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85
2015 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 2,695,000,
2,708,000 and 1,715,000 restricted stock units with a weighted average fair value of $100.81, $73.60 and $54.30 in
2015, 2014 and 2013, respectively. As of December 31, 2015, there was $268 million of total unrecognized compensa-
tion 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 2.61 years. The total fair value of restricted shares vested during 2015, 2014 and
2013 was $164 million, $57 million and $41 million, respectively.
The following table is a summary of the restricted stock unit and restricted share award activity for the year ended
December 31, 2015:
Weighted
Average
Grant Date
UNITS IN THOUSANDS Units Fair Value
Nonvested at beginning of year 4,677 $ 51.90
Granted 2,695 $ 100.81
Vested (1,646) $ 103.82
Forfeited (308) $ 73.61
Nonvested at end of year 5,418 $ 59.22
All grants under the ICP are awarded at fair 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 $127 million, $106 million and $62 million were included in financing activities in the accompanying
consolidated statements of cash flow during 2015, 2014 and 2013, respectively. Cash received from stock options
exercised, which includes the ESPP, totaled $299 million, $421 million and $500 million during 2015, 2014 and 2013,
respectively. The total intrinsic value of stock options exercised was $394 million, $372 million and $282 million in 2015,
2014 and 2013, respectively. The total fair value of stock options vested during 2015, 2014 and 2013 was $334 million,
$292 million and $329 million, respectively.
The fair value of each stock option is estimated using the Black-Scholes option pricing model based on the following
assumptions at the time of grant:
2015 2014 2013
Dividend yield (1)
1.37 %
1.47 % 1.65 %
Expected volatility (2)
18.07 %
19.92 % 30.96 %
Risk-free interest rate (3)
1.24 %
1.35 % 0.73 %
Expected life
(in years)
(4)
4.20
4.00 4.70
Weighted-average grant date fair value
$ 14.01
$ 11.04 $ 12.50
(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.