Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

The Company accounts for stock-based compensation pursuant to certain authoritative guidance which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of estimated forfeitures, over the requisite service period for awards expected to vest. The Company recognized $9.4 million of pretax stock-based compensation expense during each of the three months ended March 31, 2013 and 2012.

The following table summarizes the changes in the number of shares of common stock under option for the three months ended March 31, 2013 (in millions, except per share value):



	Shares		Weighted-Average Exercise Price		Exercisable at Period End	Aggregate Intrinsic Value Exercisable
Outstanding at December 31, 2012	11.1		$	22	9.0	$	27.8
Exercised	(1.8	)	19
Forfeited / expired	(0.2	)	28
Outstanding at March 31, 2013	9.1		$	23	8.2	$	35.3

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the three months ended March 31, 2013 (shares in millions):



	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2012	5.5		$	17
Granted	1.9		25
Vested	(1.5	)	14
Forfeited	(0.2	)	21
Outstanding at March 31, 2013	5.7		$	20

During the three months ended March 31, 2013, the Company awarded 0.9 million performance stock units which entitle recipients to shares of the Company’s stock at the end of a three-year vesting period, if specified market conditions are achieved (“PSUs”). The PSUs entitle recipients to shares of common stock equal to 0% up to 200% of the number of units granted at the vesting date depending on the level of achievement of the specified market and service conditions. As of March 31, 2013, 2.0 million PSUs were outstanding, and based on performance through March 31, 2013, recipients of PSUs would be entitled to 2.2 million shares at the vesting date. The PSUs are included in the preceding table as if the participants earn shares equal to 100% of the units granted.

During the three months ended March 31, 2013, the Company granted 0.2 million performance-based restricted stock units which entitle the recipient to shares of the Company's stock if specified market and service conditions are achieved, and the awards vest no earlier than one year to two years from the grant date. During 2012, the Company granted 0.1 million performance-based restricted stock units with similar terms. During 2011, the Company awarded 0.7 million performance-based restricted stock units, which entitle the Company's Chief Executive Officer to shares of the Company's stock if specified market and service conditions are achieved. The 1.0 million of outstanding performance-based restricted stock units vest no earlier than one year from the date of grant and no later than seven years from the date of grant. Based on performance through March 31, 2013, the market conditions have been achieved for 0.9 million of the 1.0 million of outstanding performance-based restricted stock units. Accordingly, these performance-based restricted stock units will vest when the service conditions are achieved, including the 0.7 million granted to the Company's Chief Executive Officer which will vest in July 2013 if the service conditions are achieved. The 1.0 million and 0.8 million performance-based restricted stock units are included in the preceding table as outstanding as of March 31, 2013 and December 31, 2012, respectively.

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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