Share-Based Compensation

12 Months Ended

Dec. 31, 2012

Share-Based Compensation

5. Share-Based Compensation

At December 31, 2012, total compensation cost related to nonvested awards not yet recognized was approximately $20,400,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for options and RSUs outstanding at December 31, 2012 and 2011 was approximately $90,300,000 and $110,300,000, respectively. The aggregate intrinsic value for options and RSUs vested totaled approximately $57,600,000 and $77,800,000 at December 31, 2012 and 2011, respectively. At December 31, 2012, the weighted-average contractual life for outstanding and exercisable options and RSUs was six and five years, respectively. Share-based compensation cost of $10,747,000, $7,547,000, and $7,016,000, was recorded for the years ended December 31, 2012, 2011, and 2010, respectively. The total income tax benefit recognized in the consolidated statements of income and comprehensive income for share-based compensation arrangements was approximately $4,300,000, $3,000,000, and $2,800,000, for 2012, 2011, and 2010, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2012, 2011, and 2010.

For the years ended December 31, 2012, 2011 and 2010 the fair value for options and SARs granted was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 2.0%, 3.6%, and 3.6%; dividend yield of 3.3%, 3.8%, and 4.6%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% for each of the three years; an average expected life and estimated turnover based on the historical pattern of existing grants of approximately seven years and 5.0% to 6.0%, respectively. The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The total fair value of shares vested during the years ended December 31, 2012, 2011, and 2010, was $6,700,000, $7,200,000, and $9,200,000, respectively.

A summary of the Company’s share-based compensation activity and related information is as follows:

	2012
	Shares (1)			Weighted- Average Exercise Price (2)
	(In thousands)
Outstanding at beginning of year		5,987		$	45
Granted		1,003			63
Exercised		(1,834	)		41
Forfeited		(56	)		52
Outstanding at end of year (3)		5,100		$	50
Exercisable at end of year		2,993		$	45
Shares available for future grants		2,961

(1) Shares include Restricted Stock Units (RSUs).

(2) The weighted-average exercise price excludes RSUs.

(3) The exercise prices for options and SARs outstanding as of December 31, 2012 ranged from approximately $37 to $63. The weighted-average remaining contractual life of all options and SARs outstanding is approximately six years.

The weighted-average grant date fair value of options and SARs granted during the years 2012, 2011, and 2010 was $7.96, $8.18, and $5.41, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2010 was $41,500,000, $25,100,000, and $15,700,000.

In 2012, the Company granted approximately 858,000 SARs and 145,000 RSUs. In 2011, the Company granted approximately 1,028,000 SARs and 126,000 RSUs. In 2010, the Company granted approximately 1,002,000 SARs and 124,000 RSUs.

A summary of the Company’s nonvested share awards (RSUs) activity is as follows:

Nonvested Share Awards (RSUs)	Shares			Weighted- Average Grant Date Fair Value
	(In thousands)
Nonvested at January 1, 2012		222		$	48
Granted		145			63
Vested		(40	)		51
Forfeited		(11	)		49
Nonvested at December 31, 2012		316		$	54

For the years ended December 31, 2012, 2011, and 2010 approximately $11,000,000, $5,400,000, and $3,300,000, respectively, of excess tax benefits was classified as a financing cash inflow.