Share-Based Compensation Plans

9 Months Ended

Sep. 30, 2012

Share-Based Compensation Plans

12. Share-Based Compensation Plans

The Company has share-based compensation plans under which employees and non-employee directors may be granted restricted stock units (“RSUs”). In addition, the Company grants options to purchase shares of Company common stock at the fair market value at the time of grant and performance share units (“PSUs”) to certain management-level employees. The Company recognizes the fair value of share-based compensation in net income on a straight-line basis over the requisite service period.

The following table provides amounts of share-based compensation cost recorded in the Consolidated Statement of Income:

	Three Months Ended     September 30,				Nine Months Ended     September 30,
($ in millions)	2012		2011		2012		2011
Pretax share-based compensation expense	$	88	$	86	$	257	$	287
Income tax benefit		(28)		(30)		(81)		(99)
Total share-based compensation expense, net of taxes	$	60	$	56	$	176	$	188

During the first nine months of 2012 and 2011, the Company granted 7 million RSUs with a weighted-average grant date fair value of $39.38 per RSU and 8 million RSUs with a weighted-average grant date fair value of $36.44 per RSU, respectively.

During the first nine months of 2012 and 2011, the Company granted 7 million options with a weighted-average exercise price of $39.39 per option and 8 million options with a weighted-average exercise price of $36.55 per option, respectively. The weighted-average fair value of options granted for the first nine months of 2012 and 2011 was $5.47 and $5.37 per option, respectively, and was determined using the following assumptions:

	Nine Months Ended     September 30,
	2012		2011
Expected dividend yield		4.4%		4.3%
Risk-free interest rate		1.3%		2.6%
Expected volatility		25.3%		23.2%
Expected life (years)		7.0		7.0

At September 30, 2012, there was $449 million of total pretax unrecognized compensation expense related to nonvested stock options, RSU and PSU awards which will be recognized over a weighted-average period of 1.8 years. For segment reporting, share-based compensation costs are unallocated expenses.