Stock Compensation Plans

3 Months Ended

Mar. 31, 2012

Stock Compensation Plans

Stock Compensation Plans

12.  Stock Compensation Plans

The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):

	Three months ended
	March 31,
	2012		2011
Restricted stock units (“RSUs”)	$	49	$	45
Performance Share Awards (“PSAs”)	2		25
Stock options	2		3
Employee stock purchase plans	2		1
Total share-based compensation expense	$	55	$	74

Stock Awards

A summary of the status of the Company’s RSUs is as follows (shares in thousands):

	Three months ended March 31,
	2012				2011
	Shares		Fair Value (1)		Shares		Fair Value (1)
Non-vested at beginning of period	9,916		$	42	10,674		$	38
Granted	2,278		47		2,384		52
Vested	(2,022	)	43		(2,071	)	39
Forfeited	(179	)	44		(94	)	39
Non-vested at end of period	9,993		43		10,893		41

(1) Represents per share weighted average fair value of award at date of grant

Information as of March 31, 2012 regarding the Company’s PSAs granted during the three months ended March 31, 2012 and the years ended December 31, 2011 and 2010, respectively (shares in thousands, dollars in millions):

	2012			2011			2010
Target PSAs granted	1,353			1,715			1,390
Fair value (1)	$		47	$		50	$		39
Number of shares that would be issued based on current performance levels	1,353			1,158			1,299
Unamortized expense, based on current performance levels	$	63		$	36		$	12

(1) Represents per share weighted average fair value of award at date of grant.

Stock Options

In connection with its incentive compensation plans, the Company did not grant any options in the first quarter of 2012. During the first quarter of 2011, the Company granted 80,000 stock options at a weighted average exercise price $53 per share.

The weighted average assumptions, the weighted average expected life and estimated fair value of employee stock options are summarized as follows:

	Three months ended March 31,
	2012	2011
Weighted average volatility	N/A	26.1		%
Expected dividend yield	N/A	1.3		%
Risk-free rate	N/A	2.2		%
Weighted average expected life, in years	N/A	5.5
Weighted average estimated fair value per share	N/A	$	10.92

A summary of the status of Aon’s stock options and related information is as follows (shares in thousands):

	Three months ended March 31,
	2012				2011
	Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
Beginning outstanding	9,116		$	32	13,919		$	32
Granted	—		—		80		53
Exercised	(1,032	)	35		(2,344	)	33
Forfeited and expired	(12	)	40		(127	)	37
Outstanding at end of period	8,072		31		11,528		32
Exercisable at end of period	7,173		30		9,461		30

The weighted average remaining contractual life of outstanding options was 3.1 years and 3.8 years at March 31, 2012 and 2011, respectively.

The aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing stock price of $49.06 as of March 31, 2012, which would have been received by the option holders had those option holders exercised their options as of that date.  At March 31, 2012, the aggregate intrinsic value of options outstanding was $144 million, of which $137 million was exercisable.

Other information related to the Company’s stock options is as follows (in millions):

	Three months ended
	March 31,
	2012		2011
Aggregate intrinsic value of stock options exercised	$	13	$	41
Cash received from the exercise of stock options	37		82
Tax benefit realized from the exercise of stock options	1		7

Unamortized deferred compensation expense, which includes both options and awards, amounted to $297 million as of March 31, 2012, with a remaining weighted-average amortization period of approximately 1.9 years.