Stock Compensation Plans

6 Months Ended

Jun. 30, 2013

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

STOCK COMPENSATION PLANS

STOCK COMPENSATION PLANS

Our Board of Directors granted 2.1 million stock options and 0.2 million performance share units during the six months ended June 30, 2013 under our stock compensation plans. The weighted average exercise price per share and weighted average fair value per share of the stock option grants during the six months ended June 30, 2013 were $13.01 and $5.97, respectively. We estimated the fair value of the stock options using the following assumptions in our Black-Scholes model:

Expected term: 6.25 years

Interest rate: 1.04%

Volatility: 46.87%

Dividend yield: Nil

We measure the fair value of grants of performance share units based primarily on the closing market price of a share of our common stock on the date of the grant, modified as appropriate to take into account the features of such grants. The weighted average fair value per share was $13.65 for grants made during the six months ended June 30, 2013.

We recognized stock-based compensation expense of $6 million and $8 million during the three and six months ended June 30, 2013, respectively. At June 30, 2013, unearned compensation cost related to the unvested portion of all stock-based awards was approximately $30 million and is expected to be recognized over the remaining vesting period of the respective grants, through June 2017. We recognized stock-based compensation expense of $4 million and $5 million during the three and six months ended June 30, 2012, respectively.

Stock based awards are made pursuant to stock compensation plans that are approved by our shareholders. The 2013 Performance Plan was adopted by our shareholders on April 15, 2013 and will expire on April 14, 2023 unless earlier terminated. The 2013 Performance Plan replaced the 2008 Performance Plan, which was terminated on April 15, 2013, except with respect to outstanding awards.