Share-Based Compensation (Tables)

3 Months Ended

Apr. 03, 2021

Share-based Payment Arrangement [Abstract]

Compensation expense included in net income

Compensation expense, or income in periods of share price depreciation, related to share-based compensation is included in net income as follows:

	Three Months Ended
(In millions)	April 3, 2021		April 4, 2020
Compensation expense (income)	$	55	$	(13)
Income tax (benefit) expense	(13)		3
Total net compensation expense (income) included in net income	$	42	$	(10)

Weighted-average fair value of stock options and assumptions used in option-pricing model

We grant options annually on the first day of March and the assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:

	March 1, 2021		March 1, 2020
Fair value of options at grant date	$	15.05	$	10.66
Dividend yield	0.2%		0.2%
Expected volatility	33.6%		29.3%
Risk-free interest rate	0.7%		1.1%
Expected term (in years)	4.7		4.7

Stock option activity

The stock option activity during the first quarter of 2021 is provided below:

(Options in thousands)	Number of Options	Weighted- Average Exercise Price
Outstanding at January 2, 2021	9,810	$	44.03
Granted	1,480	51.56
Exercised	(812)	(33.08)
Forfeited or expired	(59)	(45.91)
Outstanding at April 3, 2021	10,419	$	45.94
Exercisable at April 3, 2021	7,062	$	45.54

Activity for Restricted Stock Units

The activity for restricted stock units payable in both stock and cash during the first quarter of 2021 is provided below:

	Units Payable in Stock			Units Payable in Cash
(Shares/Units in thousands)	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at January 2, 2021, nonvested	583	$	47.60	1,145	$	48.53
Granted	124	51.56		333	51.56
Vested	(127)	(46.14)		(251)	(46.42)
Forfeited	—	—		(23)	(48.33)
Outstanding at April 3, 2021, nonvested	580	$	48.77	1,204	$	49.82

Fair value of awards vested and cash paid during respective periods

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

	Three Months Ended
(In millions)	April 3, 2021		April 4, 2020
Fair value of awards vested	$	19	$	17
Cash paid	13		11

Activity for Performance Share Units

The activity for our performance share units during the first quarter of 2021 is as follows:

(Units in thousands)	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at January 2, 2021, nonvested	514	$	47.02
Granted	256	51.56
Outstanding at April 3, 2021, nonvested	770	$	48.52