NOTE 11: INCENTIVE PLANS

SHARE-BASED COMPENSATION PLANS

Our 2006 Omnibus Long-term Incentive Plan (Plan) authorizes the granting of stock options, Stock-Only Stock Appreciation Rights (SOSARs) and other types of share-based awards to key salaried employees and non-employee directors. The maximum number of shares that may be issued under the Plan is 11,900,000.

PERFORMANCE SHARES — Each performance share unit is equal to and paid in one share of our common stock, but carries no voting or dividend rights. The number of units ultimately paid for performance share awards may range from 0% to 200% of target. For awards granted prior to 2010, 50% of the payment is based upon our Total Shareholder Return (TSR) performance relative to the TSR performance of the S&P 500^®. The remaining 50% of the payment is based upon the achievement of established internal financial performance targets. For awards granted after 2009, the payment is based solely upon our relative TSR performance. Awards granted prior to 2011 vest on December 31 of the third year after date of grant. Awards granted in 2011 and beyond vest on December 31 of the fourth year after date of grant. Vesting is accelerated upon reaching retirement age, death, disability, or change of control, all as defined in the award agreement. Nonvested units are forfeited upon termination for any other reason. Expense provisions referable to these awards amounted to $12,151,000 in 2012, $8,879,000 in 2011 and $7,562,000 in 2010.

The fair value of performance shares is estimated as of the date of grant using a Monte Carlo simulation model. The following table summarizes the activity for nonvested performance share units during the year ended December 31, 2012:


	Target Number of Shares			Weighted-average Grant Date Fair Value
Performance Shares
Nonvested at January 1, 2012		607,539			$39.73
Granted		479,560			$46.22
Vested		(214,159	)		$40.34
Canceled/forfeited		(36,574	)		$41.64
Nonvested at December 31, 2012		836,366			$43.21

During 2011 and 2010, the weighted-average grant date fair value of performance shares granted was $39.38 and $40.34, respectively.

The aggregate values for distributed performance share awards are based on the closing price of our common stock as of the distribution date. The aggregate values of distributed performance shares for the years ended December 31 are as follows:

in thousands

2012

2011

2010

Aggregate value of distributed
performance shares

$493

$2,548

$2,981

STOCK OPTIONS/SOSARS — Stock options/SOSARs granted have an exercise price equal to the market value of our underlying common stock on the date of grant. With the exceptions of the stock option grants awarded in December 2005 and January 2006, the options/SOSARs vest ratably over 3 to 5 years and expire 10 years subsequent to the grant. The options awarded in December 2005 and January 2006 were fully vested on the date of grant and expire 10 years subsequent to the grant date. Vesting is accelerated upon reaching retirement age, death, disability, or change of control, all as defined in the award agreement. Nonvested awards are forfeited upon termination for any other reason.

The fair value of stock options/SOSARs is estimated as of the date of grant using the Black-Scholes option pricing model. Compensation cost for stock options/SOSARs is based on this grant date fair value and is recognized for awards that ultimately vest. The following table presents the weighted-average fair value and the weighted-average assumptions used in estimating the fair value of grants during the years ended December 31:

2012 ¹

2011

2010

SOSARs

Fair value

N/A

$10.51

$12.05

Risk-free interest rate

N/A

2.27%

3.15%

Dividend yield

N/A

1.95%

2.00%

Volatility

N/A

31.57%

27.58%

Expected term

N/A

7.75 years

7.50 years

¹ No SOSARS were granted in 2012.

The risk-free interest rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period approximating the SOSARs expected term. The dividend yield assumption is based on our historical dividend payouts adjusted for current expectations of future payouts. The volatility assumption is based on the historical volatility and expectations about future volatility of our common stock over a period equal to the SOSARs expected term. The expected term is based on historical experience and expectations about future exercises and represents the period of time that SOSARs granted are expected to be outstanding.

A summary of our stock option/SOSAR activity as of December 31, 2012 and changes during the year are presented below:

Number
of Shares

Weighted-average
Exercise Price

Weighted-average
Remaining
Contractual
Life (Years)

Aggregate
Intrinsic Value
(in thousands)

Stock Options/SOSARs

Outstanding at January 1, 2012

6,641,847

$54.69

Granted

$0.00

Exercised

(505,432

)

$34.01

Forfeited or expired

(745,808

)

$46.69

Outstanding at December 31, 2012

5,390,607

$57.73

4.59

$22,047

Vested and expected to vest

5,365,068

$57.84

4.57

$21,632

Exercisable at December 31, 2012

4,853,258

$59.77

4.22

$15,503

The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between our stock price on the last trading day of 2012 and the exercise price, multiplied by the number of in-the-money options/SOSARs) that would have been received by the option holders had all options/SOSARs been exercised on December 31, 2012. These values change based on the fair market value of our common stock. The aggregate intrinsic values of options/SOSARs exercised for the years ended December 31 are as follows:

in thousands

2012

2011

2010

Aggregate intrinsic value of options/
SOSARs exercised

$5,674

$164

$1,830

To the extent the tax deductions exceed compensation cost recorded, the tax benefit is reflected as a component of equity in our Consolidated Balance Sheets. The following table presents cash and stock consideration received and tax benefit realized from stock option/SOSAR exercises and compensation cost recorded referable to stock options/SOSARs for the years ended December 31:


in thousands	*2012*		2011		2010

Stock Options/SOSARs
Cash and stock consideration received from exercises	$	15,787	$	3,596	$	20,502
Tax benefit from exercises		2,202		66		733
Compensation cost		2,966		7,968		11,288

CASH-BASED COMPENSATION PLANS

We have incentive plans under which cash awards may be made annually to officers and key employees. Expense provisions referable to these plans amounted to $16,118,000 in 2012, $6,938,000 in 2011 and $5,080,000 in 2010.