STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company grants stock-based compensation to employees under the Employees' Stock Purchase Plan (“ESPP”) and the 1988 Award and Option Plan (the “1988 Plan”) and to non-employee directors under the 2003 Non-Employee Directors' Stock Incentive Plan. Most of the Company's stock-based compensation awards are granted in the first quarter of each year. Details for awards granted in the first quarter of 2012 are included in the following paragraphs. There was minimal grant activity in the second and third quarters of 2012.

During the first quarter of 2012, employees subscribed to the right to purchase 9.5 million shares with a weighted-average exercise price of $25.42 per share and a weighted-average fair value of $8.32 per share under the ESPP.

During the first quarter of 2012, the Company granted the following stock-based compensation awards to employees under the 1988 Plan:

• 12.8 million stock options with a weighted-average exercise price of $34.00 per share and a weighted-average fair value of $9.38 per share;

• 3.5 million shares of deferred stock with a weighted-average fair value of $34.02 per share; and

• 1.2 million shares of performance deferred stock with a weighted-average fair value of $43.52 per share.

During the first quarter of 2012, the Company granted the following stock-based compensation awards to non-employee directors under the 2003 Non-Employee Directors' Stock Incentive Plan:

• 34,650 shares of restricted stock with a weighted-average fair value of $33.69 per share.

Total unrecognized compensation cost at September 30, 2012 is provided in the following table:

Total Unrecognized Compensation Cost at September 30, 2012
In millions	Unrecognized Compensation Cost		Weighted-average Recognition Period (Years)
ESPP purchase rights	$	7	0.13
Unvested stock options	$	81	0.76
Deferred stock awards	$	106	0.79
Performance deferred stock awards	$	22	0.57

On February 9, 2012, the Company's Board of Directors unanimously approved and adopted The Dow Chemical Company 2012 Stock Incentive Plan ("2012 Plan") and the 2012 Employee Stock Purchase Plan, which was approved by the Company's stockholders at the 2012 Annual Meeting of Stockholders held on May 10, 2012. The Company granted 159,935 deferred shares to employees from the May 2012 approval of the 2012 Plan through September 30, 2012.