XML 40 R23.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Equity-Based Compensation | 12 Months Ended
--- | ---
Dec. 31, 2021
Equity-Based Compensation |
Equity-Based Compensation | 14. Equity-Based Compensation Employee Stock Purchase Plan We have an Employee Stock Purchase Plan (“ESPP”) under which employees that have been employed for at least 30 days may purchase shares of our common stock at a discount. The plan provides for two offering periods for purchases: January through June and July through December. At the end of each offering period, enrolled employees purchase shares of our common stock at a price equal to 85% of the lesser of the market value of the stock on the first and last day of such offering period. The purchases are made at the end of an offering period with funds accumulated through payroll deductions over the course of the offering period. Subject to limitations set forth in the plan and under IRS regulations, eligible employees may elect to have up to 10% of their base pay deducted during the offering period. The total number of shares issued under the plan for the offering periods in 2021, 2020 and 2019 was approximately 513,000, 570,000 and 537,000, respectively. After the January 2022 issuance of shares associated with the July to December 2021 offering period, 2.7 million shares remain available for issuance under the ESPP. As a result of our ESPP, annual compensation expense increased by $12 million, or $9 million net of tax expense, for 2021, $13 million, or $10 million net of tax expense, for 2020 and $10 million, or $7 million net of tax expense, for 2019. Employee Stock Incentive Plans In May 2014, our stockholders approved our 2014 Stock Incentive Plan (the “2014 Plan”) to replace our 2009 Stock Incentive Plan (the “2009 Plan”). The 2014 Plan authorized 23.8 million shares of our common stock for issuance pursuant to the 2014 Plan, plus the approximately 1.1 million shares that then remained available for issuance under the 2009 Plan, and any shares subject to outstanding awards under both incentive plans that are subsequently cancelled, forfeited, terminate, expire or lapse. In May 2020, the Company’s Board of Directors amended the 2014 Plan to provide that the number of future shares surrendered in payment of the exercise or purchase price of an award, and the number of future shares used to satisfy the withholding obligations, shall no longer be credited back to the total number of shares available for issuance under the 2014 Plan. As of December 31, 2021, approximately 16.9 million shares were available for future grants under the 2014 Plan. All of our equity-based compensation awards described herein have been made pursuant to either our 2009 Plan or our 2014 Plan, collectively referred to as the “Incentive Plans.” We currently utilize treasury shares to meet the needs of our equity-based compensation programs. Pursuant to the Incentive Plans, we have the ability to issue stock options, stock appreciation rights and stock awards, including restricted stock, restricted stock units (“RSUs”) and performance share units (“PSUs”). The terms and conditions of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors. The 2021 annual incentive plan awards granted to the Company’s senior leadership team, which generally includes the Company’s executive officers, included a combination of PSUs and stock options. Additionally, one member of the Company’s senior leadership team received a grant of RSUs in 2021 in special recognition of 2020 contributions. The Incentive Plans awards granted to other eligible employees included a combination of PSUs, RSUs and stock options in 2021. The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field-based managers. Restricted Stock Units — A summary of our RSUs is presented in the table below (units in thousands): ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted Average
​ | ​ | ​ | ​ | Per Share
​ |  | Units |  | Fair Value
Unvested as of January 1, 2021 |  | 331 | ​ | $ | 103.84
Granted |  | 140 | ​ | $ | 118.11
Vested |  | (101) | ​ | $ | 85.59
Forfeited |  | (27) | ​ | $ | 114.18
Unvested as of December 31, 2021 |  | 343 | ​ | $ | 114.28
​ The total fair market value of RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was $12 million, $14 million and $15 million, respectively. During the year ended December 31, 2021, we issued approximately 72,000 shares of common stock for these vested RSUs, net of approximately 29,000 units deferred or used for payment of associated taxes. RSUs may not be voted or sold by award recipients until time-based vesting restrictions have lapsed. RSUs primarily provide for three-year cliff vesting and include dividend equivalents accumulated during the vesting period. Unvested units are subject to forfeiture in the event of voluntary or for-cause termination. RSUs are generally subject to pro-rata vesting upon an employee’s involuntary termination other than for cause and generally payout at the end of the three-year vesting period and become immediately vested in the event of an employee’s death or disability. Compensation expense associated with RSUs is measured based on the grant-date fair value of our common stock and is recognized on a straight-line basis over the required employment period. Beginning in 2021, the terms of the award agreements for new grants of RSUs were updated to provide for accelerated vesting following retirement as if the employee had remained employed until the end of the vesting period. Accordingly, compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement-eligible or (ii) the defined service requirement of the award. Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment of expected forfeitures. Performance Share Units — Two types of PSUs are currently outstanding: (i) PSUs for which payout is dependent on total shareholder return relative to the S&P 500 Index (“TSR PSUs”) and (ii) PSUs for which payout is dependent on the Company’s performance against pre-established adjusted cash flow metrics (“Cash Flow PSUs”). Both types of PSUs are payable in shares of common stock after the end of a three-year performance period, when the Company’s financial performance for the entire performance period is reported, typically in mid- to late-February of the succeeding year. At the end of the performance period, the number of shares awarded can range from 0% to 200% of the targeted amount, depending on the performance against the pre-established targets. A summary of our PSUs, at 100% of the targeted amount, is presented in the table below (units in thousands): ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Weighted Average
​ | ​ | ​ | ​ | Per Share
​ |  | Units |  | Fair Value
Unvested as of January 1, 2021 |  | 999 | ​ | $ | 120.95
Granted |  | 336 | ​ | $ | 122.59
Vested |  | (353) | ​ | $ | 98.45
Forfeited |  | (14) | ​ | $ | 130.49
Unvested as of December 31, 2021 |  | 968 | ​ | $ | 129.60
​ The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2021 was performed by the Management Development and Compensation Committee of our Board of Directors in February 2022. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2021. The “vested” PSUs are for the three-year performance period ended December 31, 2020, as achievement of performance results and corresponding vesting was determined in February 2021. The performance of the Company’s common stock for purposes of the TSR PSUs exceeded target performance criteria, and the Company’s financial results, as measured for purposes of the Cash Flow PSUs, achieved the maximum performance criteria. Accordingly, recipients of the PSU awards received a payout of 172.84% of the vested TSR PSUs and 200% of the vested Cash Flow PSUs. In February 2021, approximately 659,000 PSUs vested and we issued approximately 435,000 shares of common stock for these vested PSUs, net of units deferred or used for payment of associated taxes. The shares of common stock that were issued or deferred during the years ended December 31, 2021, 2020 and 2019 for prior PSU award grants had a fair market value of $74 million, $89 million and $84 million, respectively. PSUs have no voting rights. PSUs receive dividend equivalents that are paid out in cash based on the number of shares that vest at the end of the awards’ performance period. Subject to attainment of the performance metrics described above, PSUs are payable to an employee (or his beneficiary) upon death or disability as if that employee had remained employed until the end of the performance period. PSUs are generally subject to pro-rata vesting upon an employee’s involuntary termination other than for cause and are subject to forfeiture in the event of voluntary or for-cause termination. The terms of the award agreements for outstanding PSUs provide for continued vesting following retirement as if the employee had remained employed until the end of the performance period, and compensation expense for PSUs granted to retirement-eligible employees is accelerated over the period that the recipient becomes retirement-eligible plus a defined service requirement. Compensation expense associated with our Cash Flow PSUs is based on the grant-date fair value of our common stock. Compensation expense is recognized ratably over the performance period based on our estimated achievement of the established performance criteria. Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment of both the probability that the performance criteria will be achieved and expected forfeitures. The grant-date fair value of our TSR PSUs is based on a Monte Carlo valuation and compensation expense is recognized on a straight-line basis over the vesting period. Compensation expense is recognized for all TSR PSUs whether or not the market conditions are achieved less expected forfeitures. Deferred Units — Certain employees can elect to defer some or all of the vested RSU or PSU awards until a specified date or dates they choose. Deferred units are not invested, nor do they earn interest, but deferred amounts do receive dividend equivalents paid in cash during deferral at the same time and at the same rate as dividends on the Company’s common stock. Deferred amounts are paid out in shares of common stock at the end of the deferral period. As of December 31, 2021, we had approximately 201,000 vested deferred units outstanding. Stock Options — Stock options granted prior to 2021 vest in 25% increments on the first two anniversaries of the date of grant with the remaining 50% vesting on the third anniversary. Stock options granted in 2021 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options is the average of the high and low market value of our common stock on the date of grant, and the options have a term of 10 years. A summary of our stock options is presented in the table below (options in thousands): ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Weighted Average
​ | ​ | ​ | ​ | Per Share
​ |  | Options |  | Exercise Price
Outstanding as of January 1, 2021 |  | 3,543 | ​ | $ | 82.86
Granted |  | 661 | ​ | $ | 110.81
Exercised |  | (962) | ​ | $ | 68.89
Forfeited or expired |  | (36) | ​ | $ | 109.50
Outstanding as of December 31, 2021 (a) |  | 3,206 | ​ | $ | 92.53
Exercisable as of December 31, 2021 (b) |  | 1,672 | ​ | $ | 74.08
(a) | Stock options outstanding as of December 31, 2021 have a weighted average remaining contractual term of 6.6 years and an aggregate intrinsic value of $238 million based on the market value of our common stock on December 31, 2021.
(b) | Stock options exercisable as of December 31, 2021 have an aggregate intrinsic value of $155 million based on the market value of our common stock on December 31, 2021.
We received cash proceeds of $66 million, $63 million and $67 million during the years ended December 31, 2021, 2020 and 2019, respectively, from employee stock option exercises. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $66 million, $58 million and $71 million, respectively. Stock options exercisable as of December 31, 2021 were as follows (options in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Weighted Average |  | ​
​ | ​ | ​ | ​ | Per Share | ​ | Weighted Average
Range of Exercise Prices |  | Options |  | Exercise Price |  | Remaining Years
$34.94-$50.00 |  | 281 | ​ | $ | 39.29 |  | 1.7
$50.01-$70.00 |  | 405 | ​ | $ | 55.52 |  | 3.7
$70.01-$100.00 |  | 831 | ​ | $ | 85.15 |  | 6.1
$100.01-$126.01 |  | 155 | ​ | $ | 126.01 |  | 8.1
$34.94-$126.01 |  | 1,672 | ​ | $ | 74.08 |  | 5.0
​ All unvested stock options shall become exercisable upon the award recipient’s death or disability. In the event of a recipient’s retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award agreement. If the recipient is terminated by the Company without cause or voluntarily resigns, the recipient shall be entitled to exercise all stock options outstanding and exercisable within a specified time frame after such termination. All outstanding stock options, whether exercisable or not, are forfeited upon termination for cause. We account for our employee stock options under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The weighted average grant-date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $17.25, $15.82 and $12.22, respectively. The fair value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except for stock options granted to retirement-eligible employees, for which expense is accelerated over the period that the recipient becomes retirement-eligible. The following table presents the weighted average assumptions used to value employee stock options granted during the year ended December 31 under the Black-Scholes valuation model: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2021 |  | 2020 |  | 2019
Expected option life |  | 4.7 | years |  | 4.6 | years |  | 4.2 | years
Expected volatility |  | 23.2 | % |  | 16.6 | % |  | 15.5 | %
Expected dividend yield |  | 2.1 | % |  | 1.7 | % |  | 2.1 | %
Risk-free interest rate |  | 0.6 | % |  | 1.4 | % |  | 2.5 | %
​ The Company bases its expected option life on the expected exercise and termination behavior of its optionees and an appropriate model of the Company’s future stock price. The expected volatility assumption is derived from the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options, combined with other relevant factors including implied volatility in market-traded options on the Company’s stock. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option as of the grant date. For the years ended December 31, 2021, 2020 and 2019, we recognized $94 million, $79 million and $75 million, respectively, of compensation expense associated with RSU, PSU and stock option awards as a component of selling, general and administrative expenses in our Consolidated Statements of Operations. Our income tax expense for the years ended December 31, 2021, 2020 and 2019 includes related income tax benefits of $18 million, $15 million and $17 million, respectively. We have not capitalized any equity-based compensation costs during the reported periods. As of December 31, 2021, we estimate that $49 million of currently unrecognized compensation expense will be recognized over a weighted average period of 1.5 years for our unvested RSU, PSU and stock option awards issued and outstanding. Non-Employee Director Plan Our non-employee directors currently receive annual grants of shares of our common stock, generally payable in two equal installments, under the 2014 Plan described above.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + 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