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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation STOCK-BASED COMPENSATION
RTC’s long-term incentive plans authorize various types of market and performance based incentive awards that may be granted to officers and key employees. Certain historic awards remain outstanding under predecessor plans. The Raytheon Technologies Corporation 2018 Long-Term Incentive Plan, as amended and restated (2018 LTIP) was approved by shareowners on April 26, 2021. A total of 134.8 million shares have been authorized for issuance pursuant to awards under the 2018 LTIP including shares assumed from predecessor plans. There is also an additional 21.5 million shares for future issuance due to adjustments related to the Separation Transactions. As of December 31, 2021, approximately 99.2 million shares remain available for awards under the 2018 LTIP. The 2018 LTIP does not contain aggregate annual award limits, however, it sets an annual award limit per participant. The 2018 LTIP will expire after all authorized shares have been awarded or April 26, 2031, whichever is sooner.
Under the 2018 LTIP, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock appreciation rights and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions. In the event of retirement, annual stock appreciation rights, stock options, and RSUs held for more than one year may become vested and exercisable, subject to certain terms and conditions. LTIP awards with performance-based vesting generally have a minimum three-year vesting period and vest based on actual performance against pre-established metrics. In the event of retirement, performance-based awards held for more than one year, remain eligible to vest based on actual performance relative to performance goals. We have historically repurchased shares of our common stock
in an amount at least equal to the number of shares issued under our equity compensation arrangements and will continue to evaluate this policy in conjunction with our overall share repurchase program.
We measure the cost of all share-based payments, including stock options and stock appreciation rights, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:
(dollars in millions)202120202019
Total compensation cost recognized$442 $330 $268 
The associated future income tax benefit recognized was $83 million, $63 million and $47 million for the years ended December 31, 2021, 2020 and 2019, respectively.
For the years ended December 31, 2021, 2020 and 2019, the amount of cash received from the exercise of stock options was $7 million, $15 million and $27 million, respectively, with an associated tax benefit realized of $42 million, $48 million and $75 million, respectively. In addition, for the years ended December 31, 2021, 2020 and 2019, the associated tax benefit realized from the vesting of performance share units (PSUs), restricted stock awards and RSUs was $44 million, $58 million and $36 million, respectively.
At December 31, 2021, there was $328 million of total unrecognized compensation cost related to non-vested equity awards granted under long-term incentive plans. This cost is expected to be recognized ratably over a weighted-average period of 2.4 years.
A summary of the transactions under our long-term incentive plans for the year ended December 31, 2021 follows.
 Stock OptionsStock Appreciation RightsPerformance Share UnitsRestricted Stock and RSUs
(shares and units in thousands)Shares
Average
Price (1)
Shares
Average
Price (1)
Units
Average
Price (1)
Units
Average
Price (1)
Outstanding at:
December 31, 20201,944 $77.88 33,550 $77.93 — $— 11,034 $62.92 
Granted64 72.49 2,371 73.07 1,339 73.75 4,426 73.28 
Exercised / earned(109)61.85 (2,291)61.90 — — (3,431)64.77 
Cancelled(50)88.01 (569)81.90 (74)73.65 (586)65.44 
December 31, 20211,849 $78.36 33,061 $78.62 1,265 $73.75 11,443 $66.18 
(1)    Weighted-average grant / exercise price.
The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2021, 2020 and 2019 was $15.60, $23.37 and $20.81, respectively. The weighted-average grant date fair value of performance share units, which vest upon achieving certain performance metrics, granted during 2021 and 2019 was $73.75 and $117.87, respectively. There were no performance share units granted in 2020, and all PSUs granted in 2019 were converted to RSUs in connection with the Separation Transactions and Distributions. The total fair value of awards vested during the years ended December 31, 2021, 2020 and 2019 was $287 million, $284 million and $211 million, respectively. The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of stock options and stock appreciation rights exercised during the years ended December 31, 2021, 2020 and 2019 was $54 million, $206 million and $383 million, respectively. The total intrinsic value (which is the stock price at vesting multiplied by the number of underlying shares) of performance share units and other restricted awards vested was $256 million, $295 million and $188 million during the years ended December 31, 2021, 2020 and 2019, respectively.
The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2021:
 Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Stock Options1,841 $78.33 $8 7.711,029 $76.04 $11 4.30
Stock Appreciation Rights32,860 78.60 155 7.8219,276 77.34 176 4.46
Performance Share Units1,127 73.76 97 2.11
Restricted Stock and RSUs10,660 66.29 1,174 1.61
(1)    Weighted-average exercise price per share.
(2)    Weighted-average contractual remaining term in years.
The fair value of each option award is estimated on the date of grant using a binomial lattice model. The following table indicates the assumptions used in estimating fair value for awards granted during 2021, 2020 and 2019. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
202120202019
Expected volatility
29.9%
18.8%
18.8% - 19.7%
Weighted-average volatility30 %19 %20 %
Expected term (in years)
6.5
6.5
6.5 - 6.6
Expected dividend yield2.6 %1.9 %2.4 %
Risk-free rate
0.04% - 1.2%
1.4% - 1.6%
2.3% - 2.7%
Expected volatilities are based on the returns of our stock, including implied volatilities from traded options on our stock for the binomial lattice model. We use historical data to estimate equity award exercise and employee termination behavior within the valuation model. The expected term represents an estimate of the period of time equity awards are expected to remain outstanding. The risk-free rate is based on the term structure of interest rates at the time of equity award grant.