XML 41 R21.htm IDEA: XBRL DOCUMENT
v3.22.4

Stock-Based Compensation | 12 Months Ended
--- | ---
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | STOCK-BASED COMPENSATION STOCK OPTION AND AWARD PROGRAMS Under our 2016 Incentive Compensation Plan (amended and restated effective May 5, 2020) and previously under our 2007 Incentive Compensation Plan (collectively, Incentive Compensation Plans), awards may be granted to employees and other key individuals who perform services for us and our participating subsidiaries. These awards may be in the form of stock options, restricted stock units or awards (collectively referred to as RSUs) or other incentives or similar awards designed to meet the requirements of non-U.S. jurisdictions. For our Incentive Compensation Plans, there were a total of 9 million, 12 million and 14 million common shares unissued and available for grant as of December 31, 2022, 2021 and 2020, respectively, as authorized by our Board of Directors and shareholders. We generally issue new common shares upon exercise of options and vesting of RSUs. Stock-based compensation expense recognized in Salaries and employee benefits in the Consolidated Statements of Income was $373 million, $326 million and $247 million in 2022, 2021 and 2020, respectively, with corresponding income tax benefits of $90 million, $78 million and $59 million in those respective periods. A summary of stock option and RSU activity as of December 31, 2022, and corresponding changes during the year, are as follows:
|  | Stock Options |  | Service-Based RSUs |  | Service and Performance-Based RSUs
(Shares in thousands) |  | Shares |  | Weighted-Average Exercise Price |  | Shares |  | Weighted- Average Grant Price |  | Shares |  | Weighted- Average Grant Price
Outstanding as of December 31, 2021 |  | 3,104 |  |  | $ | 93.33 |  |  | 1,875 |  |  | $ | 117.36 |  |  | 3,741 |  |  | $ | 114.22 |
Granted |  | 1,168 |  |  | 154.57 |  |  | 798 |  |  | 174.48 |  |  | 1,064 |  |  | 163.60 |
Options exercised/RSUs vested |  | (638) |  |  | 88.81 |  |  | (751) |  |  | 113.19 |  |  | (1,097) |  |  | 89.58 |
Forfeited |  | — |  |  | — |  |  | (134) |  |  | 139.77 |  |  | (236) |  |  | 137.42 |
Expired |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Outstanding as of December 31, 2022 |  | 3,634 |  |  | 113.80 |  |  | 1,788 |  |  | $ | 142.92 |  |  | 3,472 |  |  | $ | 135.57 |
Options vested and expected to vest as of December 31, 2022 |  | 3,607 |  |  | 113.54 |  |  |  |  |  |  |  |  |
Options exercisable as of December 31, 2022 |  | 1,699 |  |  | $ | 80.57 |  |  |  |  |  |  |  |  |
Stock-based compensation expense is generally recognized ratably based on the grant-date fair value of the awards, net of expected forfeitures, over the vesting period. Generally, the vesting period is the shorter of the vesting schedule as defined in each award agreement or the date an individual will become eligible to retire. Retirement eligibility is dependent upon age and/or years of service. STOCK OPTIONS Each stock option has an exercise price equal to the market price of our common stock on the date of grant. Stock options generally vest on the third anniversary of the grant date and have a contractual term of 10 years from the date of grant. The fair value of options without market conditions is estimated on the date of grant using a Black-Scholes-Merton option-pricing model. The following weighted-average assumptions were used for options granted in 2022, 2021 and 2020:
|  | 2022 |  | 2021 |  | 2020
Dividend yield |  | 1.0 | % |  | 1.5 | % |  | 1.4 | %
Expected volatility(a) |  | 31 | % |  | 31 | % |  | 20 | %
Risk-free interest rate |  | 1.7 | % |  | 0.8 | % |  | 1.6 | %
Expected life of stock option (in years)(b) |  | 7.1 |  | 7.2 |  | 7.1
Weighted-average fair value per option |  | $ | 55.30 |  |  | $ | 32.38 |  |  | $ | 25.83 |
(a)The expected volatility is based on both weighted historical and implied volatilities of our common stock price. (b)The expected life of stock options was determined using both historical data and expectations of option exercise behavior. Certain executives were awarded a grant of stock options on October 31, 2022 that vest, subject to achieving performance and market conditions. These options vest in tranches on the third and fourth anniversaries from the grant date, subject to continued employment through the applicable anniversary, and have a contractual term of seven years. The fair value was estimated at the grant date using a Monte Carlo valuation model assuming a dividend yield of 1.4 percent, expected volatility (based on both weighted historical and implied volatilities of our common stock price) of 34 percent, risk-free rate of 3.9 percent and an expected life of seven years, resulting in a fair value of $50.10. The weighted-average remaining contractual life and the aggregate intrinsic value (the amount by which the fair value of our stock price exceeds the exercise price of the option) of the stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2022, were as follows:
|  | Outstanding |  | Exercisable |  | Vested and Expected to Vest
Weighted-average remaining contractual life (in years) |  | 5.6 |  | 3.6 |  | 5.6
Aggregate intrinsic value (millions) |  | $ | 131 |  |  | $ | 114 |  |  | $ | 131 |
As of December 31, 2022, there was $46 million of total unrecognized compensation cost related to unvested options, which will be recognized over the weighted-average remaining vesting period of 3.0 years. For stock options that were exercised during 2022, 2021 and 2020, the intrinsic value, based upon the fair value of our stock price at the date the options were exercised, was $56 million, $86 million and $47 million, respectively; cash received by the Company from the exercise of stock options was $56 million, $64 million and $44 million during those respective periods. The income tax benefit recognized in the Consolidated Statements of Income related to stock option exercises was $9 million, $14 million and $7 million in 2022, 2021 and 2020, respectively. RESTRICTED STOCK UNITS/AWARDS We grant RSUs that contain either a) service conditions or b) both service and performance conditions. RSUs containing only service conditions generally vest ratably over three years, or four years for awards granted prior to 2022, beginning with the first anniversary of the grant date. RSUs containing both service and performance conditions generally vest on the third anniversary of the grant date, and the number of shares earned depends on the achievement of predetermined Company metrics. RSU holders receive dividend equivalents or dividends. Performance-based RSUs include a relative total shareholder return (r-TSR) modifier so that our actual shareholder return relative to a comparable peer group is one of the performance conditions that determines the number of shares ultimately issued upon vesting. The fair value of RSUs that do not include the r-TSR modifier, including those that contain only service conditions, is measured using our stock price on the grant date. The fair value of service and performance-based RSUs that include the r-TSR modifier is determined using a Monte Carlo valuation model with the following weighted-average assumptions in 2022, 2021 and 2020:
|  | 2022 |  | 2021 |  | 2020
Expected volatility(a) |  | 42 | % |  | 41 | % |  | 19 | %
Risk-free interest rate |  | 1.4 | % |  | 0.2 | % |  | 1.4 | %
Remaining performance period (in years) |  | 2.9 |  | 2.9 |  | 2.9
(a)The expected volatility is based on historical volatility of our common stock price. As of December 31, 2022, there was $247 million of total unrecognized compensation cost related to non-vested RSUs, which will be recognized over the weighted-average remaining vesting period of 1.7 years. The weighted-average grant date fair value of RSUs granted in 2022, 2021 and 2020 was $168.26, $123.66 and $124.47, respectively. For RSUs vested during 2022, 2021 and 2020, the total fair value, based upon our stock price at the date the RSUs vested, was $323 million, $227 million and $291 million, respectively. LIABILITY-BASED AWARDS Other incentive awards can be settled with cash or equity shares at our discretion and final Compensation and Benefits Committee approval. These awards are generally settled with cash and thus are classified as liabilities; therefore, the fair value is determined at the date of grant and remeasured quarterly as part of compensation expense over the vesting period. Cash paid upon vesting of these awards in 2022, 2021 and 2020 was $50 million, $53 million and $81 million, respectively.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a)(1) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration