Shareholders’ Equity

Preferred Stock

As of December 31, 2015, we had one class of preferred stock outstanding. See Note 19 - Preferred Stock for further information. We are authorized to issue approximately 22 million shares of cumulative preferred stock, $1.00 par value per share.

Common Stock

We have 1.75 billion authorized shares of common stock, $1.00 par value per share. At December 31, 2015, 102 million shares were reserved for issuance under our incentive compensation plans, 48 million shares were reserved for debt to equity exchanges and 27 million shares were reserved for conversion of the Series A convertible preferred stock.

Treasury Stock

We account for the repurchased common stock under the cost method and include such treasury stock as a component of our common shareholder's equity. Retirement of treasury stock is recorded as a reduction of Common stock and Additional paid-in capital at the time such retirement is approved by our Board of Directors.

The following provides cumulative information relating to our share repurchase programs from their inception in October 2005 through December 31, 2015 (shares in thousands):



Authorized share repurchase programs	$	8,000
Share repurchase cost	$	7,755
Share repurchase fees	$	12
Number of shares repurchased	695,230

Of the cumulative $8.0 billion of share repurchase authority previously granted by our Board of Directors, approximately $245 million of that authority remained available as of December 31, 2015.

The following table reflects the changes in Common and Treasury stock shares (shares in thousands):



	Common Stock Shares		Treasury Stock Shares
Balance at December 31, 2012	1,238,696		14,924
Stock based compensation plans, net	28,731		—
Acquisition of Treasury stock	—		65,179
Cancellation of Treasury stock	(58,102)		(58,102)
Conversion of 2014 9% Notes	996		—
Balance at December 31, 2013	1,210,321		22,001
Stock based compensation plans, net	13,965		—
Acquisition of Treasury stock	—		86,536
Cancellation of Treasury stock	(100,928	)	(100,928	)
Conversion of 2014 9% Notes	996		—
Balance at December 31, 2014	1,124,354		7,609
Stock based compensation plans, net	11,292		—
Acquisition of Treasury stock	—		115,201
Cancellation of Treasury stock	(122,810	)	(122,810	)
Balance at December 31, 2015	1,012,836		—

Stock-Based Compensation

We have a long-term incentive plan whereby eligible employees may be granted restricted stock units (RSUs), performance shares (PSs) and non-qualified stock options. We grant stock-based awards in order to continue to attract and retain employees and to better align employees' interests with those of our shareholders. Each of these awards is subject to settlement with newly issued shares of our common stock. At December 31, 2015 and 2014, 43 million and 50 million shares, respectively, were available for grant of awards.

Stock-based compensation expense was as follows:



	Year Ended December 31,
	2015		2014		2013
Stock-based compensation expense, pre-tax	$	46	$	91	$	90
Income tax benefit recognized in earnings	17		35		34

Restricted Stock Units: Compensation expense is based upon the grant date market price. The compensation expense is recorded over the vesting period, which is normally three years from the date of grant, based on management's estimate of the number of shares expected to vest.

Performance Shares: Prior to 2014, we granted officers and selected executives PSs that vest contingent upon meeting pre-determined Revenue, Earnings per Share (EPS) and Cash Flow from Operations targets. If the annual actual results for Revenue exceed the stated targets and if the cumulative three-year actual results for EPS and Cash Flow from Operations exceed the stated targets, then the plan participants have the potential to earn additional shares of common stock. This overachievement cannot exceed 50% of the original grant.

Commencing in 2014, we expanded the PS program to include those employees who had previously been awarded RSUs, and modified the program to remove the annual performance component. All PSs granted in 2014 will vest contingent upon meeting cumulative goals for Revenue, EPS and Cash Flow from Operations over a three-year performance period. As before, if actual results exceed the stated targets, then the participants have the potential to earn additional shares of common stock: a maximum overachievement of 50% of the original grant for officers and selected executives and a maximum of 25% of the original grant for all other participants. All PSs entitle the holder to one share of common stock, payable after a three-year service period and the attainment of the stated goals.

In 2015, the maximum overachievement that can be earned was changed to 100% (from 50%) for officers and selected executives. All other terms of the awards remain unchanged.

The fair value of PSs is based upon the market price of our stock on the date of the grant. Compensation expense is recognized over the vesting period, which is normally three years from the date of grant, based on management's estimate of the number of shares expected to vest. If the stated targets are not met, any recognized compensation cost would be reversed.

Employee Stock Options: With the exception of the conversion of ACS options in connection with the ACS acquisition in 2010, we have not issued any new stock options associated with our employee long-term incentive plan since 2004. All stock options previously issued under our employee long-term incentive plan were fully exercised, cancelled or expired as of December 31, 2013.

There were 3,119 thousand and 6,115 thousand ACS options outstanding at December 31, 2015 and 2014, respectively. The ACS options at December 31, 2015 generally expire within the next 2 years.

Summary of Stock-based Compensation Activity



	2015				2014				2013
(shares in thousands)	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Restricted Stock Units
Outstanding at January 1	12,197		$	9.50	19,079		$	9.62	30,414		$	9.19
Granted	798		11.08		926		12.30		610		9.09
Vested	(10,191	)	7.86		(6,934	)	10.33		(9,992	)	8.43
Cancelled	(414	)	9.27		(874	)	8.55		(1,953	)	8.77
Outstanding at December 31	2,390		11.05		12,197		9.50		19,079		9.62

Performance Shares
Outstanding at January 1	20,721		$	11.36	8,058		$	9.15	14,536		$	8.74
Granted	9,470		10.68		16,967		12.28		1,839		7.97
Vested	(3,268	)	7.90		(2,404	)	10.68		(6,817	)	8.03
Cancelled	(3,717	)	10.74		(1,900	)	11.07		(1,500	)	8.82
Outstanding at December 31	23,206		11.67		20,721		11.36		8,058		9.15

Stock Options
Outstanding at January 1	6,115		$	7.00	14,199		$	6.95	33,732		$	6.86
Granted	—		—		—		—		—		—
Canceled/expired	(405	)	7.43		(215	)	6.95		(1,298	)	6.53
Exercised	(2,591	)	7.09		(7,869	)	6.92		(18,235	)	6.82
Outstanding at December 31	3,119		6.87		6,115		7.00		14,199		6.95
Exercisable at December 31	3,119		6.87		6,115		7.00		12,164		7.06

In 2013, we deferred the annual grant of RSUs and PSs from July 1, 2013 to January 1, 2014. RSUs granted in 2013 represent off-cycle awards while PSs granted in 2013 represent over-achievement shares associated with the 2010 PSs grant, which vested in 2013. On January 1, 2014, we granted 8,395 thousand PSs with a grant date fair value of $12.17 per share (the deferral of the 2013 annual grant) and on July 1, 2014, we granted 8,518 thousand PSs with a grant date fair value of $12.38 per share (the 2014 annual grant).

The total unrecognized compensation cost related to non-vested stock-based awards at December 31, 2015 was as follows:

The aggregate intrinsic value of outstanding RSUs and PSs awards was as follows:



Awards	December 31, 2015
Restricted Stock Units	$	25
Performance Shares	247

Information related to stock options outstanding and exercisable at December 31, 2015 was as follows:



	Options
	Outstanding		Exercisable
Aggregate intrinsic value	$	12	$	12
Weighted-average remaining contractual life (years)	2.15		2.15

The total intrinsic value and actual tax benefit realized for vested and exercised stock-based awards was as follows:



	December 31, 2015						December 31, 2014						December 31, 2013
Awards	Total Intrinsic Value		Cash Received		Tax Benefit		Total Intrinsic Value		Cash Received		Tax Benefit		Total Intrinsic Value		Cash Received		Tax Benefit
Restricted Stock Units	$	109	$	—	$	33	$	85	$	—	$	26	$	91	$	—	$	30
Performance Shares	35		—		12		30		—		10		62		—		22
Stock Options	14		19		5		42		55		15		51		124		19

Unrecognized Compensation

Remaining Weighted-Average Vesting Period (Years)

Restricted Stock Units

Performance Shares