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Stock Plans | 12 Months Ended
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Dec. 31, 2016
Stock Plans | Note 10. Stock Plans Under our Amended and Restated 2005 Performance Incentive Plan (the “Plan”), we are authorized through May 21, 2024 to issue a maximum of 243.7 million shares of our Common Stock to employees and non-employee directors. As of December 31, 2016, there were 74.2 million shares available to be granted under the Plan. 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 $57 million in 2016, $50 million in 2015 and $47 million in 2014 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $15 million in 2016, $13 million in 2015 and $12 million in 2014. The unamortized compensation expense related to our employee stock options was $52 million at December 31, 2016 and is expected to be recognized over a weighted-average period of 1 year. 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 |
2016 |  |  | 1.40% |  |  |  | 6 years |  |  |  | 23.11% |  |  |  | 1.61% |  |  | $ | 7.86 |
2015 |  |  | 1.70% |  |  |  | 6 years |  |  |  | 18.51% |  |  |  | 1.61% |  |  | $ | 6.12 |
2014 |  |  | 1.87% |  |  |  | 6 years |  |  |  | 21.48% |  |  |  | 1.64% |  |  | $ | 6.60 |
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. Stock option activity is reflected below:
|  |  |  |  | Weighted- |  |  |  |  |  |  |
|  |  |  |  | Average |  |  | Average |  |  |  |
|  |  |  |  | Exercise or |  |  | Remaining |  |  | Aggregate |
|  | Shares Subject |  |  | Grant Price |  |  | Contractual |  |  | Intrinsic |
|  | to Option |  |  | Per Share |  |  | Term |  |  | Value |
Balance at January 1, 2014 |  |  | 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 |  |  |  |  |  |  | $ | 685 million |
Annual grant to eligible employees |  |  | 8,899,530 |  |  |  | 36.94 |  |  |  |  |  |  |  |  |
Additional options issued |  |  | 901,340 |  |  |  | 35.84 |  |  |  |  |  |  |  |  |
Total options granted |  |  | 9,800,870 |  |  |  | 36.84 |  |  |  |  |  |  |  |  |
Options exercised (1) |  |  | (6,444,515 | ) |  |  | 22.94 |  |  |  |  |  |  | $ | 108 million |
Options cancelled |  |  | (2,753,798 | ) |  |  | 32.35 |  |  |  |  |  |  |  |  |
Balance at December 31, 2015 (2) |  |  | 57,034,108 |  |  |  | 26.12 |  |  |  |  |  |  | $ | 1,068 million |
Annual grant to eligible employees |  |  | 7,517,290 |  |  |  | 39.70 |  |  |  |  |  |  |  |  |
Additional options issued |  |  | 115,800 |  |  |  | 42.26 |  |  |  |  |  |  |  |  |
Total options granted |  |  | 7,633,090 |  |  |  | 39.74 |  |  |  |  |  |  |  |  |
Options exercised (1) |  |  | (8,883,101 | ) |  |  | 24.09 |  |  |  |  |  |  | $ | 174 million |
Options cancelled |  |  | (2,182,485 | ) |  |  | 35.23 |  |  |  |  |  |  |  |  |
Balance at December 31, 2016 |  |  | 53,601,612 |  |  |  | 28.02 |  |  |  | 6 years |  |  | $ | 874 million |
Exercisable at December 31, 2016 |  |  | 39,016,883 |  |  |  | 24.43 |  |  |  | 5 years |  |  | $ | 777 million |
| (1) | Cash received from options exercised was $221 million in 2016, $148 million in 2015 and $168 million in 2014. The actual tax benefit realized for the tax deductions from the option exercises totaled $31 million in 2016, $58 million in 2015 and $29 million in 2014.
| (2) | Prior-year aggregate intrinsic value has been revised.
Deferred Stock Units, Performance Share Units and Restricted Stock: Historically we have made grants of deferred stock units, performance share units and restricted stock. Beginning in 2016, we only grant deferred stock units and performance share units and no longer grant restricted stock. We may grant shares of 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 deferred stock units are subject to forfeiture if certain employment conditions are not met. Deferred stock units generally vest on the third anniversary of the grant date. Performance share units granted under our 2005 Plan vest based on varying performance, market and service conditions. The unvested performance share units have no voting rights and do not pay dividends. Dividend equivalents accumulated over the vesting period are paid only after the performance share units vest. The fair value of the deferred stock units, performance share units and restricted stock at the date of grant is amortized to earnings over the restriction period. We recorded compensation expense related to deferred stock units, performance share units and restricted stock of $83 million in 2016, $86 million in 2015 and $94 million in 2014 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $22 million in 2016, $24 million in 2015 and $26 million in 2014. The unamortized compensation expense related to our deferred stock units, performance share units and restricted stock was $111 million at December 31, 2016 and is expected to be recognized over a weighted-average period of 2 years. Our deferred stock unit, performance share unit and restricted 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, 2014 |  |  | 11,648,587 |  |  |  |  |  |  | $ | 24.48 |  |  |  |  |
Annual grant to eligible employees: |  |  |  |  |  |  | Feb. 19, 2014 |  |  |  |  |  |  |  |  |
Performance share units |  |  | 1,143,620 |  |  |  |  |  |  |  | 34.97 |  |  |  |  |
Restricted stock |  |  | 750,410 |  |  |  |  |  |  |  | 34.17 |  |  |  |  |
Deferred stock units |  |  | 1,240,820 |  |  |  |  |  |  |  | 34.17 |  |  |  |  |
Additional shares granted (1) |  |  | 935,463 |  |  |  | Various |  |  |  | 33.15 |  |  |  |  |
Total shares granted |  |  | 4,070,313 |  |  |  |  |  |  |  | 34.16 |  |  | $ | 139 million |
Vested (2) |  |  | (4,380,452 | ) |  |  |  |  |  |  | 22.98 |  |  | $ | 101 million |
Forfeited (2) |  |  | (755,808 | ) |  |  |  |  |  |  | 28.14 |  |  |  |  |
Balance at December 31, 2014 |  |  | 10,582,640 |  |  |  |  |  |  |  | 28.56 |  |  |  |  |
Annual grant to eligible employees: |  |  |  |  |  |  | Feb. 18, 2015 |  |  |  |  |  |  |  |  |
Performance share units |  |  | 1,598,290 |  |  |  |  |  |  |  | 36.94 |  |  |  |  |
Restricted stock |  |  | 386,910 |  |  |  |  |  |  |  | 36.94 |  |  |  |  |
Deferred stock units |  |  | 866,640 |  |  |  |  |  |  |  | 36.94 |  |  |  |  |
Additional shares granted (1) |  |  | 1,087,322 |  |  |  | Various |  |  |  | 39.35 |  |  |  |  |
Total shares granted |  |  | 3,939,162 |  |  |  |  |  |  |  | 37.61 |  |  | $ | 148 million |
Vested (2) |  |  | (3,905,745 | ) |  |  |  |  |  |  | 37.83 |  |  | $ | 148 million |
Forfeited (2) |  |  | (1,197,841 | ) |  |  |  |  |  |  | 32.51 |  |  |  |  |
Balance at December 31, 2015 |  |  | 9,418,216 |  |  |  |  |  |  |  | 28.00 |  |  |  |  |
Annual grant to eligible employees: |  |  |  |  |  |  | Feb. 22, 2016 |  |  |  |  |  |  |  |  |
Performance share units |  |  | 1,406,500 |  |  |  |  |  |  |  | 39.70 |  |  |  |  |
Deferred stock units |  |  | 1,040,790 |  |  |  |  |  |  |  | 39.70 |  |  |  |  |
Additional shares granted (1) |  |  | 864,851 |  |  |  | Various |  |  |  | 31.29 |  |  |  |  |
Total shares granted |  |  | 3,312,141 |  |  |  |  |  |  |  | 37.50 |  |  | $ | 124 million |
Vested (2) |  |  | (3,992,902 | ) |  |  |  |  |  |  | 40.22 |  |  | $ | 161 million |
Forfeited (2) |  |  | (1,143,828 | ) |  |  |  |  |  |  | 37.49 |  |  |  |  |
Balance at December 31, 2016 |  |  | 7,593,627 |  |  |  |  |  |  |  | 24.29 |  |  |  |  |
| (1) | Includes performance share units, deferred stock units and restricted stock.
| (2) | Includes performance share units, deferred stock units and restricted stock. The actual tax benefit realized for the tax deductions from the shares vested totaled $18 million in 2016, $18 million in 2015 and $20 million in 2014.

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