Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

Share-Based Compensation Plans

The following table summarizes share-based compensation expense recognized in the Consolidated Statements of Income in Compensation and benefits (in millions):

Years ended December 31	2016		2015		2014
Restricted share units (“RSUs”)	$	194	$	201	$	187
Performance share awards ("PSAs")	125		127		132
Employee share purchase plans	12		11		9
Total share-based compensation expense	331		339		328
Tax benefit	94		95		94
Share-based compensation expense, net of tax	$	237	$	244	$	234

Restricted Share Units

RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of Aon ordinary shares at the date of grant. With certain limited exceptions, any break in continuous employment will cause the forfeiture of all non-vested awards. Compensation expense associated with RSUs is recognized on a straight-line basis over the requisite service period. Dividend equivalents are paid on certain RSUs, based on the initial grant amount.

A summary of the status of the Company’s RSUs is as follows (shares in thousands):

Years ended December 31	2016				2015				2014
	Shares		Fair Value (1)		Shares		Fair Value (1)		Shares		Fair Value (1)
Non-vested at beginning of year	7,167		$	77	8,381		$	63	9,759		$	51
Granted	2,252		101		2,459		97		2,844		84
Vested	(2,845	)	70		(3,385	)	58		(3,732	)	49
Forfeited	(379	)	82		(288	)	71		(490	)	58
Non-vested at end of year	6,195		89		7,167		77		8,381		63

(1) Represents per share weighted average fair value of award at date of grant.

The fair value of RSUs that vested during 2016, 2015 and 2014 was $200 million, $196 million and $183 million, respectively.

Unamortized deferred compensation expense amounted to $382 million as of December 31, 2016, with a remaining weighted-average amortization period of approximately 2.1 years.

Performance Share Awards

The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share performance over a three-year period. The actual issue of shares may range from 0-200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. The grant date fair value of PSAs is based upon the market price of an Aon ordinary share at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits expense, if necessary. Dividend equivalents are not paid on PSAs.

Information regarding the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the years ended December 31, 2016, 2015, and 2014, respectively, is as follows (shares in thousands, dollars in millions, except fair value):

	2016		2015		2014
Target PSAs granted per share	783		993		816
Weighted average fair value per share at date of grant	$	100	$	96	$	81
Number of shares that would be issued based on current performance levels	777		1,437		1,540
Unamortized expense, based on current performance levels	$	57	$	48	$	—

During 2016, the Company issued approximately 1.3 million shares in connection with performance achievements related to the 2013-2015 Leadership Performance Plan (“LPP”) cycle. During 2015, the Company issued approximately 1.6 million shares in connection with performance achievements related to the 2012-2014 LPP cycle. During 2014, the Company issued approximately 0.8 million shares in connection with performance achievements related to the 2011-2013 LPP cycle and 0.2 million shares related to other performance plans.