Share-Based Compensation Plans

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

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 March 31,
	2013		2012
Restricted stock units (“RSUs”)	$	55	$	49
Performance share awards (“PSAs”)	11		2
Stock options	1		2
Employee stock purchase plans	2		2
Total stock-based compensation expense	$	69	$	55

Share Awards

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

	Three months ended March 31,
	2013				2012
	Shares		Fair Value (1)		Shares		Fair Value (1)
Non-vested at beginning of period	10,432		$	44	9,916		$	42
Granted	1,764		60		2,278		47
Vested	(2,080	)	46		(2,022	)	43
Forfeited	(128	)	44		(179	)	44
Non-vested at end of period	9,988		47		9,993		43

 ______________________________________________

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

The vesting of PSAs is contingent upon meeting various individual, divisional or company wide performance conditions, including revenue generation, or growth in revenue, pretax income or earnings per share over a one to five-year period. The performance conditions are not considered in the determination of the grant date fair value for these awards. The fair value of PSAs is based upon the market price of the Aon ordinary share at the date of grant. Compensation expense is recognized over the performance period, and in certain cases an additional vesting period, based on management's estimate of the number of units expected to vest. Compensation expense is adjusted to reflect the actual number of shares issued at the end of the programs. The actual issue of shares may range from 0-200% of the target number of PSAs granted, based on the plan. Dividend equivalents are not paid on PSAs.

Information as of March 31, 2013 regarding the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the three months ended March 31, 2013 and the years ended December 31, 2012 and 2011, respectively, is as follows (shares in thousands, dollars in millions, except fair value):

	As of March 31, 2013		As of December 31, 2012		As of December 31, 2011
Target PSAs granted	1,135		1,369		1,715
Fair value (1)	$	58	$	47	$	50
Number of shares that would be issued based on current performance levels	1,135		1,720		1,118
Unamortized expense, based on current performance levels	$	65	$	51	$	15

 ______________________________________________

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

Share Options

The Company did not grant any share options in the three months ended March 31, 2013.  During the three months ended March 31, 2012, the Company did not grant any share options.

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

	Three months ended March 31,
	2013				2012
	Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
Beginning outstanding	5,611		$	32	9,116		$	32
Granted	—		—		—		—
Exercised	(610	)	31		(1,032	)	35
Forfeited and expired	(10	)	33		(12	)	40
Outstanding at end of period	4,991		32		8,072		31
Exercisable at end of period	4,579		32		7,173		30

The weighted average remaining contractual life, in years, of outstanding options was 2.5 years and 3.1 years at March 31, 2013 and 2012, 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 $61.50 as of March 31, 2013, which would have been received by the option holders had those option holders exercised their options as of that date.  At March 31, 2013, the aggregate intrinsic value of options outstanding was $145 million, of which $137 million was exercisable.

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

	Three months ended March 31,
	2013		2012
Aggregate intrinsic value of stock options exercised	$	17	$	13
Cash received from the exercise of stock options	20		37
Tax benefit realized from the exercise of stock options	3		1

Unamortized deferred compensation expense, which includes both options and awards, amounted to $345 million as of March 31, 2013, with a remaining weighted-average amortization period of approximately 2.0 years.