Note 12. Stock Plans

On May 21, 2014, our shareholders approved the Amended and Restated 2005 Performance Incentive Plan (the “2005 Plan”). Under the amended plan, we now make grants to non-employee directors under the 2005 Plan, and we will no longer make any grants under the Amended and Restated 2006 Stock Compensation Plan for Non-Employee Directors (the “2006 Directors Plan”). We also increased the number of shares available for issuance under the 2005 Plan by 75.7 million, which includes the shares remaining available for issuance under the 2006 Directors Plan as of March 14, 2014. Under the 2005 Plan, we are now authorized to issue a maximum of 243.7 million shares of our Common Stock. We may not make any grants under the 2005 Plan after May 21, 2024. As of December 31, 2014, there were 90.6 million shares available to be granted under the 2005 Plan.

In connection with the Spin-Off and divestiture of Kraft Foods Group, under the provisions of our existing plans, employee stock option and restricted and deferred stock awards were adjusted to preserve the fair value of the awards immediately before and after the Spin-Off. As such, we did not record any incremental compensation expense related to the conversion of the awards. In connection with the stock awards held by our respective employees at the time of the Spin-Off, we collected a $55 million cash net settlement for the awards from Kraft Foods Group in March 2013.

Stock Options:

Stock options (including stock appreciation rights) are granted at an exercise price equal to the market value of the underlying stock on the grant date, generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of ten years.

We account for our employee stock options under the fair value method of accounting using a Black-Scholes methodology to measure stock option expense at the date of grant. The fair value of the stock options at the date of grant is amortized to expense over the vesting period. We recorded compensation expense related to stock options held by our employees of $47 million in 2014, $39 million in 2013 and $39 million in 2012 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $12 million in 2014, $11 million in 2013 and $11 million in 2012. The unamortized compensation expense related to our employee stock options was $67 million at December 31, 2014 and is expected to be recognized over a weighted-average period of 2 years.

Our weighted-average Black-Scholes fair value assumptions were:


	Risk-Free Interest Rate		Expected Life		Expected Volatility		Expected Dividend Yield		Fair Value at Grant Date

2014		1.87%		6 years		21.48%		1.64%	$	6.60
2013		1.15%		6 years		20.36%		1.94%	$	4.31
2012		1.16%		6 years		20.13%		3.08%	$	4.78

The risk-free interest rate represents the constant maturity U.S. government treasuries rate with a remaining term equal to the expected life of the options. The expected life is the period over which our employees are expected to hold their options. Volatility reflects historical movements in our stock price for a period commensurate with the expected life of the options. The dividend yield reflects the dividend yield in place at the time of the historical grants and reflects a lower expected dividend yield for Mondelēz International for grants made following the Spin-Off of Kraft Foods Group.

Stock option activity is reflected below:


				Weighted-
				Average		Average
	Shares Subject			Exercise or Grant Price		Remaining Contractual	Aggregate Intrinsic
	to Option			Per Share		Term	Value

Balance at January 1, 2012		49,598,867		$	28.87

Annual grant to eligible employees		12,816,380			38.00
Additional options issued		696,459			37.60

Total options granted		13,512,839			37.97
Options exercised ⁽¹⁾		(8,168,062	)		26.39		$	93 million
Options cancelled		(2,440,601	)		30.20
Adjustment due to the Spin-Off ⁽²⁾		249,996			19.59

Balance at December 31, 2012		52,753,039			20.45		$	264 million

Annual grant to eligible employees		11,644,280			27.05
Additional options issued		762,512			29.69

Total options granted		12,406,792			27.21
Options exercised ⁽¹⁾		(7,185,616	)		19.41		$	79 million
Options cancelled		(2,190,776	)		23.86

Balance at December 31, 2013		55,783,439			21.96		$	744 million

Annual grant to eligible employees		9,919,810			34.17
Additional options issued		500,250			33.65

Total options granted		10,420,060			34.14
Options exercised ⁽¹⁾		(8,076,550	)		20.85		$	125 million
Options cancelled		(1,695,398	)		27.65

Balance at December 31, 2014		56,431,551			24.19	7 years	$	685 million

Exercisable at December 31, 2014		34,811,236			20.66	6 years	$	545 million

(1)

Cash received from options exercised was $168 million in 2014, $139 million in 2013 and $205 million in 2012. The actual tax benefit realized for the tax deductions from the option exercises totaled $29 million in 2014, $14 million in 2013 and $21 million in 2012.

(2)

In 2012, as a result of the Spin-Off, existing employee stock option awards were converted into an equivalent amount of additional Mondelēz International stock options in order to preserve the fair value of the overall stock option awards granted.

Restricted Stock and Deferred Stock Units:

We may grant shares of restricted stock or deferred stock units to eligible employees, giving them, in most instances, all of the rights of shareholders, except that they may not sell, assign, pledge or otherwise encumber the shares and our deferred stock units do not have voting rights until vested. Shares of restricted stock and deferred stock units are subject to forfeiture if certain employment conditions are not met. Restricted stock and deferred stock units generally vest on the third anniversary of the grant date.

Performance share units granted in connection with our long-term incentive plan (“LTIP”) vest based on varying performance, market and service conditions. The unvested share units have no voting rights and do not pay dividends. Dividend equivalents accumulated over the vesting period are paid after the share units vest.

The fair value of the restricted stock and deferred stock units at the date of grant is amortized to earnings over the restriction period. We recorded compensation expense related to restricted stock and deferred stock units of $94 million in 2014, $94 million in 2013 and $90 million in 2012 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $26 million in 2014, $28 million in 2013 and $27 million in 2012. The unamortized compensation expense related to our restricted stock and deferred stock units was $128 million at December 31, 2014 and is expected to be recognized over a weighted-average period of 2 years.

Our restricted and deferred stock activity is reflected below:


					Weighted-Average		Weighted-Average
	Number				Fair Value		Aggregate
	of Shares			Grant Date	Per Share		Fair Value

Balance at January 1, 2012		13,617,173			$	28.43

LTIP shares granted		1,321,822		Jan. 3, 2012		37.63
Annual grant to eligible employees		2,171,330		Feb. 23, 2012		38.00
Additional shares issued		1,469,399		Various		29.18

Total shares granted		4,962,551				35.25	$	175 million
Vested		(5,007,098	)			24.80	$	189 million
Forfeited		(1,275,617	)			29.22
Adjustment due to the Spin-Off ⁽¹⁾		518,902				19.72

Balance at December 31, 2012		12,815,911				21.55

LTIP shares granted		1,542,600		Jan. 2, 2013		26.24
Annual grant to eligible employees		2,335,780		Feb. 20, 2013		27.05
Additional shares issued		1,353,057		Various		22.47

Total shares granted		5,231,437				25.63	$	134 million
Vested		(5,350,073	)			18.82	$	145 million
Forfeited		(1,048,688	)			23.23

Balance at December 31, 2013		11,648,587				24.48

LTIP shares granted		1,143,620		Jan. 2, 2014		34.97
Annual grant to eligible employees		1,991,230		Feb. 19, 2014		34.17
Additional shares issued		935,463		Various		33.15

Total shares granted		4,070,313				34.16	$	139 million
Vested		(4,380,452	)			22.98	$	151 million
Forfeited		(755,808	)			28.14

Balance at December 31, 2014		10,582,640				28.56

(1)

In 2012, as a result of the Spin-Off, existing employee stock awards were converted into an equivalent amount of additional Mondelēz International stock awards in order to preserve the fair value of the overall stock award that was granted.