Stock Incentive Plans

For the quarters ended October 3, 2014 and September 27, 2013, the Company recognized stock-based compensation expense as follows:



	Quarter Ended				Six Months Ended
(Amounts in millions)	October 3, 2014		September 27, 2013		October 3, 2014		September 27, 2013
Cost of services	$	3	$	7	9		$	13
Selling, general and administrative	13		9		26		20
Total	$	16	$	16	$	35	$	33
Total, net of tax	$	10	$	10	$	23	$	21

Stock-based compensation for the first six months of fiscal 2015 increased $2 million when compared to the same period of the prior year. The increases included $8 million due to higher expense associated with the restricted stock units (RSUs) granted to the employees of ServiceMesh, which was acquired in the third quarter of fiscal 2014, and $7 million due to the fiscal 2015 option and RSU grants, impacted by the Company's higher stock price. These increases in expense were offset by $13 million of lower expense due to adjustments for forfeitures for terminating employees.

The Company uses the Black-Scholes-Merton model in determining the fair value of stock options granted. The weighted average grant-date fair values of stock options granted during the six months ended October 3, 2014 and September 27, 2013 were $18.34 and $16.35 per share, respectively. In calculating the compensation expense for its stock incentive plans, the Company used the following weighted-average assumptions:



	Six Months Ended
	October 3, 2014		September 27, 2013
Risk-free interest rate	2.07	%	2.08	%
Expected volatility	33	%	35	%
Expected term (in years)	6.21		6.70
Dividend yield	1.50	%	1.67	%

For the six months ended October 3, 2014 and September 27, 2013, the tax benefit realized from stock option exercises and RSU settlements was $30 million and $13 million, respectively, and the excess tax benefit was $12 million and $5 million, respectively.

Employee Incentives

The Company currently has two active stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to employees upon terms approved by the Compensation Committee of the Board of Directors. The Company issues authorized but previously unissued shares upon the exercise of stock options, the granting of restricted stock and the settlement of RSUs. As of October 3, 2014, 15,593,681 shares of CSC common stock were available for the grant of future stock options, equity awards or other stock-based incentives to employees under such stock incentive plans.

Stock Options

The Company’s standard vesting schedule for stock options is one-third of the total stock option award on each of the first three anniversaries of the grant date. Stock options are generally exercisable for a term of ten years from the grant date. Information concerning stock options granted under the Company's stock incentive plans is as follows:



	As of October 3, 2014
	Number of Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (millions)
Outstanding as of March 28, 2014	9,829,611		$	43.30	5.73	$	167
Granted	1,294,215		60.90
Exercised	(2,952,668	)	44.37			53
Canceled/Forfeited	(643,192	)	39.61
Expired	(36,318	)	42.76
Outstanding as of October 3, 2014	7,491,648		46.24		6.02	99
Vested and expected to vest in the future as of October 3, 2014	7,279,846		45.97		5.93	98
Exercisable as of October 3, 2014	4,674,967		44.83		4.30	67

The total intrinsic value of options exercised during the six months ended October 3, 2014 and September 27, 2013 was $53 million and $19 million, respectively. The cash received from stock options exercised during the six months ended October 3, 2014 and September 27, 2013 was $125 million and $85 million, respectively.

As of October 3, 2014, there was $39 million of total unrecognized compensation expense related to unvested stock options, net of expected forfeitures. The cost is expected to be recognized over a weighted-average period of 2.02 years.

Restricted Stock Units

Information concerning RSUs granted under stock incentive plans is as follows:



	As of October 3, 2014
	Number of Shares		Weighted Average Fair Value per share
Outstanding as of March 28, 2014	3,187,741			$	41.34
Granted	936,759			60.81
Released/Issued	(482,177	)		37.24
Canceled/Forfeited	(476,183	)		39.42
Outstanding as of October 3, 2014	3,166,140			48.01

As of October 3, 2014, there was $116 million of total unrecognized compensation expense related to unvested RSUs, net of expected forfeitures. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.17 years.

Non-employee Director Incentives

The Company has two stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to nonemployee directors upon terms approved by the Company’s Board of Directors. As of October 3, 2014, 175,300 shares of CSC common stock remained available for grant to non-employee directors as RSUs or other stock-based incentives.

Generally, RSU awards to non-employee directors vest in full as of the next annual meeting of the Company’s stockholders following the date they are granted and are issued at a price of $0. Information concerning RSUs granted to non-employee directors is as follows:



	As of October 3, 2014
	Number of Shares		Weighted Average Fair Value per share
Outstanding as of March 28, 2014	184,146			$	42.07
Granted	22,100			59.63
Released/Issued	(62,260	)		44.10
Canceled/Forfeited	—			—
Outstanding as of October 3, 2014	143,986			43.88