Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

10.  Stockholders’ Equity

Common Stock

In 2007, Aon’s Board of Directors increased the Company’s authorized share repurchase program to $4.6 billion.  In January 2010, the Company’s Board of Directors authorized a new share repurchase program under which up to $2 billion of common stock may be repurchased (“2010 Share Repurchase Program”).  Repurchases under the 2010 Share Repurchase Program commenced in the first quarter 2011, upon conclusion of the prior program.  Shares may be repurchased through the open market or in privately negotiated transactions from time to time, based on prevailing market conditions, and will be funded from available capital.  Any repurchased shares will be available for employee stock plans and for other corporate purposes.

In the second quarter 2011, Aon repurchased 5.8 million shares at an average price per share of $52.52 for a total cost of $303 million.  In the first six months of 2011, Aon repurchased 12.6 million shares at an average price per share of $51.85, for a total cost of $653 million.  In addition, on June 30, 2011 Aon repurchased 0.4 million shares for a total cost of $20 million with settlement occurring on July 6, 2011.  These shares are not included in the number of shares repurchased for the second quarter or first six months in 2011.  In the second quarter 2010, Aon repurchased 1.2 million shares at an average price per share of $41.03, for a total cost of $50 million.  In the first six months of 2010, Aon repurchased 2.4 million shares for a total cost of $100 million.  Since the inception of its share repurchase program in 2005, Aon has repurchased a total of 124.5 million shares for an aggregate cost of $5.2 billion.  As of June 30, 2011, Aon was authorized to purchase up to $1.4 billion of additional shares under the 2010 Share Repurchase Program.

In the six months ended June 30, 2011, Aon issued 0.4 million shares of common stock in relation to the exercise of options issued to former holders of Hewitt options as part of the Hewitt acquisition.  In addition, in the six months ended June 30, 2011 Aon reissued 6.5 million shares of treasury stock for employee benefit programs and 0.1 million shares in connection with employee stock purchase plans.  In the six months ended June 30, 2010, Aon reissued 5.7 million shares of treasury stock for employee benefit programs and 0.2 million shares in connection with employee stock purchase plans.

Participating Securities

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities, as defined, and therefore, should be included in computing basic and diluted earnings per share using the two class method.  Certain of Aon’s restricted stock awards allow the holder to receive a non-forfeitable dividend equivalent.

Income from continuing operations, income (loss) from discontinued operations and net income, attributable to participating securities, were as follows (in millions):

	Three months ended June 30,					Six months ended June 30,
	2011		2010			2011		2010
Income from continuing operations	$	4	$	4		$	8	$	8
Income (loss) from discontinued operations	—		(1		)	—		(1		)
Net income	$	4	$	3		$	8	$	7

Weighted average shares outstanding are as follows (in millions):

	Three months ended June 30,		Six months ended June 30,
	2011	2010	2011	2010
Shares for basic earnings per share (1)	337.7	278.4	338.7	277.1
Common stock equivalents	5.0	4.2	5.3	4.6
Shares for diluted earnings per share	342.7	282.6	344.0	281.7

(1)  Includes 5.6 million and 6.3 million of participating securities for the three months ended June 30, 2011 and 2010, respectively,

and 5.7 million and 6.3 million of participating securities for the six months ended June 30, 2011 and 2010, respectively.

Certain common stock equivalents, primarily related to options, were not included in the computation of diluted net income per share because their inclusion would have been antidilutive.  The number of shares excluded from the calculation was 0.1 million and 4.0 million for the three months ended June 30, 2011 and 2010, respectively, and 0.1 million and 5.0 million for the six months ended June 30, 2011 and 2010, respectively.

Other Comprehensive Income (Loss)

The components of other comprehensive income (loss), net of related tax, are as follows (in millions):

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Net change in derivative losses	(1		)	(2		)	(5		)	(26		)
Net foreign currency translation adjustments	2			(132		)	197			(273		)
Net post-retirement benefit obligations	15			42			27			55
Total other comprehensive income (loss)	16			(92		)	219			(244		)
Less: other comprehensive income (loss) attributable to noncontrolling interests	—			(2		)	—			(2		)
Other comprehensive income (loss) attributable to Aon stockholders	$	16		$	(90	)	$	219		$	(242	)

The components of Accumulated other comprehensive loss, net of related tax, are as follows (in millions):

	June 30, 2011			December 31, 2010
Net derivative losses	$	(29	)	$	(24	)
Net unrealized investment gains	—			—
Net foreign currency translation adjustments	365			168
Net post-retirement benefit obligations	(2,034		)	(2,061		)
Accumulated other comprehensive loss, net of tax	$	(1,698	)	$	(1,917	)