Stockholders' Equity

9 Months Ended

Sep. 30, 2020

Stock Purchase Programs

In September 2020, our board of directors authorized the purchase of up to $500 million, in the aggregate, of our common stock. This program will be funded with cash on hand and extends through December 31, 2021. The exact timing and amount of any repurchase will be determined by management based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. No shares were purchased under this program through October 29, 2020.

In December 2019, our board of directors authorized the purchase of up to $500 million, in the aggregate, of our common stock. This program was funded with existing cash on hand and was completed in March 2020. Under this program, pursuant to a Rule 10b5-1 trading plan, we purchased approximately 3.4 million shares of our common stock for $446 million in the first quarter of 2020 (average cost of $132.45 per share). In the first quarter of 2020, we also paid $7 million to settle shares purchased in late December 2019.

1.125% Warrants

For a description of the 1.125% Warrants, refer to our 2019 Annual Report on Form 10-K, Note 12, “Derivatives,” and Note 14, “Stockholders’ Equity.” Approximately 310,000 of the 1.125% Warrants were outstanding at December 31, 2019. In the first quarter of 2020, we entered into privately negotiated termination agreements under which we paid $30 million to the counterparties for the termination of the remaining 1.125% Warrants outstanding, which resulted in a reduction of additional paid-in-capital for the same amount.

Share-Based Compensation

In connection with our employee stock plans, approximately 192,000 shares of common stock vested or were purchased, net of shares used to settle employees’ income tax obligations, during the nine months ended September 30, 2020.

Share-based compensation is recorded to “General and administrative expenses” in the accompanying consolidated statements of income. Total share-based compensation expense amounted to $15 million and $10

million, respectively, in the third quarter of 2020 and 2019. Total share-based compensation expense amounted to $43 million and $29 million, respectively, in the nine months ended September 30, 2020 and 2019.

As of September 30, 2020, there was approximately $76 million of total unrecognized compensation expense related to unvested restricted stock awards (“RSAs”), and performance stock units (“PSUs”), which we expect to recognize over remaining weighted-average periods of 2.4 years and 1.5 years, respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 11.5% for non-executive employees as of September 30, 2020.

As of September 30, 2020, unrecognized stock option expense was insignificant. No stock options were granted or exercised in the nine months ended September 30, 2020.

Activity for RSAs and PSUs is summarized below:


	RSAs	Weighted Average Grant Date Fair Value		PSUs	Weighted Average Grant Date Fair Value
Unvested balance, December 31, 2019	447,680	$	102.41	324,078	$	101.45
Granted	334,233	125.99		187,028	123.09
Vested	(166,115)	96.19		(7,368)	68.16
Forfeited	(26,439)	114.48		(29,271)	98.72
Unvested balance, September 30, 2020	589,359	$	116.99	474,467	$	110.67

The aggregate fair values of RSAs and PSUs granted and vested are presented in the following table:


	Nine Months Ended September 30,
	2020		2019

	(In millions)
Granted:
RSAs	$	42	$	32
PSUs	23		19
Total granted	$	65	$	51
Vested:
RSAs	$	21	$	18
PSUs	1		2
Total vested	$	22	$	20