Share-Based Compensation Plans

6 Months Ended

Jun. 30, 2012

Share-Based Compensation Plans

Share-Based Compensation Plans

12.  Share-Based 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				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
Restricted share units (“RSUs”)	$	34	$	33	$	83	$	78
Performance share awards (“PSAs”)	13		10		15		35
Share options	1		2		3		5
Employee share purchase plans	2		2		4		3
Total share-based compensation expense	$	50	$	47	$	105	$	121

Share Awards

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

	Six months ended June 30,
	2012				2011
	Shares		Fair Value (1)		Shares		Fair Value (1)
Non-vested at beginning of period	9,916		$	42	10,674		$	38
Granted	4,706		45		3,124		52
Vested	(2,986	)	42		(4,550	)	39
Forfeited	(356	)	44		(283	)	40
Non-vested at end of period	11,280		44		8,965		42

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

Information as of June 30, 2012 regarding the Company’s PSAs granted during the six months ended June 30, 2012 and the years ended December 31, 2011 and 2010, respectively, is as follows (shares in thousands, dollars in millions, except fair value):

	As of June 30,		As of December 31,		As of December 31,
	2012		2011		2010
Target PSAs granted	1,369		1,715		1,390
Fair value (1)	$	47	$	50	$	39
Number of shares that would be issued based on current performance levels	1,367		1,131		$	1,245
Unamortized expense, based on current performance levels	$	58	$	30	$	8

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

Share Options

In connection with its incentive compensation plans, the Company did not grant any share options in the six months ended June 30, 2012.  The Company did not grant any share options in the three months ended June 30, 2011. During the six months ended June 30, 2011, the Company granted 80,000 share options at a weighted average exercise price of $53 per share.  The weighted average volatility, expected dividend yield and risk-free rate assumed related to those options were 26.1%, 1.3% and 2.2%, respectively.  The weighted average expected life was 5.5 years, and the weighted average estimated fair value per share was $10.92.

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

	Six months ended June 30,
	2012				2011
	Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
Beginning outstanding	9,116		$	32	13,919		$	32
Granted	—		—		80		53
Exercised	(1,584	)	33		(3,554	)	32
Forfeited and expired	(51	)	37		(216	)	37
Outstanding at end of period	7,481		32		10,229		32
Exercisable at end of period	6,931		31		8,804		30

The weighted average remaining contractual life, in years, of outstanding options was 2.4 years and 3.8 years at June 30, 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 $46.78 as of June 30, 2012, which would have been received by the option holders had those option holders exercised their options as of that date.  At June 30, 2012, the aggregate intrinsic value of options outstanding was $114 million, of which $111 million was exercisable.

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

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
Aggregate intrinsic value of share options exercised	$	11	$	24	$	24	$	65
Cash received from the exercise of share options	14		39		51		121
Tax benefit realized from the exercise of share options	1		5		2		12

Unamortized deferred compensation expense, which includes both options and awards, amounted to $362 million as of June 30, 2012, with a remaining weighted-average amortization period of approximately 2.1 years.