(9) Stock-Based Employee Compensation Plans

The Corporation has a stock-based employee compensation plan, The Chubb Corporation Long-Term Incentive Plan. The compensation cost with respect to the plan was $85 million, $89 million and $84 million in 2014, 2013 and 2012, respectively. The total income tax benefit included in net income with respect to the stock-based compensation arrangement was $30 million, $31 million and $29 million in 2014, 2013 and 2012, respectively.

As of December 31, 2014, there was $78 million of unrecognized compensation cost related to nonvested awards. That cost is expected to be reflected in operating results over a weighted average period of 1.7 years.

The Long-Term Incentive Plan provides for the granting of restricted stock units, restricted stock, performance units, stock options and other stock-based awards to the Corporation’s employees. The maximum number of shares of Chubb’s common stock with respect to which stock-based awards may be granted under the plan most recently approved by shareholders is 7.4 million shares. Additional shares of Chubb’s common stock may also become available for grant in connection with the cancellation, forfeiture and/or settlement of awards previously granted. At December 31, 2014, 8.2 million shares were available for grant.

Restricted Stock Units, Performance Units and Restricted Stock

Restricted stock unit awards are payable in cash, in shares of Chubb’s common stock or in a combination of both. Restricted stock units are not considered to be outstanding shares of common stock, have no voting rights and are subject to forfeiture during the restriction period. Holders of restricted stock units may receive dividend equivalents. Performance unit awards are based on the achievement of performance goals over three year performance periods. Performance unit awards are payable in cash, in shares of Chubb’s common stock or in a combination of both. Restricted stock awards consist of shares of Chubb’s common stock granted at no cost to the employees. Shares of restricted stock become outstanding when granted, receive dividends and have voting rights. The shares are subject to forfeiture and to restrictions that prevent their sale or transfer during the restriction period.

An amount equal to the fair value at the date of grant of restricted stock unit awards and performance unit awards is expensed over the vesting period. The weighted average fair value per share of the restricted stock units granted was $86.67, $83.75 and $68.64 in 2014, 2013 and 2012, respectively. The weighted average fair value per share of the performance units granted was $76.32, $98.46 and $63.38 in 2014, 2013 and 2012, respectively.

Additional information with respect to restricted stock units and performance units is as follows:


	Restricted Stock Units					Performance Units*
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested, January 1, 2014		2,127,647		$	70.23		861,141		$	79.87
Granted		625,197			86.67		421,271			76.32
Vested**		(762,349	)		60.53		(456,176	)		63.38
Forfeited		(82,551	)		81.16		(4,041	)		77.87

Nonvested, December 31, 2014		1,907,944			79.02		822,195			87.21

The number of shares earned may range from 0% to 200% of the performance units shown in the table above.

The performance units earned in 2014 were 35.2% of the vested shares shown in the table, or 160,574 shares.

The total fair value of restricted stock units that vested during 2014, 2013 and 2012 was $66 million, $72 million and $74 million, respectively. The total fair value of performance units that vested during 2014, 2013 and 2012 was $17 million, $64 million and $70 million, respectively.

Stock Options

Stock options are granted at exercise prices not less than the fair value of Chubb’s common stock on the date of grant. The terms and conditions upon which options become exercisable may vary among grants. Options expire no later than ten years from the date of grant.

An amount equal to the fair value of stock options at the date of grant is expensed over the vesting period. The weighted average fair value per stock option granted during 2014, 2013 and 2012 was $15.48, $14.95 and $11.95, respectively. The fair value of each stock option was estimated on the date of grant using the Black-Scholes option pricing model.

Additional information with respect to stock options is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in millions)
Outstanding, January 1, 2014		251,687		$	62.52
Granted		65,605			86.59
Exercised		(54,932	)		59.08
Forfeited		(6,949	)		82.83

Outstanding, December 31, 2014		255,411			68.89		6.6	$	9

Exercisable, December 31, 2014		128,880			55.24		4.8		6

The total intrinsic value of the stock options exercised during 2014, 2013 and 2012 was $2 million, $16 million and $40 million, respectively. The Corporation received cash of $3 million, $10 million and $47 million during 2014, 2013 and 2012, respectively, from the exercise of stock options. The tax benefit realized with respect to the exercise of stock options was $1 million, $5 million and $13 million during 2014, 2013 and 2012, respectively.