XML 32 R14.htm IDEA: XBRL DOCUMENT v3.25.0.1
Share-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation

NOTE 2 — SHARE-BASED COMPENSATION

Stock Incentive Plans

Our stock incentive plans are designed to promote the long-term financial interests and growth of the Company by attracting and retaining management and other personnel, motivating them to achieve long range goals and aligning their interests with those of our stockholders. Stock appreciation right (“SAR”) and restricted share unit (“RSU”) grants vest solely based upon continued employment over a specific period of time, and performance share unit (“PSU”) grants vest based upon both continued employment over a specific period of time and the achievement of predetermined financial targets over a specific period of time. At December 31, 2024 there were 7.316 million shares available for future grants.

Employee Stock Purchase Plan

Our employee stock purchase plan (“ESPP”) provides our participating employees an opportunity to obtain shares of our common stock at a discount (through payroll deductions over three-month periods). At December 31, 2024, 9.618 million shares of common stock were reserved for ESPP issuances. During 2024, 2023 and 2022, the Company recognized $18 million, $17 million and $16 million, respectively, of compensation expense related to the ESPP.

SAR, RSU and PSU Activity

The fair value of each SAR award is estimated on the grant date, using valuation models and the weighted average assumptions indicated in the following table. Awards under our stock incentive plans generally vest based on continued employment (“Time SARs” and “RSUs”) or based upon continued employment and the achievement of certain financial targets (“Performance SARs” and “PSUs”). PSUs have a three-year cumulative earnings per share target, and the number of PSUs earned can vary from zero (for actual performance of less than 90% of target) to two times the original PSU grant (for actual performance of 110% or more of target). Each grant is valued as a single award with an expected term equal to the average expected term of the component vesting tranches. The expected term of the share-based award is limited by the contractual term. We use historical exercise behavior data and other factors to estimate the expected term of the SARs.

Compensation cost is recognized on the straight-line attribution method. The straight-line attribution method requires that total compensation expense recognized must at least equal the vested portion of the grant-date fair value. The expected volatility is derived using historical stock price information for our common stock and the volatility implied by the trading of options to purchase our stock on open-market exchanges. The risk-free interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected share-based award life on the date of grant. The expected life is an estimate of the number of years a share-based award will be held before it is exercised. The expected dividend yield is estimated based on the assumption that the dividend yield at date of grant will be maintained over the expected life of the grant.

 

 

 

2024

 

 

2023

 

 

2022

 

Risk-free interest rate

 

 

3.94

%

 

 

3.69

%

 

 

1.64

%

Expected volatility

 

 

33

%

 

 

36

%

 

 

34

%

Expected life, in years

 

 

5.23

 

 

 

5.14

 

 

 

5.11

 

Expected dividend yield

 

 

0.87

%

 

 

0.95

%

 

 

0.95

%

 

NOTE 2 — SHARE-BASED COMPENSATION (continued)

SAR, RSU and PSU Activity (continued)

Information regarding Time SAR and Performance SAR activity during 2024, 2023 and 2022 is summarized below (share amounts in thousands):

 

 

Time
SARs

 

 

Performance
SARs

 

 

Total
SARs

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual Term

 

Aggregate
Intrinsic Value
(dollars in millions)

 

SARs outstanding, December 31, 2021

 

 

6,162

 

 

 

286

 

 

 

6,448

 

 

$

113.15

 

 

 

 

 

 

Granted

 

 

570

 

 

 

—

 

 

 

570

 

 

 

236.00

 

 

 

 

 

 

Exercised

 

 

(660

)

 

 

(159

)

 

 

(819

)

 

 

90.84

 

 

 

 

 

 

Cancelled

 

 

(112

)

 

 

—

 

 

 

(112

)

 

 

182.87

 

 

 

 

 

 

SARs outstanding, December 31, 2022

 

 

5,960

 

 

 

127

 

 

 

6,087

 

 

 

126.38

 

 

 

 

 

 

Granted

 

 

580

 

 

 

—

 

 

 

580

 

 

 

253.49

 

 

 

 

 

 

Exercised

 

 

(1,156

)

 

 

(83

)

 

 

(1,239

)

 

 

95.29

 

 

 

 

 

 

Cancelled

 

 

(59

)

 

 

—

 

 

 

(59

)

 

 

202.05

 

 

 

 

 

 

SARs outstanding, December 31, 2023

 

 

5,325

 

 

 

44

 

 

 

5,369

 

 

 

146.46

 

 

 

 

 

 

Granted

 

 

491

 

 

 

—

 

 

 

491

 

 

 

305.44

 

 

 

 

 

 

Exercised

 

 

(1,128

)

 

 

(44

)

 

 

(1,172

)

 

 

111.02

 

 

 

 

 

 

Cancelled

 

 

(101

)

 

 

—

 

 

 

(101

)

 

 

246.78

 

 

 

 

 

 

SARs outstanding, December 31, 2024

 

 

4,587

 

 

 

—

 

 

 

4,587

 

 

$

170.31

 

 

5.3 years

 

$

598

 

SARs exercisable, December 31, 2024

 

 

3,322

 

 

 

—

 

 

 

3,322

 

 

$

136.86

 

 

4.3 years

 

$

542

 

 

The weighted average fair values of SARs granted during 2024, 2023 and 2022 were $102.65, $87.47 and $69.55 per share, respectively. The intrinsic values of SARs exercised during 2024, 2023 and 2022 were $257 million, $207 million and $115 million, respectively. As of December 31, 2024, the unrecognized compensation cost related to nonvested SARs was $47 million.

Information regarding RSU and PSU activity during 2024, 2023 and 2022 is summarized below (share amounts in thousands):

 

 

RSUs

 

 

PSUs

 

 

Total RSUs
and PSUs

 

 

Weighted
Average
Grant
Date Fair
Value

 

RSUs and PSUs outstanding, December 31, 2021

 

 

2,191

 

 

 

2,083

 

 

 

4,274

 

 

$

150.32

 

Granted

 

 

611

 

 

 

455

 

 

 

1,066

 

 

 

235.71

 

Performance adjustment

 

 

—

 

 

 

699

 

 

 

699

 

 

 

138.45

 

Vested

 

 

(878

)

 

 

(1,399

)

 

 

(2,277

)

 

 

138.41

 

Cancelled

 

 

(140

)

 

 

(123

)

 

 

(263

)

 

 

183.86

 

RSUs and PSUs outstanding, December 31, 2022

 

 

1,784

 

 

 

1,715

 

 

 

3,499

 

 

 

179.18

 

Granted

 

 

609

 

 

 

479

 

 

 

1,088

 

 

 

253.85

 

Performance adjustment

 

 

—

 

 

 

697

 

 

 

697

 

 

 

144.42

 

Vested

 

 

(717

)

 

 

(1,393

)

 

 

(2,110

)

 

 

152.50

 

Cancelled

 

 

(125

)

 

 

(88

)

 

 

(213

)

 

 

217.78

 

RSUs and PSUs outstanding, December 31, 2023

 

 

1,551

 

 

 

1,410

 

 

 

2,961

 

 

 

214.71

 

Granted

 

 

582

 

 

 

434

 

 

 

1,016

 

 

 

305.97

 

Performance adjustment

 

 

—

 

 

 

566

 

 

 

566

 

 

 

174.55

 

Vested

 

 

(639

)

 

 

(1,132

)

 

 

(1,771

)

 

 

181.81

 

Cancelled

 

 

(138

)

 

 

(103

)

 

 

(241

)

 

 

260.96

 

RSUs and PSUs outstanding, December 31, 2024

 

 

1,356

 

 

 

1,175

 

 

 

2,531

 

 

$

260.95

 

 

NOTE 2 — SHARE-BASED COMPENSATION (continued)

SAR, RSU and PSU Activity (continued)

 

The fair values of RSUs and PSUs that vested during 2024, 2023 and 2022 were $539 million, $550 million and $550 million, respectively. As of December 31, 2024, the unrecognized compensation cost related to RSUs and PSUs was $383 million.