Capital Stock

Use of Capital – Dividends and Stock Repurchase Program

We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders. The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

A summary of the cash dividend activity for the nine months ended September 30, 2018 and 2017 is as follows:



Declaration Date	Record Date	Payment Date	Cash Dividend per Share	Total
Nine Months Ended September 30, 2018
January 30, 2018	March 9, 2018	March 23, 2018	$0.75	$	192
April 24, 2018	June 8, 2018	June 25, 2018	$0.75	$	196
July 24, 2018	September 10, 2018	September 25, 2018	$0.75	$	195

Nine Months Ended September 30, 2017
February 22, 2017	March 10, 2017	March 24, 2017	$0.65	$	172
April 27, 2017	June 9, 2017	June 23, 2017	$0.65	$	172
July 25, 2017	September 8, 2017	September 25, 2017	$0.70	$	181

On October 30, 2018, our Audit Committee declared a fourth quarter 2018 dividend to shareholders of $0.75 per share, payable on December 21, 2018 to shareholders of record at the close of business on December 5, 2018.

Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On December 7, 2017, the Board of Directors authorized a $5,000 increase to the common stock repurchase program. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are effected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital. The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings.

A summary of common stock repurchases from October 1, 2018 through October 18, 2018 (subsequent to September 30, 2018) and for the nine months ended September 30, 2018 and 2017 is as follows:



	October 1, 2018 Through October 18, 2018		Nine Months Ended September 30
	October 1, 2018 Through October 18, 2018		2018		2017
Shares repurchased	0.3		5.0		8.7
Average price per share	$	274.32	$	240.15	$	186.80
Aggregate cost	$	95	$	1,192	$	1,635
Authorization remaining at the end of the period	$	5,891	$	5,986	$	2,541

Equity Units

In May 2015, we issued 25.0 Equity Units in an aggregate principal amount of $1,250. Each Equity Unit contained a purchase contract obligating the holder to purchase a certain number of shares of our common stock on May 1, 2018, subject to earlier termination or settlement. On May 1, 2018, we issued approximately 6.0 shares of our common stock pursuant to the purchase contract portion of the Equity Units, and we received $1,250 in proceeds from the holders of the Equity Units for such common stock. The number of shares purchased was determined using a market value formula set forth in the Equity Units purchase contracts. For additional information relating to the Equity Units, see Note 10, “Debt” of this Form 10-Q and Note 12, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K.

Stock Incentive Plans

A summary of stock option activity for the nine months ended September 30, 2018 is as follows:



	Number of Shares		Weighted- Average Option Price per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2018	4.3		$	124.31
Granted	0.9		232.61
Exercised	(1.0	)	110.85
Forfeited or expired	(0.2	)	187.56
Outstanding at September 30, 2018	4.0		148.58		6.42	$	498
Exercisable at September 30, 2018	2.6		125.25		5.27	$	393

A summary of the nonvested restricted stock activity, including restricted stock units, for the nine months ended September 30, 2018 is as follows:



	Restricted Stock Shares and Units		Weighted- Average Grant Date Fair Value per Share
Nonvested at January 1, 2018	2.0		$	152.20
Granted	0.9		233.27
Vested	(1.0	)	147.92
Forfeited	(0.1	)	186.38
Nonvested at September 30, 2018	1.8		182.57

During the nine months ended September 30, 2018, we granted approximately 0.3 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2018 to 2020. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2020 based on results in the three year period.

During the nine months ended September 30, 2018, we granted an additional 0.2 restricted stock units, associated with our 2015 grants, that were earned as a result of satisfactory completion of performance measures between 2015 and 2017. These grants and vested shares have been included in the activity shown above.

Fair Value

We use a binomial lattice valuation model to estimate the fair value of all stock options granted. For a more detailed discussion of our stock incentive plan fair value methodology, see Note 14, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2017 included in our 2017 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2018 and 2017:



	Nine Months Ended September 30
	2018		2017
Risk-free interest rate	2.90	%	2.31	%
Volatility factor	30.00	%	32.00	%
Quarterly dividend yield	0.323	%	0.397	%
Weighted-average expected life (years)	3.70		4.00

The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2018 and 2017:



	Nine Months Ended September 30
	2018		2017
Options granted during the period	$	55.44	$	40.84
Restricted stock awards granted during the period	233.27		173.62