Under the stockholder-approved LTIP, the Compensation Committee (Committee), which is made up of nonemployee members of the Board, or the Chief Executive Officer (when delegated authority by such Committee), may grant stock options, stock appreciation rights (SARs), restricted stock units (RSUs), restricted shares, performance share units (PSUs), and performance shares, up to a maximum of 104,125,000 shares of our Common Stock, of which 8,609,075 remain available for future grants as of December 31, 2021.

The number of shares remaining for issuance under the LTIP is reduced (i) by 1 for each award granted as a stock option or stock-settled SAR, or (ii) by 1.61 for an award made in the form other than a stock option or stock-settled SAR. Under the Board-approved Thoroughbred Stock Option Plan (TSOP), the Committee may grant stock options up to a maximum of 6,000,000 shares of Common Stock. We use newly issued shares to satisfy any exercises and awards under the LTIP and the TSOP.

The LTIP also permits the payment, on a current or a deferred basis and in cash or in stock, of dividend equivalents on shares of Common Stock covered by stock options, RSUs, or PSUs in an amount commensurate with regular quarterly dividends paid on Common Stock. With respect to stock options, if employment of the participant is terminated for any reason, including retirement, disability, or death, we have no further obligation to make any dividend equivalent payments. Regarding RSUs, we have no further obligation to make any dividend equivalent payments unless employment of the participant is terminated as a result of qualifying retirement or disability. Should an employee terminate employment, they are not required to forfeit dividend equivalent payments already received. Outstanding PSUs do not receive dividend equivalent payments.


	2021			2020			2019
	Granted	Weighted- Average Grant-Date Fair Value		Granted	Weighted- Average Grant-Date Fair Value		Granted	Weighted- Average Grant-Date Fair Value
Stock options	42,770	$	62.49	43,770	$	52.05	47,360	$	45.74
RSUs	183,093	240.09		178,190	210.11		219,710	164.47
PSUs	50,100	240.72		78,830	212.66		102,250	160.97

Recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to October 1st will forfeit awards received in the current year. Receipt of certain LTIP awards is contingent on the recipient having executed a non-compete agreement with the company.

We account for our grants of stock options, RSUs, PSUs, and dividend equivalent payments in accordance with FASB ASC 718, “Compensation - Stock Compensation.” Accordingly, all awards result in charges to net income while dividend equivalent payments, which are all related to equity classified awards, are charged to retained income. Compensation cost for the awards is recognized on a straight-line basis over the requisite service period for the entire award. Related compensation costs and tax benefits during the years were:

Option exercise prices will be at least the higher of (i) the average of the high and low prices at which Common Stock is traded on the grant date, or (ii) the closing price of Common Stock on the grant date. All options are subject to a vesting period of at least one year, and the term of the option will not exceed ten years. Holders of the options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for four years in an amount equal to the regular quarterly dividends paid on Common Stock.

For all years, options granted under the LTIP and the TSOP may not be exercised prior to the fourth and third anniversaries of the date of grant, respectively, or if the optionee retires or dies before that anniversary date, may not be exercised before the later of one year after the grant date or the date of the optionee’s retirement or death.

The fair value of each option awarded was measured on the date of grant using the Black-Scholes valuation model. Expected volatility is based on implied volatility from traded options on, and historical volatility of, Common Stock. Historical data is used to estimate option exercises and employee terminations within the valuation model. Historical exercise data is used to estimate the average expected option term. The average risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. A dividend yield of zero was used for the LTIP options during the vesting period. For 2021, 2020, and 2019, a dividend yield of 1.64%, 1.76%, and 2.06%, respectively, was used for all vested LTIP options.


	2021		2020		2019


Average expected volatility	26	%	22	%	23	%
Average risk-free interest rate	0.75	%	1.47	%	2.56	%
Average expected option term	7.5 years		7.5 years		7.2 years


	Stock Options	Weighted- Average Exercise Price

Outstanding at December 31, 2020	1,526,125	$	98.17
Granted	42,770	241.79
Exercised	(470,632)	91.66
Forfeited	(2,368)	94.31

Outstanding at December 31, 2021	1,095,895	106.58

The aggregate intrinsic value of options outstanding at December 31, 2021 was $209 million with a weighted-average remaining contractual term of 4.1 years. Of these options outstanding, 953,680 were exercisable and had an aggregate intrinsic value of $196 million with a weighted-average exercise price of $92.43 and a weighted-average remaining contractual term of 2.5 years.


	2021		2020		2019
	($ in millions)

Options exercised	470,632		1,171,786		770,597
Total intrinsic value	$	83	$	144	$	86
Cash received upon exercise	42		98		53
Related tax benefits realized	17		29		18

At December 31, 2021, total unrecognized compensation related to options granted under the LTIP was $1 million, and is expected to be recognized over a weighted-average period of approximately 2.6 years.

RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares of Common Stock. Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to regular quarterly dividends paid on Common Stock.


	2021		2020		2019
	($ in millions)

RSUs vested	260,307		204,665		166,197
Common Stock issued net of tax withholding	184,319		146,047		119,346
Related tax benefits realized	$	7	$	4	$	2


	RSUs	Weighted- Average Grant-Date Fair Value

Nonvested at December 31, 2020	600,240	$	148.29
Granted	183,093	240.09
Vested	(260,307)	121.84
Forfeited	(21,923)	201.84

Nonvested at December 31, 2021	501,103	193.23

At December 31, 2021, total unrecognized compensation related to RSUs was $34 million, and is expected to be recognized over a weighted-average period of approximately 2.6 years.

PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a three-year cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model.


	2021		2020		2019
	($ in millions)

PSUs earned	78,727		235,935		331,099
Common Stock issued net of tax withholding	49,967		156,477		221,241
Related tax benefits realized	$	1	$	7	$	9


	PSUs	Weighted- Average Grant-Date Fair Value

Balance at December 31, 2020	240,100	$	171.34
Granted	50,100	240.72
Earned	(78,727)	147.75
Unearned	(4,143)	147.75
Forfeited	(4,400)	207.40

Balance at December 31, 2021	202,930	197.33

At December 31, 2021, total unrecognized compensation related to PSUs granted under the LTIP was $4 million, and is expected to be recognized over a weighted-average period of approximately 1.7 years.


	2021	2020	2019
Available for future grants:
LTIP	8,609,075	8,995,582	9,294,726
TSOP	435,867	435,699	434,401
Issued:
LTIP	632,279	1,270,208	852,869
TSOP	72,639	204,102	258,315