Stock Transactions And Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Assumptions Used In The Black-Scholes Model To Value Options Granted

The following summarizes the assumptions used in the Black-Scholes Merton option pricing model (“Black-Scholes”) to value options granted during the nine month period ended September 30, 2016:



Risk-free interest rate	1.2% - 1.6%
Weighted average volatility	24.6	%
Dividend yield	0.6	%
Expected years until exercise	5.5 - 8.0

Components Of Stock-Based Compensation Program

The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):



	Three Month Period Ended						Nine Month Period Ended
	September 30, 2016			October 2, 2015			September 30, 2016			October 2, 2015
Restricted stock units (“RSUs”)/performance stock units (“PSUs”):
Pretax compensation expense	$	21.1		$	23.4		$	65.0		$	49.8
Income tax benefit	(6.2		)	(8.6		)	(19.1		)	(17.1		)
RSU/PSU expense, net of income taxes	14.9			14.8			45.9			32.7
Stock options:
Pretax compensation expense	10.3			9.9			31.3			27.1
Income tax benefit	(3.2		)	(3.1		)	(9.7		)	(8.5		)
Stock option expense, net of income taxes	7.1			6.8			21.6			18.6
Total stock-based compensation:
Pretax compensation expense	31.4			33.3			96.3			76.9
Income tax benefit	(9.4		)	(11.7		)	(28.8		)	(25.6		)
Total stock-based compensation expense, net of income taxes	$	22.0		$	21.6		$	67.5		$	51.3

Option Activity Under The Company's Stock Plans

The following summarizes option activity under the Company’s stock plans (in millions, except weighted exercise price and number of years):



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2015 ^(a)	24.9		$	43.75
Granted	5.2		66.55
Exercised	(4.9	)	32.54
Cancelled/forfeited	(1.4	)	68.60
Adjustment due to Fortive Separation ^(b)	(5.2	)	50.44
Outstanding as of September 30, 2016	18.6		$	49.31	6	$	542.4
Vested and expected to vest as of September 30, 2016^(c)	18.0		$	48.81	6	$	533.7
Vested as of September 30, 2016	9.0		$	36.69	4	$	376.9


^(a)	The outstanding options (except those options canceled as part of the Separation as noted below) as of December 31, 2015 have been adjusted by a factor of 1.32, as noted above, due to the Separation.


^(b)	The “Adjustment due to Fortive Separation” reflects the cancellation of options which were outstanding as of July 2, 2016 and held by Fortive employees, which have been converted to Fortive options as part of the Separation.


^(c)	The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

RSU and PSU Activity

The following summarizes information on unvested RSU and PSU activity (in millions, except weighted average grant-date fair value):



	Number of RSUs/PSUs		Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2015 ^(a)	6.1		$	53.93
Granted	1.8		65.33
Vested	(1.7	)	49.29
Forfeited	(0.7	)	46.31
Adjustment due to Fortive Separation ^(b)	(1.2	)	58.24
Unvested as of September 30, 2016	4.3		60.69


^(a)	The unvested RSUs and PSUs (except those RSUs and PSUs canceled as part of the Separation as noted below) as of December 31, 2015 have been adjusted by a factor of 1.32, as noted above, due to the Separation.


^(b)	The “Adjustment due to Fortive Separation” reflects the cancellation of RSUs and PSUs which were outstanding as of July 2, 2016 and held by Fortive employees which have been converted to Fortive RSUs and PSUs as part of the Separation.