Note 15 Stock-Based Compensation (a) Stockoptions The Company grants stock options under its Executive Stock Option Plan (“ESOP”) to selected individuals. The options provide the holder the right to purchase MFC common shares at an exercise price equal to the higher of the prior day, prior five-day or prior ten-day average closing market price of the shares on the Toronto Stock Exchange on the date the options are granted. The options vest over a period not exceeding four years and expire not more than 10 years from the grant date. Effective with the 2015 grant, options may only be exercised after the fifth-year anniversary. A total of 73,600,000 common shares have been reserved for issuance under the ESOP. Options outstanding 2022 2021 Number of Weighted Number of Weighted options average options average For the years ended December 31, (in millions) exercise price (in millions) exercise price Outstanding, January 1 21 $ 22.09 24 $ 21.74 Granted – – – – Exercised (1) 16.15 (3) 18.34 Expired – 24.63 – 24.73 Forfeited – 23.96 – 23.96 Outstanding, December 31 20 $ 22.42 21 $ 22.09 Exercisable, December 31 10 $ 20.91 8 $ 18.94 Options outstanding Options exercisable Weighted average Weighted average Number of Weighted remaining Number of Weighted remaining options average contractual life options average contractual life For the year ended December 31, 2022 (in millions) exercise price (in years) (in millions) exercise price (in years) $12.64—$20.99 4 $ 17.42 2.91 4 $ 17.42 2.91 $21.00—$24.83 16 $ 23.58 4.94 6 $ 23.08 2.95 Total 20 $ 22.42 4.56 10 $ 20.91 2.93 No stock options were granted in 2022 or 2021. Compensation expense related to stock options was $5 for the year ended December 31, 2022 (2021 – $9). (b) Deferredshareunits In 2000, the Company granted deferred share units (“DSUs”) on a one-time basis to certain employees under the ESOP. These DSUs vest over a three-year period and each DSU entitles the holder to receive one common share on retirement or termination of employment. When dividends are paid on common shares, holders of DSUs are deemed to receive dividends at the same rate, payable in the form of additional DSUs. The number of these DSUs outstanding was 166,000 as at December 31, 2022 (2021 – 188,000). In addition, for certain employees and pursuant to the Company’s deferred compensation program, the Company grants DSUs under the Restricted Share Units (“RSUs”) Plan which entitle the holder to receive payment in cash equal to the value of the same number of common shares plus credited dividends on retirement or termination of employment. In 2022, the Company granted 30,000 DSUs to certain employees which vest after 36 months (2021 – 34,000). In 2022, 106,000 DSUs (2021 – 26,000) were granted to certain employees who elected to defer receipt of all or part of their annual bonus. These DSUs vested immediately. Under the Stock Plan for Non-Employee Directors, each eligible director may elect to receive his or her annual director’s retainer and fees in DSUs (which vest immediately) or common shares in lieu of cash. In 2022, 116,000 DSUs (2021 – 101,000) were issued under this arrangement. Upon termination of the Board service, an eligible director who has elected to receive DSUs will be entitled to receive cash equal to the value of the DSUs accumulated in his or her account, or at his or her direction, an equivalent number of common shares. The Company is allowed to issue up to one million common shares under this plan after which awards may be settled using shares purchased in the open market. 199