using the Black Scholes valuation model and the assumptions shown in the table below:
| 2015 |  | 2014 |  | 2013
Expected life | 6.1 years |  | 5.8 years |  | 5.7 years
Expected annual volatility rate | 30.8% |  | 39.6% |  | 41.0%
Dividend yield | 1.9% |  | 2.0% |  | 2.3%
Risk-free interest rate | 1.8% |  | 1.8% |  | 1.0%
Estimated annual forfeiture rate | 3.2% |  | 2.9% |  | 2.9%
U.S. Cellular estimated the fair value of stock options granted during 2015, 2014 and 2013 using the Black-Scholes valuation model and the assumptions shown in the table below.
| 2015 |  | 2014 |  | 2013
Expected life | 4.6 years |  | 4.5 years |  | 4.6-9.0 years
Expected annual volatility rate | 30.1% |  | 28.0%-28.1% |  | 29.2%-39.6%
Dividend yield | 0% |  | 0% |  | 0%
Risk-free interest rate | 1.2% |  | 1.4%-1.5% |  | 0.7%-2.4%
Estimated annual forfeiture rate | 9.7% |  | 9.4% |  | 0.0%-8.1%
Summary of stock options | A summary of TDS stock options (total and portion exercisable) and changes during 2015, is presented in the tables and narrative below.
|  |  |  |  |  |  |  |  |  | Weighted
|  |  |  |  |  |  |  |  |  | Average
|  |  |  | Weighted |  |  |  |  | Remaining
|  |  |  | Average |  | Aggregate |  | Contractual
|  | Number of |  | Exercise |  | Intrinsic |  | Life
Common Share Options |  | Options |  | Prices |  | Value |  | (in years)
Outstanding at December 31, 2014 |  | 9,140,000 |  | $ | 30.25 |  |  |  |  |
(6,487,000 exercisable) |  |  |  |  | 32.93 |  |  |  |  |
Granted |  | 998,000 |  |  | 29.26 |  |  |  |  |
Exercised |  | (575,000) |  |  | 23.11 |  |  |  |  |
Forfeited |  | (21,000) |  |  | 26.30 |  |  |  |  |
Expired |  | (407,000) |  |  | 37.09 |  |  |  |  |
Outstanding at December 31, 2015 |  | 9,135,000 |  | $ | 30.29 |  | $ | 9,531,000 |  | 5.3
(6,009,000 exercisable) |  |  |  | $ | 32.54 |  | $ | 5,548,000 |  | 3.8
A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2015, is presented in the table below:
|  |  |  |  |  |  |  |  |  | Weighted
|  |  |  |  |  |  |  |  |  | Average
|  |  |  | Weighted |  |  |  |  | Remaining
|  |  |  | Average |  | Aggregate |  | Contractual
|  | Number of |  | Exercise |  | Intrinsic |  | Life
Common Share Options |  | Options |  | Price |  | Value |  | (in years)
Outstanding at December 31, 2014 |  | 3,388,000 |  | $ | 41.51 |  |  |  |  |
(1,586,000 exercisable) |  |  |  |  | 45.28 |  |  |  |  |
Granted |  | 1,279,000 |  |  | 36.42 |  |  |  |  |
Exercised |  | (321,000) |  |  | 32.94 |  |  |  |  |
Forfeited |  | (110,000) |  |  | 37.57 |  |  |  |  |
Expired |  | (134,000) |  |  | 43.77 |  |  |  |  |
Outstanding at December 31, 2015 |  | 4,102,000 |  | $ | 40.62 |  | $ | 11,292,000 |  | 6.8
(1,849,000 exercisable) |  |  |  | $ | 44.33 |  | $ | 3,733,000 |  | 4.6
Summary of nonvested restricted stock units | A summary of TDS nonvested restricted stock units and changes during 2015, is presented in the table below:
Common Restricted Stock Units |  | Number |  | Weighted Average
Grant Date
Fair Value
Nonvested at December 31, 2014 |  | 692,000 |  | $ | 23.20
Granted |  | 368,000 |  | $ | 27.57
Forfeited |  | (16,000) |  | $ | 25.60
Nonvested at December 31, 2015 |  | 1,044,000 |  | $ | 24.70
A summary of U.S. Cellular nonvested restricted stock units at December 31, 2015 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, 2014 |  | 1,142,000 |  | $ | 35.60
Granted |  | 478,000 |  |  | 37.24
Vested |  | (349,000) |  |  | 34.05
Forfeited |  | (77,000) |  |  | 35.76
Nonvested at December 31, 2015 |  | 1,194,000 |  | $ | 36.70

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