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Stock-Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2015
Stock-Based Compensation  
Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives

 

Pre-tax compensation expense and the related income tax benefit for these stock-based incentives were as follows, in millions:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Long-term stock awards

 

$
7 

 

$
11 

 

$
13 

 

$
21 

 

Stock options

 
3 

 
1 

 
4 

 
2 

 

Phantom stock awards and stock appreciation rights

 
3 

 
1 

 
6 

 
1 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
13 

 

$
13 

 

$
23 

 

$
24 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (37 percent tax rate — before valuation allowance)

 

$
5 

 

$
5 

 

$
9 

 

$
9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of the Company's long-term stock award activity

 

Our long-term stock award activity was as follows, shares in millions:

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

 

 

 

 

 

 

2015

 

2014

 

 

 

 

 

 

 

Unvested stock award shares at January 1

 
6 

 
8 

 

Weighted average grant date fair value

 

$
18 

 

$
17 

 

 

 

 

 

 

 

Stock award shares granted

 
1 

 
1 

 

Weighted average grant date fair value

 

$
26 

 

$
22 

 

 

 

 

 

 

 

Stock award shares vested

 
2 

 
2 

 

Weighted average grant date fair value

 

$
17 

 

$
17 

 

 

 

 

 

 

 

Stock award shares forfeited

 

—

 

—

 

Weighted average grant date fair value

 

$
19 

 

$
16 

 

 

 

 

 

 

 

Forfeitures upon spin off (A) 

 
1 

 

—

 

Weighted average grant date fair value

 

$
20 

 

$

—

 

 

 

 

 

 

 

Modification upon spin off (B) 

 
1 

 

—

 

 

 

 

 

 

 

Unvested stock award shares at June 30

 
5 

 
7 

 

Weighted average grant date fair value

 

$
17 

 

$
18 

 

 

(A)

In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards, which were then converted to TopBuild stock awards.

 

(B)

Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation.  The modification to the outstanding stock awards was made pursuant to an existing anti-dilution provision in our 2014 Plan and 2005 Long Term Incentive Plan.

 

Schedule of the Company's stock option activity

 

Our stock option activity was as follows, shares in millions:

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2015

 

2014

 

 

 

 

 

 

 

Option shares outstanding, January 1

 
18 

 
24 

 

Weighted average exercise price

 

$
21 

 

$
22 

 

 

 

 

 

 

 

Option shares granted

 

—

 

—

 

Weighted average exercise price

 

$
26 

 

$
22 

 

 

 

 

 

 

 

Option shares exercised

 
2 

 
2 

 

Aggregate intrinsic value on date of exercise (A) 

 

$

24 million

 

$

13 million

 

Weighted average exercise price

 

$
16 

 

$
16 

 

 

 

 

 

 

 

Option shares forfeited

 
3 

 

—

 

Weighted average exercise price

 

$
29 

 

$
22 

 

 

 

 

 

 

 

Forfeitures upon spin off (B) 

 

—

 

—

 

Weighted average exercise price

 

$
19 

 

$

—

 

 

 

 

 

 

 

Modification upon spin off (C) 

 
2 

 

—

 

 

 

 

 

 

 

Option shares outstanding, June 30

 
15 

 
22 

 

Weighted average exercise price

 

$
18 

 

$
22 

 

Weighted average remaining option term (in years)

 
4 

 
4 

 

 

 

 

 

 

 

Option shares vested and expected to vest, June 30

 
15 

 
22 

 

Weighted average exercise price

 

$
18 

 

$
22 

 

Aggregate intrinsic value (A) 

 

$

101 million

 

$

88 million

 

Weighted average remaining option term (in years)

 
4 

 
4 

 

 

 

 

 

 

 

Option shares exercisable (vested), June 30

 
13 

 
20 

 

Weighted average exercise price

 

$
18 

 

$
23 

 

Aggregate intrinsic value (A) 

 

$

89 million

 

$

69 million

 

Weighted average remaining option term (in years)

 
3 

 
3 

 

 

(A)

Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares.

(B)

In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards, which were then converted to TopBuild stock awards.

(C)

Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation.  The modification to the outstanding options was made pursuant to an existing anti-dilution provision in our 2014 Plan and 2005 Long Term Incentive Plan.

 

Schedule of weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2015

 

2014

 

 

 

 

 

 

 

Weighted average grant date fair value

 

$
9.67 

 

$
9.53 

 

Risk-free interest rate

 
1.75 

%
1.91 

%

Dividend yield

 
1.32 

%
1.34 

%

Volatility factor

 
42.00 

%
49.00 

%

Expected option life

 

6 years

 

6 years