Travelers 2015 Annual Report Download - page 229

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. SHARE-BASED INCENTIVE COMPENSATION (Continued)
each option is the interpolated market yield for the mid-month of the option grant on a U.S. Treasury
bill with a term comparable to the expected option term of the granted stock option. The following
table provides information about options granted:
(for the year ended December 31,) 2015 2014 2013
Assumptions used in estimating fair value of options on
grant date
Expected term of stock options .................... 6 years 6 years 6 years
Expected volatility of Company’s stock ............... 19.29% 27.2% - 27.5% 28.7% - 28.8%
Weighted average volatility ........................ 19.29% 27.5% 28.8%
Expected annual dividend per share ................. $2.20 $2.00 - $2.20 $1.84
Risk-free rate ................................. 1.31% 1.81% - 1.82% 1.11% - 1.14%
Additional information
Weighted average grant-date fair value of options granted
(per share) .................................. $15.78 $17.22 $17.09
Total intrinsic value of options exercised during the year
(in millions) ................................. $120 $117 $122
A summary of stock option activity under the 2014 Incentive Plan and the legacy plans as of and
for the year ended December 31, 2015 is as follows:
Weighted
Weighted Average Aggregate
Average Contractual Intrinsic
Exercise Life Value
Stock Options Number Price Remaining ($ in millions)
Outstanding, beginning of year .......... 10,024,860 $ 63.08
Original grants ...................... 2,244,464 106.04
Exercised .......................... (2,310,548) 55.16
Forfeited or expired .................. (94,521) 87.17
Outstanding, end of year ............... 9,864,255 $ 74.48 6.6 years $379
Vested at end of year(1) ............... 7,226,516 $ 68.80 6.0 years $318
Exercisable at end of year .............. 4,155,912 $ 53.51 4.3 years $247
(1) Represents awards for which the requisite service has been rendered, including those that are
retirement eligible.
On February 2, 2016, the Company, under the 2014 Stock Incentive Plan, granted 2,808,558 stock
option awards with an exercise price of $106.03 per share. The fair value attributable to the stock
option awards on the date of grant was $13.26 per share.
Restricted Stock Units, Deferred Stock Units and Performance Share Award Programs
The Company issues restricted stock unit awards to eligible officers and key employees under the
Equity Awards program established pursuant to the 2014 Incentive Plan. A restricted stock unit
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