DFS Annual Report

Notes to the Consolidated and Combined Financial Statements (in millions, except per share data, unless otherwise indicated)-(Continued) General Terms of Awards The Donnelley Financial Compensation Committee of the Board of Directors has discretion to establish the terms and conditions for grants, including the number of shares, vesting and required service or other performance criteria. Generally, awards under the 2016 PIP must have a minimum vesting period of three years. On October 1, 2016, the Company awarded certain employees and members of the Board of Directors restricted stock and RSUs. 50% of each of the awards of restricted stock and RSUs granted in 2016 will vest two years from the grant date and 50% will vest three years from the grant date. Vesting of the restricted stock awards is also subject to performance metrics. Both the restricted stock and RSU awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting upon specified events, including death or permanent disability of the grantee, termination of the grantee’s employment under certain circumstances or a change in control of the Company. Stock Options As of December 31, 2016, all outstanding options were 100% vested. There were no options granted during the years ended December 31, 2016, 2015 or 2014. The following table summarizes activity for Donnelley Financial stock options held by employees of Donnelley Financial, RRD and LSC for the period following the Separation: Shares Under Option (thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (millions) Outstanding at October 1, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 $22.30 5.4 $— Vested options converted on October 1, 2016 in connection with the Separation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 21.47 3.7 1.4 Outstanding at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . 299 21.48 3.5 1.4 Exercisable at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . 207 $16.35 3.5 $ 1.4 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on October 3, 2016 and December 31, 2016, respectively, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on October 3, 2016 and December 31, 2016. This amount will change in future periods based on the fair market value of the Company’s stock and the number of options outstanding. Total intrinsic value of options exercised for the year ended December 31, 2016 was de minimis. Compensation expense related to stock options for the years ended December 31, 2016, 2015 and 2014 was de minimis. F-28