US Bank 2015 Annual Report Download - page 127

Expected stock volatility is based on several factors
including the historical volatility of the Company’s common
stock, implied volatility determined from traded options and
other factors. The Company uses historical data to estimate
option exercises and employee terminations to estimate the
expected life of options. The risk-free interest rate for the
expected life of the options is based on the U.S. Treasury
yield curve in effect on the date of grant. The expected
dividend yield is based on the Company’s expected dividend
yield over the life of the options.
The following summarizes certain stock option activity of the Company:
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
Fair value of options vested ....................................................................... $ 25 $ 33 $ 41
Intrinsic value of options exercised ................................................................. 130 171 144
Cash received from options exercised .............................................................. 257 408 489
Tax benefit realized from options exercised .......................................................... 50 66 56
To satisfy option exercises, the Company predominantly uses treasury stock.
Additional information regarding stock options outstanding as of December 31, 2015, is as follows:
Outstanding Options Exercisable Options
Range of Exercise Prices Shares
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price Shares
Weighted-
Average
Exercise
Price
$11.02 – $15.00 ..................................... 2,664,092 3.1 $11.20 2,664,092 $11.20
$15.01 – $20.00 ..................................... 161,218 2.0 19.58 161,218 19.58
$20.01 – $25.00 ..................................... 2,051,039 4.2 23.85 2,051,039 23.85
$25.01 – $30.00 ..................................... 5,911,183 5.0 28.49 5,051,861 28.47
$30.01 – $35.00 ..................................... 9,215,909 2.6 32.21 8,719,854 32.11
$35.01 – $40.00 ..................................... 3,523,469 1.1 36.04 3,523,469 36.04
$40.01 – $44.32 ..................................... 2,198,798 8.6 42.32 274,562 40.32
Total ............................................. 25,725,708 3.6 $29.82 22,446,095 $28.68
RESTRICTED STOCK AND UNIT AWARDS
A summary of the status of the Company’s restricted shares of stock and unit awards is presented below:
2015 2014 2013
Year Ended December 31 Shares
Weighted-
Average Grant-
Date Fair
Value Shares
Weighted-
Average Grant-
Date Fair
Value Shares
Weighted-
Average Grant-
Date Fair
Value
Outstanding at beginning of period ........ 7,921,571 $34.09 8,653,859 $29.96 8,935,743 $25.04
Granted ............................ 2,897,396 44.24 3,133,168 40.37 3,717,635 33.88
Vested ............................. (3,428,736) 33.27 (3,409,650) 29.38 (3,744,411) 22.17
Cancelled .......................... (495,400) 38.66 (455,806) 34.05 (255,108) 29.18
Outstanding at end of period ............. 6,894,831 $38.44 7,921,571 $34.09 8,653,859 $29.96
The total fair value of shares vested was $152 million,
$139 million and $127 million for the years ended
December 31, 2015, 2014 and 2013, respectively. Stock-
based compensation expense was $125 million, $125 million
and $129 million for the years ended December 31, 2015,
2014 and 2013, respectively. On an after-tax basis, stock-
based compensation was $78 million, $78 million and $80
million for the years ended December 31, 2015, 2014 and
2013, respectively. As of December 31, 2015, there was
$158 million of total unrecognized compensation cost related
to nonvested share-based arrangements granted under the
plans. That cost is expected to be recognized over a
weighted-average period of 2.5 years as compensation
expense.
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