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Share-Based Payments (Tables)
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12 Months Ended |
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Dec. 31, 2011
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| Schedule of Share-based Compensation Expense and Associated Tax Benefit |
The components of share-based compensation expense and the
associated tax benefit follow:
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YEAR ENDED DECEMBER 31, |
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(MILLIONS OF
DOLLARS) |
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2011 |
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2010 |
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2009 |
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Stock option expense
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$166 |
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$150 |
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$165 |
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RSU expense
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228 |
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211 |
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183 |
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TSRU expense
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17 |
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28 |
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15 |
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Directors’ compensation and
other
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5 |
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2 |
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3 |
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PSA expense/(expense
reduction)
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3 |
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14 |
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(17 |
) |
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Share-based payment
expense
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419 |
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405 |
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349 |
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Tax benefit for share-based
compensation expense
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(139 |
) |
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(129 |
) |
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(99 |
) |
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Share-based payment expense, net of
tax
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$280 |
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$276 |
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$250 |
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Stock Options [Member]
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| Schedule of Valuation Assumptions |
The weighted-average assumptions used in the valuation of
stock options follow:
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YEAR ENDED DECEMBER 31, |
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2011 |
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2010 |
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2009 |
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Expected dividend yield(a)
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4.14 |
% |
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4.00 |
% |
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4.90 |
% |
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Risk-free interest rate(b)
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2.59 |
% |
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2.87 |
% |
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2.69 |
% |
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Expected stock price volatility
(c)
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25.55 |
% |
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26.85 |
% |
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41.36 |
% |
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Expected term(d)
(years)
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6.25 |
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6.25 |
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6.0 |
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| (a) |
Determined using a constant dividend yield during the expected
term of the option.
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| (b) |
Determined using the interpolated yield on U.S. Treasury
zero-coupon issues.
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| (c) |
Determined using implied volatility, after consideration of
historical volatility.
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| (d) |
Determined using historical exercise and post-vesting
termination patterns.
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| Schedule of stock option activity |
The following table summarizes all stock option activity
during 2011:
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SHARES
(THOUSANDS)
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WEIGHTED-AVERAGE
EXERCISE PRICE
PER SHARE
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WEIGHTED-AVERAGE
REMAINING
CONTRACTUAL TERM
(YEARS)
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AGGREGATE
INTRINSIC
VALUE(a)
(MILLIONS)
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Outstanding, December 31,
2010
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458,604 |
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$28.29 |
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Granted
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66,850 |
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18.92 |
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Exercised
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(9,406 |
) |
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16.31 |
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Forfeited
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(6,513 |
) |
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17.41 |
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Canceled
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(79,982 |
) |
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38.73 |
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Outstanding, December 31,
2011
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429,553 |
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25.31 |
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4.9 |
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$751 |
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Vested and expected to
vest(b),
December 31, 2011
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421,754 |
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25.46 |
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4.9 |
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$715 |
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Exercisable, December 31,
2011
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273,563 |
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30.09 |
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3.0 |
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$17 |
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| (a) |
Market
price of underlying Pfizer common stock less exercise
price.
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| (b) |
The
number of options expected to vest takes into account an estimate
of expected forfeitures.
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| Summary of Stock Option Activity Data |
The following table provides data related to all stock
option activity:
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YEAR ENDED/AS OF
DECEMBER 31, |
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(MILLIONS OF DOLLARS,
EXCEPT PER STOCK OPTION AMOUNTS) |
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2011 |
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2010 |
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2009 |
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Weighted-average grant date fair
value per stock option
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$ |
3.15 |
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$ |
$3.25 |
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$ |
3.30 |
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Aggregate intrinsic value on
exercise
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$ |
32 |
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$ |
5 |
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$ |
2 |
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Cash received upon
exercise
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$ |
153 |
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$ |
16 |
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$ |
7 |
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Tax benefits realized related to
exercise
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$ |
10 |
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$ |
1 |
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$ |
1 |
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Total compensation cost
related to nonvested stock options not yet recognized,
pre-tax
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$ |
177 |
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$ |
178 |
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$ |
147 |
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Weighted-average period
over which stock option compensation cost is expected to
be recognized (years)
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1.3 |
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1.3 |
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1.2 |
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Restricted Stock Units [Member]
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| Schedule of stock option activity |
The following table summarizes all RSU activity during
2011:
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SHARES
(THOUSANDS) |
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WEIGHTED-
AVERAGE
GRANT DATE
FAIR VALUE
PER SHARE |
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Nonvested, December 31,
2010
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41,177 |
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$17.57 |
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Granted
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15,671 |
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18.91 |
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Vested
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(13,281) |
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20.99 |
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Reinvested dividend
equivalents
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1,740 |
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19.28 |
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Forfeited
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(3,367) |
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17.27 |
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Nonvested, December 31,
2011
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41,940 |
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$17.08 |
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| Summary of Stock Option Activity Data |
The following table provides data related to all RSU
activity:
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(MILLIONS OF DOLLARS)
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YEAR ENDED DECEMBER
31, |
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2011 |
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2010 |
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2009 |
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Total grant date fair-value-based
amount of shares vested
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$279 |
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$311 |
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$131 |
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Total compensation cost related to
nonvested RSU awards not yet recognized, pre-tax
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$264 |
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$230 |
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$198 |
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Weighted-average period over which
RSU cost is expected to be recognized (years)
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1.3 |
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1.4 |
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1.3 |
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Performance Share Awards [Member]
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| Schedule of Valuation Assumptions |
The weighted-average assumptions used in the valuation of
PSAs follow:
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YEAR ENDED DECEMBER
31, |
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2011 |
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2010 |
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2009 |
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Risk-free interest rate(a)
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1.22 |
% |
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1.24 |
% |
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1.95 |
% |
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Expected Pfizer stock price
volatility(b)
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25.55 |
% |
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26.75 |
% |
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40.40 |
% |
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Average peer stock price
volatility(b)
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21.63 |
% |
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23.64 |
% |
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36.30 |
% |
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Contractual term (years)
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3 |
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3 |
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3 |
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| (a) |
Determined using the interpolated yield on U.S. Treasury
zero-coupon issues.
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| (b) |
Determined using implied volatility, after consideration of
historical volatility.
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Total Shareholder Return Units [Member]
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| Schedule of Valuation Assumptions |
The weighted-average assumptions used in the valuation of
TSRUs follow:
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YEAR ENDED DECEMBER
31, |
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2011 |
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2010 |
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2009 |
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Expected dividend yield(a)
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4.15% |
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3.99% |
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4.55 |
% |
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Risk-free interest rate(b)
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2.51% |
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2.34% |
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2.35 |
% |
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Expected stock price
volatility(c)
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25.55% |
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26.76% |
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36.92 |
% |
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Contractual term (years)
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5.95 |
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5.00 |
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5.00 |
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| (a) |
Determined using a constant dividend yield during the expected
term of the TSRU.
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| (b) |
Determined using the interpolated yield on U.S. Treasury
zero-coupon issues.
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| (c) |
Determined using implied volatility, after consideration of
historical volatility.
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