DuPont 2013 Annual Report Download - page 88

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-41
The company's contributions to the U.S. parent company's defined contribution plans were $208, $212 and $210 for the years
ended December 31, 2013, 2012 and 2011, respectively. The company's matching contributions vest immediately upon
contribution. The 3 percent nonmatching company contribution vests for employees with at least three years of service. In addition,
the company made contributions to other defined contribution plans of $105, $124 and $84 for the years ended December 31,
2013, 2012 and 2011, respectively. Included in the company's contributions are amounts related to discontinued operations of $2,
$30 and $29 for the years ended December 31, 2013, 2012 and 2011, respectively. The company expects to contribute about $320
to its defined contribution plans in 2014.
19. COMPENSATION PLANS
The total stock-based compensation cost included in the Consolidated Income Statements was $129, $105 and $113 for 2013,
2012 and 2011, respectively. The income tax benefits related to stock-based compensation arrangements were $43, $35 and $37
for 2013, 2012 and 2011, respectively.
In April 2011, the shareholders approved amendments to the DuPont Equity and Incentive Plan (EIP). The EIP provides for equity-
based and cash incentive awards to certain employees, directors, and consultants. Under the amended EIP, the maximum number
of shares reserved for the grant or settlement of awards is 110 million shares, provided that each share in excess of 30 million that
is issued with respect to any award that is not an option or stock appreciation right will be counted against the 110 million share
limit as four and one-half shares. At December 31, 2013, approximately 51 million shares were authorized for future grants under
the company's EIP. The company satisfies stock option exercises and vesting of time-vested restricted stock units (RSUs) and
performance-based restricted stock units (PSUs) with newly issued shares of DuPont common stock.
The company's Compensation Committee determines the long-term incentive mix, including stock options, RSUs and PSUs and
may authorize new grants annually.
Stock Options
The exercise price of shares subject to option is equal to the market price of the company's stock on the date of grant. Options
granted prior to 2004 expire 10 years from date of grant; options granted between 2004 and 2008 serially vested over a three-year
period and carry a six-year option term. Stock option awards granted between 2009 and 2013 expire seven years after the grant
date. The plan allows retirement eligible employees to retain any granted awards upon retirement provided the employee has
rendered at least six months of service following grant date.
For purposes of determining the fair value of stock options awards, the company uses the Black-Scholes option pricing model and
the assumptions set forth in the table below. The weighted-average grant-date fair value of options granted in 2013, 2012 and 2011
was $10.40, $11.81 and $12.32, respectively.
2013 2012 2011
Dividend yield 3.6% 3.2% 3.2%
Volatility 34.86% 34.87% 33.26%
Risk-free interest rate 1.0% 0.9% 2.3%
Expected life (years) 5.3 5.3 5.3
The company determines the dividend yield by dividing the current annual dividend on the company's stock by the option exercise
price. A historical daily measurement of volatility is determined based on the expected life of the option granted. The risk-free
interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the expected life of
the option granted. Expected life is determined by reference to the company's historical experience.