Share-Based Compensation

9 Months Ended

Sep. 30, 2017

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

SHARE-BASED COMPENSATION

We recorded share-based compensation expense of $44 million in the 2017 third quarter and $39 million in the 2016 third quarter, $139 million for the 2017 first three quarters, and $98 million for the 2016 first three quarters. Deferred compensation costs for unvested awards totaled $209 million at September 30, 2017 and $192 million at December 31, 2016.

RSUs and PSUs

We granted 1.7 million RSUs during the 2017 first three quarters to certain officers, key employees, and non-employee directors, 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 three quarters 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 three quarters had a weighted average grant-date fair value of $84.

SARs

We granted 0.3 million SARs to officers and key employees during the 2017 first three quarters. These SARs generally expire ten years after the grant date and both vest and may be exercised in four equal annual installments commencing one year following the grant date. The weighted average grant-date fair value of SARs granted in the 2017 first three quarters was $30, and the weighted average exercise price was $88.

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



Expected volatility	30.9	%
Dividend yield	1.3	%
Risk-free rate	2.4	%
Expected term (in years)	8