Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2018

Stock-Based Compensation

Stock-Based Compensation Expense

Stock-Based Compensation Expense

	Years ended December 31
(Millions)	2018		2017		2016
Cost of sales	$	48	$	49	$	47
Selling, general and administrative expenses		207		229		206
Research, development and related expenses		47		46		45
Stock-based compensation expenses	$	302	$	324	$	298
Income tax benefits	$	(154)	$	(327)	$	(272)
Stock-based compensation expenses (benefits), net of tax	$	148	$	(3)	$	26

Stock Option Activity

Stock Option Program

The following table summarizes stock option activity for the years ended December 31:

	2018			2017			2016
		Weighted			Weighted			Weighted
	Number of	Average		Number of	Average		Number of	Average
(Options in thousands)	Options	Exercise Price		Options	Exercise Price		Options	Exercise Price
Under option —
January 1	34,965	$	125.73	36,196	$	112.07	38,552	$	102.01
Granted:
Annual	3,211		233.19	5,410		175.93	5,592		147.99
Exercised	(3,482)		91.01	(6,474)		90.37	(7,716)		86.76
Forfeited	(125)		188.00	(167)		162.36	(232)		148.43
December 31	34,569	$	138.98	34,965	$	125.73	36,196	$	112.07
Options exercisable
December 31	26,117	$	121.98	24,281	$	108.50	25,241	$	95.65

Stock Option Assumptions

Stock Option Assumptions

	Annual
	2018			2017			2016
Exercise price	$	233.63		$	175.76		$	147.87
Risk-free interest rate		2.7	%		2.1	%		1.5	%
Dividend yield		2.4	%		2.5	%		2.5	%
Expected volatility		21.0	%		17.3	%		20.8	%
Expected life (months)		78			78			77
Black-Scholes fair value	$	41.59		$	23.51		$	22.47

Restricted Stock and Restricted Stock Units Activity

Restricted Stock and Restricted Stock Units

The following table summarizes restricted stock and restricted stock unit activity for the years ended December 31:

	2018			2017			2016
		Weighted			Weighted			Weighted
		Average			Average			Average
	Number of	Grant Date		Number of	Grant Date		Number of	Grant Date
(Shares in thousands)	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Nonvested balance —
As of January 1	1,994	$	162.60	2,185	$	145.64	2,441	$	127.47
Granted
Annual	467		233.61	604		176.10	749		148.20
Other	8		207.76	21		233.77	8		169.00
Vested	(640)		164.83	(769)		127.21	(960)		101.64
Forfeited	(40)		186.48	(47)		158.25	(53)		145.95
As of December 31	1,789	$	180.02	1,994	$	162.60	2,185	$	145.64

Performance Shares Activity

The following table summarizes performance share activity for the years ended December 31:

	2018			2017			2016
		Weighted			Weighted			Weighted
		Average			Average			Average
	Number of	Grant Date		Number of	Grant Date		Number of	Grant Date
(Shares in thousands)	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Undistributed balance —
As of January 1	686	$	171.90	656	$	142.98	871	$	120.89
Granted	166		229.13	201		191.28	219		160.17
Distributed	(206)		159.82	(314)		124.88	(367)		99.06
Performance change	(56)		198.39	155		173.91	(38)		155.98
Forfeited	(28)		204.09	(12)		171.36	(29)		149.08
As of December 31	562	$	188.96	686	$	171.90	656	$	142.98