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Stock-based compensation (Tables)

12 Months Ended

Dec. 31, 2012

Stock option, restricted stock unit and employee stock purchase plan transactions

Summarized information as of December 31, 2012, about outstanding stock options that are vested and expected to vest, as well as stock options that are currently exercisable, is as follows:



	Outstanding Stock Options (Fully Vested and Expected to Vest) (a)		Options Exercisable
Number of outstanding (shares)	96,121,395		68,534,425
Weighted average remaining contractual life (in years)	4.7		3.3
Weighted average exercise price per share	$	28.75	$	27.30
Intrinsic value (millions of dollars)	$	398	$	300

(a) Includes effects of expected forfeitures of approximately 4 million shares. Excluding the effects of expected forfeitures, the aggregate intrinsic value of stock options outstanding was $414 million.

Stock option and RSU transactions under our long-term incentive and director compensation plans during 2012 were as follows:



	Stock Options				RSUs
	Shares		Weighted Average Exercise Price per Share		Shares		Weighted Average Grant Date Fair Value per Share
Outstanding grants, December 31, 2011	113,273,394		$	25.79	23,358,846		$	25.09
Granted	13,508,034		32.35		5,617,150		31.60
Vested RSUs	—		—		(4,182,928	)	28.66
Expired and forfeited	(4,732,514	)	29.78		(1,417,834	)	26.76
Exercised	(22,409,816	)	20.32		—		—
Outstanding grants, December 31, 2012	99,639,098		$	27.73	23,375,234		$	25.91

Shares available for future grant and reserved for issuance are summarized below:



	As of December 31, 2012
Shares	Long-term Incentive and Director Compensation Plans		Employee Stock Purchase Plan		Total
Reserved for issuance (a)	197,554,600		25,137,819		222,692,419
Shares to be issued upon exercise of outstanding options and RSUs	(123,143,365	)	(681,951	)	(123,825,316	)
Available for future grants	74,411,235		24,455,868		98,867,103

(a) Includes 129,033 shares credited to directors’ deferred compensation accounts that settle in shares of TI common stock. These shares are not included as grants outstanding at December 31, 2012.

We estimate the fair values for non-qualified stock options under long-term incentive and director compensation plans using the Black-Scholes option-pricing model with the following weighted average assumptions.



	2012			2011			2010
Weighted average grant date fair value, per share	$	8.31		$	10.37		$	6.61
Weighted average assumptions used:
Expected volatility	30		%	30		%	32		%
Expected lives (in years)	7.1			6.9			6.4
Risk-free interest rates	1.40		%	2.61		%	2.83		%
Expected dividend yields	2.10		%	1.51		%	2.08		%

Total stock-based compensation expense recognized was as follows:



	For Years Ended December 31,
	2012		2011		2010
Stock-based compensation expense recognized in:
Cost of revenue (COR)	$	48	$	40	$	36
Research and development (R&D)	71		58		53
Selling, general and administrative (SG&A)	127		121		101
Acquisition charges	17		50		—
Total	$	263	$	269	$	190

Employee stock purchase plan transactions during 2012 were as follows:



	Employee Stock Purchase Plan (Shares)		Exercise Price
Outstanding grants, December 31, 2011	580,095		$	25.29
Granted	2,931,354		25.64
Exercised	(2,829,498	)	25.12
Outstanding grants, December 31, 2012	681,951		$	27.47

Schedule of share-based compensation, Shares outstanding under stock option plans, by exercise price range

Summarized information about stock options outstanding at December 31, 2012, is as follows:



		Stock Options Outstanding				Options Exercisable
Range of Exercise Price		Number Outstanding (Shares)	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price per Share		Number Exercisable (Shares)	Weighted Average Exercise Price per Share
$	9.56 to 10.00	4,882	0.8	$	9.56	4,882	$	9.56
	10.01 to 20.00	13,179,570	4.5	15.32		9,619,657	15.43
	20.01 to 30.00	34,637,310	4.8	24.86		27,154,258	25.33
	30.01 to 38.40	51,817,336	4.9	32.81		31,755,628	32.59
$	9.56 to 38.40	99,639,098	4.8	$	27.73	68,534,425	$	27.30

- 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.

+ References+ Details

- Definition

Tabular disclosure of option exercise prices, by grouped ranges, including the upper and lower limits of the price range, the number of shares under option, weighted average exercise price and remaining contractual option terms.

+ References+ Details