Share-based compensation not yet recognized

  
The following table presents a summary of the Company’s outstanding and exercisable stock option activity:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Options |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (Years)  |  | Aggregate Intrinsic Value (in millions) |
|  |  |  |  |  |  |  |  |
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|  |  |  |  |  |  |  |  |
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|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |
| Outstanding at January 1. 2021 | —  |  |  | $—  |  |  | —  |  |  | $—  |  |
| Assumed | 249,861  |  |  | 19.45  |  |  | —  |  |  | —  |  |
| Granted | —  |  |  | —  |  |  | —  |  |  | —  |  |
| Exercised | (4,000) |  |  | 19.45  |  |  | —  |  |  | —  |  |
| Forfeited or expired | —  |  |  | —  |  |  | —  |  |  | —  |  |
| Outstanding at December 31, 2021 | 245,861  |  |  | 19.45  |  |  | 3.1 |  | 7  |  |
| Exercisable at December 31, 2021 | 34,856  |  |  | $19.45  |  |  | 3.1 |  | $1  |  |

As of December 31, 2021, the aggregate intrinsic value of both outstanding and exercisable stock options was $7 million and $1 million, respectively.Summary of Share-Based Plans ActivityThe following table presents the activity related to the Company’s share-based plans (excluding the ESPP): 

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Year Ended December 31, |
|  | 2021 |  | 2020 |  | 2019 |
|  | Units |  | Weighted-Average Grant Price |  | Units |  | Weighted-Average Grant Price |  | Units |  | Weighted-Average Grant Price |
| Outstanding, January 1 | 3,496,231  |  |  | $34.37  |  |  | 3,000,224  |  |  | $36.71  |  |  | 2,893,281  |  |  | $34.04  |  |
| Assumed | 82,013  |  |  | 49.95  |  |  | —  |  |  | —  |  |  | —  |  |  | —  |  |
| Granted | 1,417,370  |  |  | 44.97  |  |  | 1,947,902  |  |  | 32.64  |  |  | 1,677,167  |  |  | 36.21  |  |
| Vested & Distributed | (1,400,722) |  |  | 38.88  |  |  | (1,384,091) |  |  | 38.59  |  |  | (1,518,836) |  |  | 32.21  |  |
| Forfeited | (91,936) |  |  | 35.00  |  |  | (67,804) |  |  | 35.89  |  |  | (51,388) |  |  | 38.29  |  |
| Outstanding, December 31 | 3,502,956  |  |  | $38.23  |  |  | 3,496,231  |  |  | $34.37  |  |  | 3,000,224  |  |  | $36.71  |  |

There are 44,911,455 shares of Company common stock available for awards to be granted under the Omnibus Plan and Directors Plan. In addition, there are 4,547,955 shares available for awards under the ESPP. Upon settlement of share-based awards, the Company generally issues new shares, but may also issue shares from treasury stock.Citizens measures compensation expense related to stock awards based upon the fair value of the awards on the grant date. Compensation expense is adjusted for forfeitures as they occur. The related expense is charged to earnings on a straight-line basis over the requisite service period (e.g., vesting period) of the award. With respect to performance-based stock awards, compensation expense is adjusted upward or downward based upon the probability of achievement of performance. Awards that continue to vest after retirement are expensed over the shorter of the period of time from grant date to the final vesting date or from the grant date to the date when an employee is retirement eligible. Awards granted to employees who are retirement eligible at the grant date are generally expensed immediately upon grant.Share-based compensation expense (including ESPP) was $59 million, $48 million, and $55 million for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, the total unrecognized compensation expense for nonvested equity awards granted was $53 million. This expense is expected to be recognized over a weighted-average period of approximately two years. No share-based compensation costs were capitalized during the years ended December 31, 2021, 2020 and 2019.Citizens recognized income tax benefits related to share-based compensation arrangements of $12 million, $8 million and $1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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|  |  | Citizens Financial Group, Inc. | 131 |


