Share-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

We recorded share-based compensation expense of $48 million in the 2017 first quarter and $28 million in the 2016 first quarter. Deferred compensation costs for unvested awards totaled $301 million at March 31, 2017 and $192 million at December 31, 2016.

RSUs and PSUs

We granted 1.6 million RSUs during the 2017 first quarter to certain officers and key employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We granted 0.2 million PSUs in the 2017 first quarter to certain executive officers, subject to continued employment and the satisfaction of certain performance conditions based on achievement of pre-established targets for Adjusted EBITDA, RevPAR Index, room openings, and/or net administrative expense over, or at the end of, a three-year performance period. RSUs, including PSUs, granted in the 2017 first quarter had a weighted average grant-date fair value of $83.

SARs

We granted 0.3 million SARs to officers and key employees during the 2017 first quarter. These SARs generally expire ten years after the grant date and both vest and may be exercised in cumulative installments of one quarter at the end of each of the first four years following the grant date. The weighted average grant-date fair value of SARs granted in the 2017 first quarter was $30 and the weighted average exercise price was $88.

We used the following assumptions as part of a binomial lattice-based valuation to determine the fair value of the SARs we granted during the 2017 first quarter:

Expected volatility	30.9	%
Dividend yield	1.3	%
Risk-free rate	2.4	%
Expected term (in years)	7 - 9