Stock Incentive Plans
Our stock incentive plans consist of the 2009 Long-Term Incentive Plan and the Salary Stock Plan. Both plans are administered by the Executive Compensation Committee of our Board of Directors. The aggregate number of shares with respect to which awards may be granted under these amended plans shall not exceed 75 million.
Long-Term Incentive Plan
We granted 7 million, 7 million and 5 million RSUs in the years ended December 31, 2013, 2012 and 2011. These awards granted either cliff vest or ratably vest generally over a three-year service period, as defined in the terms of each award. Our policy is to issue new shares upon settlement of RSUs.
The 2013 awards granted to the Top 25 highest compensated employees will settle on the second and third anniversary dates of grant in 25% increments consistent with the terms of the 2009 Long-Term Incentive Plan. The awards for the Next 75 highest compensated employees will settle on the second and third anniversary dates of grant. The awards for the non-Top 100 highest compensated employees will settle on the first, second and third anniversary dates of grant. Vesting and subsequent settlement will generally occur based upon employment at the end of each specified service period.
The 2012 awards granted to the Top 25 highest compensated employees will settle on the second and third anniversary dates of grant in 25% increments consistent with the terms of the 2009 Long-Term Incentive Plan. The awards for the non-Top 25 highest compensated employees will vest and settle on the second and third anniversary dates of grant. Vesting and subsequent settlement will generally occur based upon employment at the end of each specified service period.
The 2011 awards granted to the Top 25 highest compensated employees will settle three years from the grant date in 25% increments consistent with the terms of the 2009 Long-Term Incentive Plan. The awards for the Next 75 highest compensated employees will settle either: (1) three years from the date of grant; or (2) on the first and third anniversary dates of grant. The awards to the non-Top 100 highest compensated employees will settle on the first, second and third anniversary dates of grant. Vesting and subsequent settlement will generally occur based upon employment at the end of each specified service period.
Retirement eligible participants that are non-Top 100 highest compensated employees who retire in the first twelve months following the grant will retain and vest a pro-rata portion of RSUs earned and those who retire after the first anniversary of the grant will retain and vest the full RSU grant. The vested award will be payable on the settlement date.
The plan was amended in January 2014 to provide cash payment, on a going forward basis, of dividend equivalents upon settlement to active employees and certain former employees with outstanding awards as of the amendment date.
Salary Stock Plan
In the years ended December 31, 2013, 2012 and 2011 a portion of each participant's salary was accrued on each salary payment date and converted to RSUs on a quarterly basis. In March 2012 we amended the plan to provide for cash settlement of awards and reclassified $97 million from Additional paid-in capital to Accrued liabilities and Other liabilities and deferred income taxes. Prior to this amendment it was our policy to issue new shares upon settlement of these awards. In June 2013 we amended the plan to provide for cash or share settlement of awards based on election by the participant. The plan was amended in January 2014 to provide cash payment, on a going forward basis, of dividend equivalents upon settlement to active employees with outstanding awards as of the amendment date. The liability for these awards continues to be remeasured to fair value at the end of each reporting period.
RSUs
The following table summarizes information about the RSUs under our stock incentive plans (RSUs in millions):
|
| | | | | | | | |
| Shares | | Weighted-Average Grant Date Fair Value | | Weighted-Average Remaining Contractual Term in Years |
RSUs outstanding at January 1, 2013 | 26.9 |
| | $ | 23.06 |
| | 0.7 |
Granted | 8.9 |
| | $ | 29.05 |
| | |
Settled | (16.0 | ) | | $ | 20.60 |
| | |
Forfeited or expired | (1.2 | ) | | $ | 27.20 |
| | |
RSUs outstanding at December 31, 2013 | 18.6 |
| | $ | 27.76 |
| | 1.2 |
| | | | | |
RSUs unvested and expected to vest at December 31, 2013 | 9.2 |
| | $ | 27.94 |
| | 1.6 |
RSUs vested and payable at December 31, 2013 | 8.8 |
| | $ | 27.61 |
| | — |
RSUs granted in the year ended December 31, 2012 | | | $ | 25.10 |
| | |
RSUs granted in the year ended December 31, 2011 | | | $ | 31.18 |
| | |
The following table summarizes compensation expense recorded for our stock incentive plans (dollars in millions):
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2013 | | 2012 | | 2011 |
Compensation expense | $ | 311 |
| | $ | 302 |
| | $ | 233 |
|
Income tax benefit | $ | 100 |
| | $ | 100 |
| | $ | — |
|
At December 31, 2013 the total unrecognized compensation expense for nonvested equity awards granted was $149 million. This expense is expected to be recorded over a weighted-average period of 1.6 years. The total fair value of RSUs vested in the years ended December 31, 2013, 2012 and 2011 was $342 million, $141 million and $105 million. In the years ended December 31, 2013, 2012 and 2011 total payments for 3.1 million, 1.6 million and 456,000 RSUs settled under stock incentive plans were $94 million, $36 million and $14 million.
