Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

The Company measures compensation cost for all stock awards at fair value on the date of grant and recognizes compensation cost, net of estimated forfeitures, over the requisite service period for awards expected to vest. The Company recognized $7.0 million and $9.4 million of pretax stock-based compensation expense during the three months ended March 31, 2014 and 2013, respectively.

The following table summarizes the changes in the number of shares of common stock under option for the three months ended March 31, 2014 (in millions, except per share values):



	Shares		Weighted-Average Exercise Price		Exercisable at Period End	Aggregate Intrinsic Value Exercisable
Outstanding at December 31, 2013	5.9		$	22	5.3	$	53.3
Exercised	(0.9	)	22
Forfeited / expired	(0.1	)	25
Outstanding at March 31, 2014	4.9		$	22	4.7	$	37.7

The following table summarizes the changes in the number of restricted stock units for the three months ended March 31, 2014 (shares in millions):



	Restricted Stock Units		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2013	4.2		$	22
Granted	1.1		33
Vested	(0.8	)	21
Forfeited	(0.2	)	24
Outstanding at March 31, 2014	4.3		$	25

During the three months ended March 31, 2014, the Company awarded 0.7 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, 2014, 2.0 million PSUs were outstanding, and based on performance through March 31, 2014, recipients of PSUs would be entitled to 2.1 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.

As of December 31, 2013, the Company had 0.3 million outstanding performance-based restricted stock units that entitle the recipients to shares of common stock if specified market and service conditions are achieved and vest no earlier than one year from the date of grant and no later than seven years from the date of grant (“Stock Price Based RSUs”). During the three months ended March 31, 2014, 0.1 million of Stock Price Based RSUs vested. Based on performance through March 31, 2014, the market conditions have been achieved for substantially all of the remaining 0.2 million of outstanding Stock Price Based RSUs. Accordingly, the Stock Price Based RSUs will vest when the service conditions are achieved. The 0.2 million Stock Price Based RSUs are included in the preceding table as outstanding as of March 31, 2014.

- 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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