Capital Stock

9 Months Ended

Sep. 30, 2020

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 our cash dividend activity for the nine months ended September 30, 2020 and 2019 is as follows:


Declaration Date	Record Date	Payment Date	Cash Dividend per Share	Total
Nine Months Ended September 30, 2020
January 28, 2020	March 16, 2020	March 27, 2020	$0.95	$	240
April 28, 2020	June 10, 2020	June 25, 2020	$0.95	$	242


July 28, 2020	September 10, 2020	September 25, 2020	$0.95	$	238

Nine Months Ended September 30, 2019
January 29, 2019	March 18, 2019	March 29, 2019	$0.80	$	206
April 23, 2019	June 10, 2019	June 25, 2019	$0.80	$	206
July 23, 2019	September 10, 2019	September 25, 2019	$0.80	$	204

On October 27, 2020, our Audit Committee declared a fourth quarter 2020 dividend to shareholders of $0.95 per share, payable on December 22, 2020 to shareholders of record at the close of business on December 7, 2020.

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. We temporarily suspended our share repurchase program in March 2020 as a precautionary measure in light of the COVID-19 pandemic, but resumed the program in late June 2020 after market conditions improved.

A summary of common stock repurchases for the nine months ended September 30, 2020 and 2019 is as follows:


	Nine Months Ended September 30
	2020		2019
Shares repurchased	5.0		5.2
Average price per share	$	269.15	$	270.42
Aggregate cost	$	1,342	$	1,396
Authorization remaining at the end of the period	$	2,450	$	4,098

For additional information regarding the use of capital for debt security repurchases, see Note 11, “Debt”, included in this Form 10-Q and Note 12, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2019 included in our 2019 Annual Report on Form 10-K.

Stock Incentive Plans

A summary of stock option activity for the nine months ended September 30, 2020 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, 2020	3.1	$	190.31
Granted	1.0	271.32
Exercised	(0.6)	123.36
Forfeited or expired	(0.1)	271.54
Outstanding at September 30, 2020	3.4	223.68		6.84	$	180
Exercisable at September 30, 2020	1.9	181.32		5.41	$	176

A summary of the nonvested restricted stock activity, including restricted stock units, for the nine months ended September 30, 2020 is as follows:


	Restricted Stock Shares and Units	Weighted- Average Grant Date Fair Value per Share
Nonvested at January 1, 2020	1.4	$	242.47
Granted	1.3	272.11
Vested	(1.2)	194.30
Forfeited	(0.1)	271.24
Nonvested at September 30, 2020	1.4	272.04

During the nine months ended September 30, 2020, we granted approximately 0.3 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2020 to 2022. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2022 based on results in the three year period.

During the nine months ended September 30, 2020, we granted an additional 0.6 restricted stock units associated with our 2017 grants that were earned as a result of satisfactory completion of performance measures between 2017 and 2019. 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, 2019 included in our 2019 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, 2020 and 2019:


	Nine Months Ended September 30
	2020		2019
Risk-free interest rate	1.30	%	2.69	%
Volatility factor	26.00	%	25.00	%
Quarterly dividend yield	0.350	%	0.260	%
Weighted-average expected life (years)	4.30		4.40

The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2020 and 2019:


	Nine Months Ended September 30
	2020		2019
Options granted during the period	$	54.02	$	68.69
Restricted stock awards granted during the period	272.11		306.13