Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

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

The Company recorded stock-based compensation expense of $8 million and $7 million ($5 million and $4 million, net of tax) during the three months ended September 30, 2015 and 2014, respectively, and $19 million and $23 million ($12 million and $14 million, net of tax) during the nine months ended September 30, 2015 and 2014, respectively. In jurisdictions with net operating loss carryforwards, exercises and/or vestings of stock-based awards have generated $49 million of total tax deductions at September 30, 2015. Approximately $19 million of tax benefits will be recorded in additional paid-in capital when these tax deductions are realized in these jurisdictions.

The weighted average assumptions used in the Monte Carlo simulation model to calculate the fair value of the Company’s stock unit awards containing a market condition are as follows:



	Nine Months Ended September 30,
	2015	2014
Expected volatility of stock price	37%	40%
Risk-free interest rate	0.74%	0.83%
Expected term of awards	3 years	3 years
Dividend yield	0.0%	0.0%

The activity related to the Company’s restricted stock units (“RSUs”) and cash units, consisted of (in thousands of shares):



		Time-Based RSUs				Performance-Based and Market-Based RSUs				Cash Unit Awards
		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2015 ^(a)		998		$	27.26	1,884		$	19.17	267		$	14.90
	Granted	425		54.72		230		55.51		—		—
	Vested ^(b)	(538	)	22.23		(982	)	12.05		(156	)	12.65
	Forfeited/expired	(29	)	41.19		(182	)	19.96		—		—
Outstanding at September 30, 2015 ^(c)		856		$	43.57	950		$	35.15	111		$	18.04

__________


^(a)	Reflects the maximum number of stock units assuming achievement of all time-, performance- and market-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based and market-based RSUs granted during the nine months ended September 30, 2014 was $42.05 and $42.03, respectively.


^(b)	The total grant date fair value of RSUs vested during the nine months ended September 30, 2015 and 2014 was $24 million and $15 million, respectively. The total grant date fair value of cash units vested during the nine months ended September 30, 2015 was $2 million.

^(c)

The Company’s outstanding time-based RSUs, performance-based and market-based RSUs, and cash units had aggregate intrinsic values of $37 million, $41 million and $5 million, respectively. Aggregate unrecognized compensation expense related to time-based RSUs and performance-based and market-based RSUs amounted to $31 million and will be recognized over a weighted average vesting period of 1.0 years. The Company assumes that substantially all outstanding awards will vest over time.

The stock option activity consisted of (in thousands of shares):



		Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1, 2015		848		$	2.92	$	54	4.3
	Granted	—		—
	Exercised	(20	)	5.40		1
	Forfeited/expired	(1	)	0.79
Outstanding and exercisable at September 30, 2015		827		$	2.87	$	34	3.5