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STOCK OPTION AND STOCK UNIT PLANS (Tables)
 12 Months Ended
Dec. 31, 2014
INCENTIVE STOCK OPTIONS  
STOCK OPTION AND STOCK UNIT PLANS  
Schedule of outstanding stock options

 

December 31, 2014

 

Number

 

Weighted
Average
Exercise
Price

 

Weighted
Average
Remaining
Contractual

Life (years)

 

Aggregate
Intrinsic
Value

 

(options in thousands; intrinsic value in millions of
Canadian dollars)

 

 

 

 

 

 

 

 

 

Options outstanding at beginning of year

 
29,602 

 
30.52 

 

 

 

 

 

Options granted

 
5,963 

 
48.80 

 

 

 

 

 

Options exercised1

 
(3,973)

 
22.20 

 

 

 

 

 

Options cancelled or expired

 
(262)

 
41.33 

 

 

 

 

 

Options outstanding at end of year

 
31,330 

 
34.97 

 
6.6 

 
523 

 

Options vested at end of year2

 
16,591 

 
27.25 

 
5.2 

 
405 

 

1

The total intrinsic value of ISO exercised during the year ended December 31, 2014 was $117 million (2013 - $98 million; 2012 - $130 million) and cash received on exercise was $37 million (2013 - $24 million; 2012 - $69 million).

2

The total fair value of options vested under the ISO Plan during the year ended December 31, 2014 was $26 million (2013 - $22 million; 2012 - $19 million).
Schedule of weighted average assumptions used to determine the fair value of stock options granted

 

Year ended December 31,

 
2014 

 
2013 

 
2012 

Fair value per option (Canadian dollars)1

 
5.53 

 
5.27 

 
4.81 

Valuation assumptions

 

 

 

 

 

 

Expected option term (years)2

 
5 

 
5 

 
5 

Expected volatility3

 
16.9% 

 
17.4% 

 
19.7% 

Expected dividend yield4

 
2.9% 

 
2.8% 

 
3.0% 

Risk-free interest rate5

 
1.6% 

 
1.2% 

 
1.3% 

1

Options granted to United States employees are based on New York Stock Exchange prices. The option value and assumptions shown are based on a weighted average of the United States and the Canadian options. The fair values per option were $5.45 (2013 - $5.15; 2012 - $4.65) for Canadian employees and US$5.35 (2013 - US$5.63; 2012 - US$5.58) for United States employees.

2

The expected option term is based on historical exercise practice.

3

Expected volatility is determined with reference to historic daily share price volatility and consideration of the implied volatility observable in call option values near the grant date.

4

The expected dividend yield is the current annual dividend at the grant date divided by the current stock price.

5

The risk-free interest rate is based on the Government of Canada’s Canadian Bond Yields and the United States Treasury Bond Yields.

 

PERFORMANCE BASED STOCK OPTIONS  
STOCK OPTION AND STOCK UNIT PLANS  
Schedule of outstanding stock options

 

December 31, 2014

 

Number

 

Weighted
Average
Exercise
Price

 

Weighted
Average
Remaining
Contractual Life (years)

 

Aggregate
Intrinsic
Value

(options in thousands; intrinsic value in millions of
Canadian dollars)

 

 

 

 

 

 

 

 

Options outstanding at beginning of year

 
4,373 

 
35.56 

 

 

 

 

Options granted

 
138 

 
48.81 

 

 

 

 

Options exercised1

 

-

 

-

 

 

 

 

Options outstanding at end of year

 
4,511 

 
35.97 

 
4.5 

 
71 

Options vested at end of year2

 
1,964 

 
30.93 

 
3.4 

 
41 

1

No PBSO were exercised in 2014. The total intrinsic value of PBSO exercised during the year ended December 31, 2013 and 2012 was $62 million and $20 million, respectively, and cash received on exercise was $28 million and $12 million.

2

The total fair value of options vested under the PBSO Plan during the year ended December 31, 2014 was $5 million (2013 - nil; 2012 - $1 million).

 

Schedule of weighted average assumptions used to determine the fair value of stock options granted

 

Year ended December 31,

 
2014 

 
2012 

 

Fair value per option (Canadian dollars)

 
5.77 

 
4.25 

 

Valuation assumptions

 

 

 

 

 

Expected option term (years)1

 
6.5 

 
8 

 

Expected volatility2

 
15.0% 

 
16.1% 

 

Expected dividend yield3

 
2.8% 

 
2.8% 

 

Risk-free interest rate4

 
1.7% 

 
1.6% 

 

1

The expected option term is based on historical exercise practice.

2

Expected volatility is determined with reference to historic daily share price volatility.

3

The expected dividend yield is the current annual dividend at the grant date divided by the current stock price.

4

The risk-free interest rate is based on the Government of Canada’s Canadian Bond Yields.

 

PERFORMANCE STOCK UNITS  
STOCK OPTION AND STOCK UNIT PLANS  
Schedule of outstanding stock units

 

December 31, 2014

 

Number

 

Weighted
Average
Remaining
Contractual
Life (years)

 

Aggregate
Intrinsic
Value

(units in thousands; intrinsic value in millions of Canadian dollars)

 

 

 

 

 

 

Units outstanding at beginning of year

 
591 

 

 

 

 

Units granted

 
274 

 

 

 

 

Units cancelled

 
(2)

 

 

 

 

Units matured1

 
(332)

 

 

 

 

Dividend reinvestment

 
24 

 

 

 

 

Units outstanding at end of year

 
555 

 
1.5 

 
66 

1

The total amount paid during the year ended December 31, 2014 for PSU was $36 million (2013 - $48 million; 2012 - $25 million).

 

Restricted stock units  
STOCK OPTION AND STOCK UNIT PLANS  
Schedule of outstanding stock units

 

December 31, 2014

 

Number

 

Weighted
Average
Remaining
Contractual
Life (years)

 

Aggregate
Intrinsic
Value

 

(units in thousands; intrinsic value in millions of Canadian dollars)

 

 

 

 

 

 

 

Units outstanding at beginning of year

 
1,828

 

 

 

 

 

Units granted

 
1,019

 

 

 

 

 

Units cancelled

 
(99

)

 

 

 

 

Units matured1

 
(867

)

 

 

 

 

Dividend reinvestment

 
78

 

 

 

 

 

Units outstanding at end of year

 
1,959

 
1.5

 
116

 

1

The total amount paid during the year ended December 31, 2014 for RSU was $45 million (2013 - $41 million; 2012 - $37 million).