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Stock-Based Compensation (Table) | 12 Months Ended
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Dec. 31, 2016
Stock-based compensation |
Stock-based compensation, fair value assumptions | U.S. Cellular estimated the fair value of stock options granted during 2016, 2015 and 2014 using the Black-Scholes valuation model and the assumptions shown in the table below.
| 2016 |  | 2015 |  | 2014
Expected life | 4.7 years |  | 4.6 years |  | 4.5 years
Expected annual volatility rate | 30.5% |  | 30.1% |  | 28.0%-28.1%
Dividend yield | 0% |  | 0% |  | 0%
Risk-free interest rate | 1.2% |  | 1.2% |  | 1.4%-1.5%
Estimated annual forfeiture rate | 9.4% |  | 9.7% |  | 9.4%
Summary of stock options | A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2016 is presented in the table below:
Common Share Options |  | Number of Options |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value (in millions) |  | Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2015 |  | 4,102,000 |  | $ | 40.62 |  |  |  |  |
(1,849,000 exercisable) |  |  |  | $ | 44.33 |  |  |  |  |
| Granted |  | 898,000 |  |  | 45.87 |  |  |  |  |
| Exercised |  | (541,000) |  |  | 35.34 |  |  |  |  |
| Forfeited |  | (197,000) |  |  | 39.08 |  |  |  |  |
| Expired |  | (289,000) |  |  | 50.06 |  |  |  |  |
Outstanding at December 31, 2016 |  | 3,973,000 |  | $ | 41.92 |  | $ | 14 |  | 6.8
(1,937,000 exercisable) |  |  |  | $ | 42.54 |  | $ | 7 |  | 5.0
Summary of nonvested restricted stock units | A summary of U.S. Cellular nonvested restricted stock units at December 31, 2016 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, 2015 | 1,194,000 |  | $ | 36.70
Granted | 571,000 |  |  | 43.32
Vested | (348,000) |  |  | 31.52
Forfeited | (107,000) |  |  | 39.28
Nonvested at December 31, 2016 | 1,310,000 |  | $ | 40.74
Stock-based compensation | The following table summarizes stock‑based compensation expense recognized during 2016, 2015 and 2014:
Year Ended December 31, | 2016 |  | 2015 |  | 2014
(Dollars in millions) |  |  |  |  |  |  |  |
Stock option awards | $ | 11 |  | $ | 11 |  | $ | 10
Restricted stock unit awards |  | 14 |  |  | 13 |  |  | 11
Deferred compensation bonus and matching stock unit awards |  | – |  |  | – |  |  | –
Awards under Non-Employee Director compensation plan |  | 1 |  |  | 1 |  |  | 1
Total stock-based compensation, before income taxes |  | 26 |  |  | 25 |  |  | 22
Income tax benefit |  | (10) |  |  | (10) |  |  | (8)
Total stock-based compensation expense, net of income taxes | $ | 16 |  | $ | 15 |  | $ | 14
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, | 2016 |  | 2015 |  | 2014
(Dollars in millions) |  |  |  |  |  |  |  |
Selling, general and administrative expense | $ | 23 |  | $ | 22 |  | $ | 19
System operations |  | 3 |  |  | 3 |  |  | 3
Total stock-based compensation expense | $ | 26 |  | $ | 25 |  | $ | 22

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