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Stock-Based Compensation Stock-Based Compensation (Tables)
 9 Months Ended
Sep. 30, 2018
Stock-Based Compensation [Abstract]  
Stock-based Compensation Expense, Tax Effect
Stock-based compensation expense was as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Stock-based compensation expense, pre-tax
 
$
15

 
$
14

 
$
44

 
$
39

Income tax benefit recognized in earnings
 
4

 
5

 
11

 
15
Schedule Of Share Based Payment Award Valuation Assumptions, Performance Shares, Market-Based Component Table [Table Text Block]
Market-Based Component
The TSR metric is based on the percentage change in the Company’s stock price plus the dividends paid over the three-year measurement period. Payout for this portion of the PS will be determined based on Xerox’s percentage change compared to the shareholder returns of the peer group of companies approved by the compensation committee of the Board (as disclosed in the 2018 annual proxy statement). Since the TSR portion of the PS award represents a market condition, a Monte Carlo simulation was used to determine the grant-date fair value. A summary of the key valuation input assumptions used in the Monte Carlo simulation relative to PS awards granted were as follows:
 
 
Program to Date September 30, 2018
Term
 
3 years

Risk-free interest rate(1)
 
2.39
%
Dividend yield(2)
 
3.24
%
Xerox’s historical volatility(3)
 
29.12
%
Weighted average fair value(4)
 
$
32.03

____________
(1)
The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve from the valuation date, with a maturity matched to the TSR performance period.
(2)
The dividend yield was calculated as the expected quarterly dividend divided by Xerox’s three-month average stock price as of the valuation date.
(3)
Xerox’s historical volatility is calculated from daily stock returns over a three-year look-back term from the valuation date.
(4)
The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.
TSR Payout as a Percentage, Comparison to Peer Group [Table Text Block]
Our TSR compared to the peer group TSR will determine the payout as follows:
Percentile
 
Payout as a Percent of Target(1)
80th and above
 
200
%
50th
 
100
%
25th
 
35
%
Below 25th
 
0
%
____________
(1)
For performance between the levels described above, the degree of vesting is interpolated on a linear basis.
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]
The weighted average assumptions used in the BS option-pricing model relative to SO awards were as follows:
 
 
Program to Date September 30, 2018
Expected term(1)
 
6.13 years

Expected volatility(2)
 
27.25
%
Expected dividend yield(3)
 
3.25
%
Risk-free interest rate(4)
 
2.63
%
Weighted average fair value(5)
 
$
5.71

____________
(1)
Since these SO grants are effectively part of a new program, the expected term was calculated using the "Simplified Method” under the SEC guidance based on the SOs vesting schedule and contractual term. We did not have sufficient historical exercise data to provide a reasonable basis to estimate an expected term.
(2)
The expected volatility was calculated based on a combination of Xerox's term-matched historical volatility and implied volatility from traded options.
(3)
The dividend yield was calculated as the expected quarterly dividend divided by Xerox’s three-month average stock price as of the grant date.
(4)
The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve with a maturity matched to the expected term of the SOs.
(5)
The weighted average of fair values used to record compensation expense as determined by the BS option-pricing model.