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STOCK OPTION AND STOCK UNIT PLANS (Tables) | 12 Months Ended
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Dec. 31, 2012
INCENTIVE STOCK OPTIONS |
STOCK OPTION AND STOCK UNIT PLANS |
Schedule of outstanding stock options |
December 31, 2012 |  | Number |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value |
(options in thousands; intrinsic value in millions of Canadian dollars) |  |  |  |  |  |  |  |  |
Options outstanding at beginning of year |  | 27,465 |  | 21.19 |  |  |  |  |
Options granted |  | 5,802 |  | 38.32 |  |  |  |  |
Options exercised 1 |  | (5,796) |  | 16.99 |  |  |  |  |
Options cancelled or expired |  | (103) |  | 27.78 |  |  |  |  |
Options outstanding at end of year |  | 27,368 |  | 25.69 |  | 6.7 |  | 375 |
Options vested at end of year 2 |  | 13,703 |  | 20.33 |  | 5.2 |  | 261 |
1 The total intrinsic value of ISOs exercised during the year ended December 31, 2012 was $130 million (2011 - $68 million; 2010 - $38 million) and cash received on exercise was $69 million (2011 - $56 million; 2010 - $50 million). 2 The total fair value of options vested under the ISO Plan during the year ended December 31, 2012 was $19 million (2011 - $17 million; 2010 - $14 million).
Schedule of weighted average assumptions used to determine the fair value of stock options |
Year ended December 31, |  | 2012 |  | 2011 |  | 2010
Fair value per option (Canadian dollars)1 |  | 4.81 |  | 4.19 |  | 3.44
Valuation assumptions |  |  |  |  |  |
Expected option term (years)2 |  | 5 |  | 6 |  | 6
Expected volatility 3 |  | 19.7% |  | 18.6% |  | 19.7%
Expected dividend yield 4 |  | 3.0% |  | 3.4% |  | 3.6%
Risk-free interest rate 5 |  | 1.3% |  | 2.9% |  | 2.7%
1 Options granted to United States employees are based on New York Stock Exchange prices. The option value and assumptions shown are based on a weighted average of the United States and the Canadian options. The fair values per option were $4.65 (2011 - $4.01; 2010 - $3.28) for Canadian employees and US$5.58 (2011 - US$5.11; 2010 - US$4.00) for United States employees. 2 The expected option term is based on historical exercise practice. 3 Expected volatility is determined with reference to historic daily share price volatility and consideration of the implied volatility observable in call option values near the grant date. 4 The expected dividend yield is the current annual dividend at the grant date divided by the current stock price. 5 The risk-free interest rate is based on the Government of Canada’s Canadian Bond Yields and the United States Treasury Bond Yields.
PERFORMANCE BASED STOCK OPTIONS |
STOCK OPTION AND STOCK UNIT PLANS |
Schedule of outstanding stock options |
December 31, 2012 |  | Number |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value
(options in thousands; intrinsic value in millions of Canadian dollars) |  |  |  |  |  |  |  |
Options outstanding at beginning of year |  | 4,127 |  | 18.52 |  |  |  |
Options granted |  | 3,543 |  | 39.34 |  |  |  |
Options exercised 1 |  | (966) |  | 18.29 |  |  |  |
Options outstanding at end of year |  | 6,704 |  | 29.56 |  | 5.3 |  | 66
Options vested at end of year 2 |  | 3,061 |  | 18.54 |  | 2.6 |  | 64
1 The total intrinsic value of PBSOs exercised during the year ended December 31, 2012 was $20 million (2011 - $2 million; 2010 - $26 million) and cash received on exercise was $12 million (2011 - $3 million; 2010 - $27 million). 2 The total fair value of options vested under the PBSO Plan during the year ended December 31, 2012 was $1 million (2011 - $2 million; 2010 - $2 million).
Schedule of weighted average assumptions used to determine the fair value of stock options |
Year ended December 31, |  | 2012
Fair value per option (Canadian dollars) |  | 4.25
Valuation assumptions |  |
Expected option term (years)1 |  | 8
Expected volatility 2 |  | 16.1%
Expected dividend yield 3 |  | 2.8%
Risk-free interest rate 4 |  | 1.6%
1 The expected option term is based on historical exercise practice. 2 Expected volatility is determined with reference to historic daily share price volatility. 3 The expected dividend yield is the current annual dividend at the grant date divided by the current stock price. 4 The risk-free interest rate is based on the Government of Canada’s Canadian Bond Yields.
PERFORMANCE STOCK UNITS |
STOCK OPTION AND STOCK UNIT PLANS |
Schedule of outstanding stock units |
December 31, 2012 |  | Number |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value
(units in thousands; intrinsic value in millions of Canadian dollars) |  |  |  |  |  |
Units outstanding at beginning of year |  | 937 |  |  |  |
Units granted |  | 307 |  |  |  |
Units matured 1 |  | (627) |  |  |  |
Dividend reinvestment |  | 35 |  |  |  |
Units outstanding at end of year |  | 652 |  | 1.5 |  | 56
1 The total amount paid during the year ended December 31, 2012 for PSUs was $25 million (2011 - $17 million; 2010 - $14 million).
RESTRICTED STOCK UNITS |
STOCK OPTION AND STOCK UNIT PLANS |
Schedule of outstanding stock units |
December 31, 2012 |  | Number |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value |
(units in thousands; intrinsic value in millions of Canadian dollars) |  |  |  |  |  |  |
Units outstanding at beginning of year |  | 1,902 |  |  |  |  |
Units granted |  | 891 |  |  |  |  |
Units cancelled |  | (114 | ) |  |  |  |
Units matured 1 |  | (939 | ) |  |  |  |
Dividend reinvestment |  | 79 |  |  |  |  |
Units outstanding at end of year |  | 1,819 |  | 1.5 |  | 78 |
1 The total amount paid during the year ended December 31, 2012 for RSUs was $37 million (2011 - $39 million; 2010 - $24 million).

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