Note 5: Stock Based Compensation

Stock Options

During the six months ended June 30, 2016, the Company granted non-qualified stock options to certain employees under the Company’s 2007 Omnibus Equity Compensation Plan (the “2007 Plan”). Stock options have a maximum term of seven years, are granted with exercise prices equal to the fair market value of the Company’s common stock on the date of grant, vest ratably over a three-year service period beginning January 1 of the year of the grant and generally are subject to the employee’s continued employment with the Company. Stock options granted are valued using the Black-Scholes option-pricing model.

The following table presents the weighted-average assumptions used in the Black-Scholes option-pricing model and the resulting weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2016:

Dividend yield		2.09	%
Expected volatility		15.89	%
Risk-free interest rate		1.15	%
Expected life (years)		4.0
Exercise price	$	65.15
Grant date fair value per share	$	6.59

The grant date fair value is amortized through expense over the requisite service period using the straight-line method. As of June 30, 2016, $3 of total unrecognized compensation cost related to the non-vested stock options is expected to be recognized over the weighted-average period of 1.9 years.

The table below summarizes stock option activity for the six months ended June 30, 2016:

	Shares (in thousands)			Weighted- Average Exercise Price (per share)		Weighted- Average Remaining Life (years)		Aggregate Intrinsic Value
Options outstanding as of January 1, 2016		1,187		$	39.70		3.9	$	24
Granted		339			65.15
Forfeited or expired		(28	)		58.12
Exercised		(374	)		33.17
Options outstanding as of June 30, 2016		1,124		$	49.10		4.5	$	40
Exercisable as of June 30, 2016		543		$	39.11		3.1	$	25

The following table summarizes additional information regarding stock options exercised for the six months ended June 30, 2016 and 2015:

	2016		2015
Intrinsic value	$	13	$	6
Exercise proceeds		12		8
Income tax benefit		4		2

Restricted Stock Units (“RSUs”)

During the six months ended June 30, 2016, the Company granted RSUs, both with and without performance conditions, to certain employees and RSUs without performance conditions to non-employee directors under the 2007 Plan. The RSUs without performance conditions generally vest ratably over a three-year service period beginning January 1 of the year of grant and are valued at the market value of the Company’s common stock on the date of grant. The RSUs with performance conditions include those with internal performance measures, and separately, certain market thresholds and vest ratably over a three-year performance period beginning January 1 of the year of grant (the “Performance Period”). Distribution of the performance shares is contingent upon the achievement of internal performance measures and, separately, certain market thresholds over the Performance Period. The RSUs with internal performance measures are valued at the market value of the Company’s common stock on the date of grant. The RSUs granted with market conditions are valued using the Monte Carlo simulation model.

The following table presents the weighted-average assumptions used in the Monte Carlo simulation model for RSUs with market conditions granted during the six months ended June 30, 2016:

Expected volatility		15.90	%
Risk-free interest rate		0.91	%
Expected life (years)		3.0
Grant date fair value per share	$	76.88

During 2013, the Company granted selected employees RSUs with performance conditions (the “2013 RSUs”) comprised of internal performance measures and, separately, market thresholds expressed in the form of a relative total shareholder return. An aggregate of 128 thousand of the 2013 RSUs vested in January 2016. The terms of the 2013 RSUs specified that, so long as the participant continued to be employed by the Company during the Performance Period and to the extent the performance conditions were achieved, the RSUs would vest at target; if the performance conditions were surpassed, up to 175% of the target number of shares would be distributed; and to the extent that the performance thresholds were not met, the award would be forfeited. In January 2016, an additional 74 thousand RSUs were granted and immediately vested because performance thresholds associated with the 2013 RSUs were exceeded.

The table below summarizes RSU activity for the six months ended June 30, 2016:

	Shares (in thousands)			Weighted-Average Grant Date Fair Value (per share)
Non-vested total as of January 1, 2016		436		$	46.97
Granted		142			69.58
Performance share adjustment		74			39.89
Vested (a)		(250	)		42.58
Forfeited		(14	)		60.04
Non-vested total as of June 30, 2016		388		$	56.25

(a)	Includes 202 thousand shares related to the 2013 RSUs and 48 thousand shares related to RSUs without performance conditions that vested during the six months ended June 30, 2016.

The following table summarizes additional information regarding RSUs issued during the six months ended June 30, 2016 and 2015:

	2016		2015
Intrinsic value	$	15	$	16
Income tax benefit		2		2

The grant date fair value of the restricted stock awards that vest ratably and have market and/or performance and service conditions are amortized through expense over the requisite service period using the graded-vesting method. RSUs that have no performance conditions are amortized through expense over the requisite service period using the straight-line method. As of June 30, 2016, $8 of total unrecognized compensation cost related to the non-vested RSUs is expected to be recognized over the weighted-average remaining life of 1.3 years.