Stock-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The following table provides detail related to share-based compensation expense.



Three Months Ended September 30,
(in millions)	2012		2011
	Xylem Employees		Xylem Employees		Other Employee Allocations			2011 Total
Equity-based Compensation	$	6	$	1	$	1		$	2
Liability-based Compensation	—		—		(1		)	(1		)



Nine Months Ended September 30,
(in millions)	2012		2011
	Xylem Employees		Xylem Employees		Other Employee Allocations		2011 Total
Equity-based Compensation	$	16	$	3	$	4	$	7
Liability-based Compensation	—		—		—		—

Summary of restricted stock activity

The following is a summary of restricted stock activity for the nine months ended September 30, 2012:



(in thousands, except for per share amounts)	Shares		Weighted Average Grant Date Fair Value /Share
Outstanding at December 31, 2011	1,488		$	25.93
Granted	546		$	26.54
Vested	(304	)	$	21.39
Forfeited	(110	)	$	27.27
Outstanding at September 30, 2012	1,620		$	26.90

Summary of the changes in outstanding stock options

The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2012:



(in thousands, except for per share amounts)	Shares		Weighted Average Exercise Price /Share		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2011	4,590		$	25.83	5.4
Granted	861		$	26.57	10.0
Exercised	(924	)	$	24.03	0.1
Forfeited	(327	)	$	27.85	6.7
Outstanding at September 30, 2012	4,200		$	26.22	6.5
Options exercisable at September 30, 2012	1,642		$	25.49	2.6

Weighted-average assumptions for annual March 2012 grants

The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for our annual March 2012 grants (there were subsequent grants during 2012 which were not material).



Dividend yield	1.52%
Volatility	33.4%
Risk-free interest rate	1.42%
Expected term (in years)	7.0
Weighted-average fair value / share	$8.10