Share - Based Compensation

3 Months Ended

Mar. 31, 2012

Share-Based Compensation [Abstract]

Share Based Compensation

Note 3: Share-Based Compensation

Share-based compensation expense includes restricted stock, restricted stock units, stock options, stock appreciation rights, performance share units and deferred income plan stock unit awards. The compensation expense we recorded in net income for our share-based compensation plans is as follows:

	Three Months Ended
(In millions)	March 31, 2012			April 2, 2011
Compensation expense	$	46		$	36
Income tax benefit		(17	)		(13	)
Total net compensation cost included in net income	$	29		$	23

Stock Options

The stock option compensation cost calculated under the fair value approach is recognized over the vesting period of the stock options. The weighted-average fair value of options granted per share was $10 in both the first quarter of 2012 and 2011. We estimate the fair value of options granted on the date of grant using the Black-Scholes option-pricing model. Expected volatilities are based on implied volatilities from traded options on our common stock, historical volatilities and other factors. We use historical data to estimate option exercise behavior, adjusted to reflect anticipated changes in expected life. The weighted-average assumptions used in our Black-Scholes option-pricing model for awards issued during the respective periods are as follows:

	Three Months Ended
	March 31, 2012			April 2, 2011
Dividend yield		0.3	%		0.3	%
Expected volatility		40.0	%		38.0	%
Risk-free interest rate		0.8	%		2.4	%
Expected lives (in years)		5.5			5.5

At March 31, 2012, our outstanding and exercisable options had an aggregate intrinsic value of $33 million and $26 million, respectively. Stock option activity for the first quarter of 2012 is as follows:

	Number of Options (In thousands)			Weighted- Average Exercise Price			Weighted- Average Remaining Contractual Life (In years)
Outstanding at beginning of period		8,860		$	27.68			6
Granted		3,008			27.76
Exercised		(594	)		(18.70	)
Canceled, expired or forfeited		(396	)		(27.96	)
Outstanding at end of period		10,878		$	28.18			7
Exercisable at end of period		5,513		$	29.36			5

Restricted Stock Units

The 2012 activity for restricted stock units payable in stock and for restricted stock units payable in cash is provided below:

	Units Payable in Stock						Units Payable in Cash
(Shares in thousands)	Number of Shares			Weighted- Average Grant Date Fair Value			Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at beginning of year, nonvested		638		$	35.53			2,927		$	17.33
Granted		367			27.54			808			27.74
Vested		(218	)		(37.89	)		(801	)		(15.00	)
Forfeited		(13	)		(33.19	)		(73	)		(19.24	)
Outstanding at end of period, nonvested		774		$	31.12			2,861		$	20.88

Performance Share Units

The fair value of share-based compensation awards accounted for as liabilities includes performance share units. The fair value of these awards is based on the trading price of our common stock, less adjustments to reflect that dividends are not paid on these awards, and is remeasured at each reporting period date. The 2012 activity for our performance share units is as follows:

(Shares in thousands)	Number of Shares			Weighted- Average  Grant Date Fair Value
Outstanding at beginning of year, nonvested		859		$	22.98
Granted		535			27.76
Forfeited		(53	)		(22.62	)
Outstanding at end of period, nonvested		1,341		$	24.90

Share-Based Compensation Awards

The value of the share-based compensation awards that vested and/or were paid during the respective periods is as follows:

	Three Months Ended
(In millions)	March 31, 2012		April 2, 2011
Subject only to service conditions:
Value of awards vested	$	30	$	34
Intrinsic value of cash awards paid		21		20
Subject to performance conditions:
Intrinsic value of cash awards paid		51		1