Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Stock Purchase Program

In early December 2019, our board of directors authorized the purchase of up to $500 million, in the aggregate, of our common stock. This program was funded by existing cash on hand and was completed in March 2020.

Under this program, pursuant to Rule 10b5-1 trading plans, we purchased approximately 3.4 million shares of our common stock for $446 million in the first quarter of 2020 (average cost of $132.45 per share). In the first quarter of 2020, we also paid $7 million to settle shares purchased in late December 2019.

1.125% Warrants

For a description of the 1.125% Warrants, refer to our 2019 Annual Report on Form 10-K, Note 12, “Derivatives,” and Note 14, “Stockholders’ Equity.” Approximately 310,000 of the 1.125% Warrants were outstanding at December 31, 2019. In the first quarter of 2020, we entered into privately negotiated termination agreements under which we paid $30 million to the Counterparties for the termination of the remaining 1.125% Warrants outstanding, which resulted in a reduction of additional paid-in-capital for the same amount.

Share-Based Compensation

In connection with our employee stock plans, approximately 98,000 shares of common stock vested or were purchased, net of shares used to settle employees’ income tax obligations, during the three months ended March 31, 2020.

Share-based compensation is recorded to “General and administrative expenses” in the accompanying consolidated statements of income. Total share-based compensation expense amounted to $12 million and $9 million, respectively, in the three months ended March 31, 2020 and 2019.

As of March 31, 2020, there was $89 million of total unrecognized compensation expense related to unvested restricted stock awards (“RSAs”), and performance stock units (“PSUs”), which we expect to recognize over remaining weighted-average periods of 2.9 years and 1.9 years, respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 10.7% for non-executive employees as of March 31, 2020.

As of March 31, 2020, there was also $3 million of total unrecognized compensation expense related to unvested stock options, which we expect to recognize over a weighted-average period of 0.5 years. No stock options were granted or exercised in the three months ended March 31, 2020.

Activity for RSAs and PSUs is summarized below:



	RSAs		PSUs		Total		Weighted Average Grant Date Fair Value
Unvested balance, December 31, 2019	447,680		324,078		771,758		$	102.01
Granted	294,319		160,929		455,248		122.20
Vested	(151,110	)	(7,368	)	(158,478	)	92.92
Forfeited	(12,202	)	(22,826	)	(35,028	)	101.60
Unvested balance, March 31, 2020	578,687		454,813		1,033,500		$	112.31

The aggregate fair values of RSAs and PSUs granted and vested are presented in the following table:



	Three Months Ended March 31,
	2020		2019
	(In millions)
Granted:
RSAs	$	36	$	30
PSUs	19		18
Total granted	$	55	$	48
Vested:
RSAs	$	19	$	16
PSUs	1		2
Total vested	$	20	$	18