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Employee Benefit Plans (Tables)
12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan
(dollars in millions)20202019
Change in benefit obligation:
Beginning balance$1,092 $869 
Service cost40 33 
Interest cost16 21 
Actuarial (gain) loss40 81 
Benefits paid(28)(30)
Net settlement, curtailment and special termination benefits(26)(23)
Other91 141 
Ending balance$1,225 $1,092 
Change in plan assets:
Beginning balance$622 $444 
Actual return on plan assets24 76 
Employer contributions64 32 
Benefits paid(28)(30)
Settlements(26)(23)
Other47 123 
Ending balance$703 $622 
Funded status:
Fair value of plan assets$703 $622 
Benefit obligations(1,225)(1,092)
Funded status of plan$(522)$(470)
Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets$87 $83 
Current liability(21)(20)
Noncurrent liability(588)(533)
Net amount recognized$(522)$(470)
Amounts recognized in Accumulated other comprehensive loss consist of:
Net actuarial loss$280 $236 
Prior service credit(1)(2)
Net amount recognized$279 $234 
Plans with Accumulated Benefit Obligation in Excess of Plan Assets
Information for pension plans with accumulated benefit obligations in excess of plan assets:

(dollars in millions)20202019
Projected benefit obligation$787 $697 
Accumulated benefit obligation685 609 
Fair value of plan assets205 157 
Plans with Projected Benefit Obligation in Excess of Plan Assets
Information for pension plans with projected benefit obligations in excess of plan assets:

(dollars in millions)20202019
Projected benefit obligation$991 $966 
Accumulated benefit obligation846 846 
Fair value of plan assets383 413 
Schedule of Net Periodic Pension Costs
The components of the net periodic pension cost are as follows:

(dollars in millions)202020192018
Pension benefits:
Service cost$40 $33 $33 
Interest cost16 21 21 
Expected return on plan assets(25)(24)(23)
Amortization of prior service credit(1)(1)(1)
Recognized actuarial net loss16 10 12 
Net settlement, curtailment and special termination benefits loss (gain)5 (3)
Net periodic pension cost – employer$51 $41 $39 
Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss are as follows:

(dollars in millions)202020192018
Current year actuarial loss$41 $28 $37 
Prior service credit arising during period — (1)
Amortization of actuarial loss(16)(10)(12)
Amortization of prior service credit1 
Net settlement and curtailment (loss) gain(5)(2)
Other24 27 (8)
Total recognized in other comprehensive loss$45 $44 $20 
Net recognized in net periodic pension cost and other comprehensive loss$96 $85 $59 
Defined Benefit Plan, Assumptions
Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages:

Benefit ObligationNet Cost
(dollars in millions)20202019202020192018
Discount rate:
Projected benefit obligation1.1 %1.5 %1.5 %2.5 %2.4 %
Salary scale3.0 %3.1 %3.1 %3.3 %3.3 %
Expected return on plan assets — 4.5 %5.2 %5.2 %
Interest crediting rate0.6 %0.7 %0.7 %1.5 %1.5 %
Schedule of Plan Assets
The fair values of pension plan assets at December 31, 2020 and 2019 by asset category are as follows:

(dollars in millions)Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)Not Subject to LevelingTotal
Asset category
Public equities:
Global Equity Commingled Funds (1)
$52 $39 $ $ $91 
Global Equity Funds at net asset value (5)
   154 154 
Fixed income securities:
Governments20 41   61 
Corporate Bonds49 4   53 
Fixed income securities at net asset value (5)
   90 90 
Real estate (2) (5)
12 6  12 30 
Other (3) (5)
2 129  25 156 
Cash and cash equivalents (4) (5)
6 1  41 48 
Total$141 $220 $ $322 683 
Other assets and liabilities (6)
20 
Total at December 31, 2020$703 
(dollars in millions)Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)Not Subject to LevelingTotal
Asset category
Public equities:
Global Equity Commingled Funds (1)
$— $183 $— $— $183 
Global Equity Funds at net asset value (5)
— — — 78 78 
Fixed income securities:
Governments— 54 — — 54 
Corporate Bonds— 87 — — 87 
Fixed income securities at net asset value (5)
— — — 47 47 
Real estate(2) (5)
— 26 — 27 
Other (3)
— 138 — — 138 
Cash and cash equivalents (4)(5)
— — — 
Total at December 31, 2019$— $496 $— $126 $622 

(1) Represents investments in mutual funds and investments in commingled funds that invest primarily in common stocks.
(2) Represents investments in real estate including commingled funds and directly-held properties.
(3) Represents insurance contracts and global-balanced-risk commingled funds consisting mainly of equity, bonds and some commodities.
(4) Represents short-term commercial paper, bonds and other cash or cash-like instruments.
(5) In accordance with FASB ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
(6) Represents trust receivables and payables that are not leveled.
Schedule of Multiemployer Plans
Our participation in these plans for the annual periods ended December 31 is outlined in the table below. Unless otherwise noted, the most recent Pension Protection Act (“PPA”) zone status available in 2020 and 2019 is for the plan’s year-end at June 30, 2019 and June 30, 2018, respectively. The zone status is based on information that we received from the plan and is certified by the plan’s actuary. Our significant plan is in the green zone which represents a plan that is at least 80% funded and does not require a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”). An extended amortization provision of ten years was utilized to recognize investment gains or losses for our significant plan through June 30, 2019.

(dollars in millions)PPA Zone StatusFIP/RP StatusContributionsSurcharge ImposedExpiration Date of Collective-Bargaining Agreement
Pension FundEIN/Pension Plan Number20202019Pending/Implemented202020192018
National Elevator Industry Pension Plan23-2694291GreenGreenNo$131$127 $120 No7/8/2022
Other funds7
$138$136 $128 
Schedule of Net Periodic Pension Cost The amounts for pension and postretirement expenses for the years ended December 31 were as follows:
(dollars in millions)202020192018
Service cost$1 $15 $18 
Non-service pension benefit(5)(42)(49)
$(4)$(27)$(31)
Stock-based Compensation Expense and Resulting Tax Benefits
Stock-based compensation expense and the resulting tax benefits were as follows:

Year Ended
(dollars in millions)
202020192018
Stock-based compensation expense (Share-based)$63 $37 $38 
Stock-based compensation expense (Cash-based)(4)10 (1)
Total gross stock-based compensation expense$59 $47 $37 
Less: future tax benefit7 
Stock-based compensation expense, net of tax$52 $42 $33 
Share-based Payment Arrangement, Activity
A summary of the transactions under the new Otis Plan for the year ended December 31, 2020 follows:

Stock Appreciation RightsRestricted Share UnitsPerformance Share UnitsStock Options
(shares in thousands)SharesAverage Price*SharesAverage Price**SharesAverage Price**SharesAverage Price**
Outstanding at:
December 31, 2019— $— — $— — $— — $— 
Converted from UTC (1)
12,782 60.161,376 68.1438 67.53520 53.99
Granted (2)
179 53.25607 54.2165.45— 
Exercised / Earned (2)
(609)45.19(201)61.89(43)67.29(57)45.39
Cancelled(175)72.82(72)67.56— 69.79(9)41.42
December 31, 202012,177 $60.63 1,710 $63.94 — $— 454 $55.31 

* Weighted-average grant price
** Weighted-average grant fair value
(1) Converted shares as of April 3, 2020 include Carrier and Legacy UTC employees receiving Otis awards on Separation
(2) Includes annual retainer awards issued to the Board of Directors
Performance Share Units Outstanding, Vested and Expected to Vest
The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable at December 31, 2020:

Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**
Stock Options/Stock Appreciation Rights12,506 $60.30 $115 5.6 years7,964 $54.16 $107 4.1 years
Performance Share Units/Restricted Stock1,639 $111 1.7 years

* Weighted-average grant price per share
** Weighted-average contractual remaining term in years
Restricted Stock Outstanding, Vested and Expected to Vest
The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable at December 31, 2020:

Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**
Stock Options/Stock Appreciation Rights12,506 $60.30 $115 5.6 years7,964 $54.16 $107 4.1 years
Performance Share Units/Restricted Stock1,639 $111 1.7 years

* Weighted-average grant price per share
** Weighted-average contractual remaining term in years
Stock Options Outstanding, Vested and Expected to Vest
The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable at December 31, 2020:

Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**AwardsAverage Price*Aggregate Intrinsic ValueRemaining Term**
Stock Options/Stock Appreciation Rights12,506 $60.30 $115 5.6 years7,964 $54.16 $107 4.1 years
Performance Share Units/Restricted Stock1,639 $111 1.7 years

* Weighted-average grant price per share
** Weighted-average contractual remaining term in years
Schedule of Valuation Assumptions The following table indicates the assumptions used in estimating fair value for the years ended December 31, 2020, 2019 and 2018. For periods prior to the Separation, these assumptions represent those utilized by UTC and are not necessarily indicative of assumptions that would be used by Otis as a standalone company. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
202020192018
Expected volatility
25.5%
18.8% - 19.7%
17.5% - 21.1%
Weighted-average volatility25.5%19.5%18.0%
Expected term (in years)
6.8
6.5 - 6.6
6.5 - 6.6
Expected dividend yield1.8%2.4%2.2%
Risk-free rate
0.5%
2.3% - 2.7%
1.3% - 2.7%