Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

A summary of our RSUs is presented in the table below (units in thousands):


	Years Ended December 31,
	2012					2011					2010
	Units			Weighted Average Fair Value		Units			Weighted Average Fair Value		Units			Weighted Average Fair Value
Unvested, beginning of year		317		$	23.60		586		$	27.61		1,030		$	30.76
Granted		345		$	34.55		6		$	31.65		8		$	34.25
Vested(a)		(304	)	$	23.23		(253	)	$	32.62		(428	)	$	35.37
Forfeited		(42	)	$	34.51		(22	)	$	26.12		(24	)	$	26.54

Unvested, end of year		316		$	34.46		317		$	23.60		586		$	27.61

(a)

The total fair market value of RSUs that vested during the years ended December 31, 2012, 2011 and 2010 was $11 million, $9 million and $14 million, respectively. Net of units deferred and units used for payment of associated taxes, we issued approximately 196,000, 162,000 and 264,000 shares of common stock for RSUs that vested during the years ended December 31, 2012, 2011 and 2010, respectively.

Summary of PSUs

A summary of our PSUs is presented in the table below (units in thousands):


	Years Ended December 31,
	2012					2011					2010
	Units(a)			Weighted Average Fair Value		Units(b)			Weighted Average Fair Value		Units(c)			Weighted Average Fair Value
Unvested, beginning of year		981		$	34.85		1,740		$	26.72		2,254		$	27.68
Granted		976		$	37.87		380		$	37.19		690		$	33.49
Vested(d)		—		$	—		(1,070	)	$	22.66		—		$	—
Expired without vesting		—		$	—		—		$	—		(1,064	)	$	32.92
Forfeited		(239	)	$	37.47		(69	)	$	31.31		(140	)	$	28.41

Unvested, end of year		1,718		$	36.20		981		$	34.85		1,740		$	26.72

(a)

The determination of achievement of performance results and corresponding vesting of PSUs with the three-year performance period ended December 31, 2012 was performed by the Management Development and Compensation Committee in February 2013. Accordingly, vesting information is not included in the table above as of December 31, 2012.

(b)

The Company’s financial results for the three-year performance period ended December 31, 2011, as measured for purposes of these awards, were lower than the target levels established but in excess of the threshold performance criteria. Accordingly, recipients of PSU awards with the performance period ended December 31, 2011 were entitled to receive a payout of approximately 87% of the vested PSUs. In early 2012, we issued approximately 581,000 shares of common stock for these vested PSUs, net of units deferred and units used for payment of associated taxes.

(c)

The Company’s financial results for the three-year performance period ended December 31, 2010, as measured for purposes of these awards, did not meet the threshold performance criteria for such PSUs, and as a result, the PSUs with the performance period ended December 31, 2010 expired without vesting.

(d)	The PSUs that vested for the performance period ended December 31, 2011 had a fair market value of $23 million.

Summary of Stock Options

A summary of our stock options is presented in the table below (options in thousands):


	Years Ended December 31,
	2012					2011					2010
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding, beginning of year		14,255		$	32.91		9,957		$	28.95		8,800		$	25.98
Granted(a) (b)		1,986		$	34.86		6,597		$	37.04		3,901		$	33.56
Exercised(c)		(1,925	)	$	26.59		(1,900	)	$	26.46		(2,454	)	$	25.17
Forfeited or expired		(1,319	)	$	34.71		(399	)	$	33.05		(290	)	$	32.88

Outstanding, end of year(d)		12,997		$	33.96		14,255		$	32.91		9,957		$	28.95

Exercisable, end of year(e)		5,318		$	31.15		5,176		$	27.46		6,286		$	26.25

(a)

Although we stopped granting stock options from 2005 through 2009, some of our outstanding options granted in 2003 and 2004 have a reload feature that provides for the automatic grant of a new stock option award when the exercise price of the existing stock option is paid using already owned shares of common stock. The new option award is for the equivalent number of shares used as payment of the exercise price and has the same expiration date as the original option.

(b)	The weighted average grant-date fair value of stock options granted during the years ended December 31, 2012, 2011 and 2010 was $4.66, $5.88 and $5.83, respectively.

(c)	The aggregate intrinsic value of stock options exercised during the years ended December 31, 2012, 2011 and 2010 was $15 million, $20 million and $25 million, respectively.

(d)	Stock options outstanding as of December 31, 2012 have a weighted average remaining contractual term of 6.65 years and an aggregate intrinsic value of $19 million based on the market value of our common stock on December 31, 2012.

(e)	The aggregate intrinsic value of stock options exercisable as of December 31, 2012 was $19 million.

Exercisable Stock Options

Exercisable stock options at December 31, 2012, were as follows (options in thousands):


Range of Exercise Prices	Options		Weighted Average Exercise Price		Weighted Average Remaining Years
$19.61-$20.00		480	$	19.61		0.18
$20.01-$30.00		1,905	$	27.68		1.01
$30.01-$39.93		2,933	$	35.29		7.69

$19.61-$39.93		5,318	$	31.15		4.62

Weighted Average Assumptions Used To Value Employee Stock Options Granted

The following table presents the weighted average assumptions used to value employee stock options granted during the years ended December 31, 2012, 2011 and 2010 under the Black-Scholes valuation model:


	Years Ended December 31,
	2012	2011	2010
Expected option life	5.5 years	5.4 years	5.7 years
Expected volatility	24.2%	24.2%	24.8%
Expected dividend yield	4.1%	3.7%	3.8%
Risk-free interest rate	1.1%	2.3%	2.9%

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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