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77
2014 Annual Report
The Company’s restricted awards are considered nonvested share awards and require no payment from the employee.
Compensation cost is recorded based on the market price of the Company’s common stock on the grant date and
is recognized on a straight-line basis over the requisite service period. The Company granted 2,708,000, 1,715,000
and 1,811,000 restricted stock units with a weighted average fair value of $73.60, $54.30 and $44.80 in 2014, 2013
and 2012, respectively. As of December 31, 2014, there was $190 million of total unrecognized compensation cost
related to the restricted stock units that are expected to vest. These costs are expected to be recognized over a
weighted-average period of 2.7 years. The total fair value of restricted shares vested during 2014, 2013 and 2012
was $57 million, $41 million and $81 million, respectively.
The following table is a summary of the restricted stock unit and restricted share award activity for the year ended
December 31, 2014.
Weighted Average
Grant Date
UNITS IN THOUSANDS Units Fair Value
Nonvested at beginning of year 3,021 $ 38.56
Granted 2,708 $ 73.60
Vested (803) $ 73.11
Forfeited (249) $ 57.58
Nonvested at end of year 4,677 $ 51.90
All grants under the ICP are awarded at fair market value on the date of grant. The fair value of stock options
is estimated using the Black-Scholes Option Pricing Model and stock-based compensation is recognized on a
straight-line basis over the requisite service period. Stock options granted generally become exercisable over a
four-year period from the grant date. Stock options generally expire seven years after the grant date.
Excess tax benefits of $106 million, $62 million and $28 million were included in financing activities in the accompa-
nying consolidated statements of cash flow during 2014, 2013 and 2012, respectively. Cash received from stock
options exercised, which includes the ESPP, totaled $421 million, $500 million and $836 million during 2014, 2013
and 2012, respectively. The total intrinsic value of stock options exercised was $372 million, $282 million and
$321 million in 2014, 2013 and 2012, respectively. The total fair value of stock options vested during 2014, 2013
and 2012 was $292 million, $329 million and $386 million, respectively.
The fair value of each stock option is estimated using the Black-Scholes option pricing model based on the follow-
ing assumptions at the time of grant:
2014 2013 2012
Dividend yield (1)
1.47 %
1.65 % 1.44 %
Expected volatility (2)
19.92 %
30.96 % 32.49 %
Risk-free interest rate (3)
1.35 %
0.73 % 0.84 %
Expected life (in years)
(4)
4.00
4.70 4.70
Weighted-average grant date fair value
$ 11.04
$ 12.50 $ 11.12
(1) The dividend yield is based on annual dividends paid and the fair market value of the Company’s stock at the grant date.
(2) The expected volatility is estimated using the Company’s historical volatility over a period equal to the expected life of each option grant
after adjustments for infrequent events such as stock splits.
(3) The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the
expected term of the options being valued.
(4) The expected life represents the number of years the options are expected to be outstanding from grant date based on historical option
holder exercise experience.