Stock Compensation

9 Months Ended

Sep. 30, 2012

Stock Compensation

Note 7. Stock Compensation

Our stockholders approved the 2012 Omnibus Incentive Plan (the Plan) at the April 2012 stockholder meeting, replacing the 2008 Omnibus Incentive Plan (the Prior Plan). The Plan authorizes grants of stock awards through April 2022 and provides for the issuance of up to 5.0 million shares of common stock in addition to the 1.9 million remaining shares available under the Prior Plan. Cash-settled awards do not count against the maximum share issuance of the Plan.

The Compensation Committee of our Board of Directors approved the grant of stock options, stock appreciation rights (SARs), restricted stock units (RSUs) and performance share units (PSUs) shown in the table below during the first nine months of 2012.

			Weighted-average Per Share
	Granted		Exercise		Grant Date
	(In millions)		Price		Fair Value
Stock options		0.7	$	15.99	$	7.91
SARs		0.2	$	15.85	$	7.84
RSUs		0.6			$	15.86
PSUs		0.1			$	16.00

Stock options and SARs related to 0.8 million shares were exercised and 0.1 million shares were forfeited in 2012. We received $1 of cash from the exercise of stock options and we paid $2 of cash to settle SARs and RSUs during 2012. We also issued 0.2 million in RSUs based on vesting.

We estimated fair values for options and SARs granted during 2012 using the following key assumptions as part of the Black-Scholes option pricing model. The expected term was estimated using the simplified method because the limited period of time our common stock has been publicly traded provides insufficient historical exercise data. The dividend yield was calculated by dividing the expected annual dividend by the average stock price of our common stock over the prior year. The expected volatility was estimated using a combination of the historical volatility of similar entities and the implied volatility of our exchange-traded options.

	Options			SARs
Expected term (in years)		6.00			6.00
Risk-free interest rate		1.24	%		1.24	%
Dividend yield		1.33	%		1.33	%
Expected volatility		59.90	%		59.90	%

We recognized stock compensation expense of $4 and $1 during the third quarter of 2012 and 2011 and $14 and $9 during the respective nine-month periods. At September 30, 2012, the total unrecognized compensation cost related to the nonvested equity awards granted and expected to vest was $19. This cost is expected to be recognized over a weighted-average period of 1.8 years.