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Share-Based Payments | 12 Months Ended
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Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Payments |
| SHARE-BASED PAYMENTS
Omnibus Incentive Plan Prudential Financial, Inc.’s Omnibus Incentive Plan provides stock-based awards including stock options, stock appreciation rights, restricted stock shares, restricted stock units, stock settled performance shares, and cash settled performance units. Dividend equivalents are generally provided on restricted stock shares and restricted stock units outstanding as of the record date. Dividend equivalents are generally accrued on target performance shares and units outstanding as of the record date. These dividend equivalents are paid only on the shares and units released up to a maximum of the target number of shares and units awarded. Generally, the requisite service period is the vesting period. There were 23,092,637 authorized shares available for grant under the Omnibus Plan as of December 31, 2017. Compensation Costs Compensation cost for restricted stock units, performance shares and performance units granted to employees is measured by the share price of the underlying Common Stock at the date of grant. Compensation cost for employee stock options is based on the fair values estimated on the grant date. The fair value of each stock option award is estimated using a binomial option pricing model on the date of grant for stock options issued to employees. The weighted average grant date assumptions used in the binomial option valuation model are as follows:
|  | 2017 |  | 2016 |  | 2015
Expected volatility |  | 35.29 | % |  | 38.36 | % |  | 34.67 | %
Expected dividend yield |  | 2.84 | % |  | 3.92 | % |  | 3.00 | %
Expected term |  | 5.60 years |  |  | 5.61 years |  |  | 5.57 years |
Risk-free interest rate |  | 2.06 | % |  | 1.25 | % |  | 1.61 | %
Expected volatilities are based on historical volatility of the Company’s Common Stock and implied volatilities from traded options on the Company’s Common Stock. The Company uses historical data and expectations of future exercise patterns to estimate option exercises and employee terminations within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods associated with the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following chart summarizes the compensation cost recognized and the related income tax benefit for stock options, restricted stock units, performance shares and performance units for the years ended December 31:
|  | 2017 |  | 2016 |  | 2015
|  | Total Compensation Cost Recognized |  | Income Tax Benefit |  | Total Compensation Cost Recognized |  | Income Tax Benefit |  | Total Compensation Cost Recognized |  | Income Tax Benefit
|  | (in millions)
Employee stock options |  | $ | 12 |  |  | $ | 5 |  |  | $ | 19 |  |  | $ | 7 |  |  | $ | 21 |  |  | $ | 8 |
Employee restricted stock units |  | 142 |  |  | 51 |  |  | 126 |  |  | 47 |  |  | 111 |  |  | 42 |
Employee performance shares and performance units |  | 109 |  |  | 41 |  |  | 57 |  |  | 21 |  |  | 32 |  |  | 12 |
Total |  | $ | 263 |  |  | $ | 97 |  |  | $ | 202 |  |  | $ | 75 |  |  | $ | 164 |  |  | $ | 62 |
Compensation costs related to stock-based compensation plans capitalized in deferred acquisition costs for the years ended December 31, 2017, 2016 and 2015 were de minimis. Stock Options Each stock option granted has an exercise price at the fair market value of the Company’s Common Stock on the date of grant and has a maximum term of 10 years. Generally, one third of the option grant vests in each of the first three years. A summary of the status of the Company’s stock option grants is as follows:
|  | Employee Stock Options
|  | Shares |  | Weighted Average Exercise Price
Outstanding at December 31, 2016 |  | 6,738,802 |  |  | $ | 63.53 |
Granted |  | 410,501 |  |  | 110.15 |
Exercised |  | (2,385,170 | ) |  | 63.80 |
Forfeited |  | (28,910 | ) |  | 69.23 |
Expired |  | (5,821 | ) |  | 83.29 |
Outstanding at December 31, 2017 |  | 4,729,402 |  |  | $ | 67.38 |
Exercisable at December 31, 2017 |  | 3,248,670 |  |  | $ | 61.91 |
The weighted average grant date fair value of employee stock options granted during the years ended December 31, 2017, 2016 and 2015 was $27.91, $14.81 and $18.45, respectively. The total intrinsic value (i.e., market price of the stock less the option exercise price) of employee stock options exercised during the years ended December 31, 2017, 2016 and 2015 was $109 million, $120 million, and $49 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value of stock options outstanding and exercisable as of December 31, 2017 is as follows:
|  | December 31, 2017
|  | Employee Stock Options
|  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value
|  | (in years) |  | (in millions)
Outstanding |  | 5.56 |  | $ | 225 |
Exercisable |  | 4.51 |  | $ | 172 |
Restricted Stock Units, Performance Share Awards and Performance Unit Awards A restricted stock unit is an unfunded, unsecured right to receive a share of the Company’s Common Stock at the end of a specified period of time, which is subject to forfeiture and transfer restrictions. Generally, the restrictions will lapse on the third anniversary of the date of grant. Performance shares and performance units are awards denominated in the Company’s Common Stock. The number of units is determined over the performance period, and may be adjusted based on the satisfaction of certain performance goals for the Company. Performance share awards are payable in the Company’s Common Stock. Performance unit awards are payable in cash. A summary of the Company’s restricted stock units, performance shares and performance unit awards is as follows:
|  | Restricted Stock Units |  | Weighted Average Grant Date Fair Value |  | Performance Share and Performance Unit Awards(1) |  | Weighted Average Grant Date Fair Value
Restricted at December 31, 2016(2) |  | 4,979,707 |  |  | $ | 73.77 |  |  | 1,663,673 |  |  | $ | 104.06 |
Granted(2) |  | 1,540,848 |  |  | 110.39 |  |  | 601,179 |  |  | 114.98 |
Forfeited |  | (125,209 | ) |  | 83.34 |  |  | (9,610 | ) |  | 109.21 |
Performance adjustment(3) |  |  |  |  |  | 105,829 |  |  | 110.45 |
Released |  | (1,253,305 | ) |  | 84.08 |  |  | (540,739 | ) |  | 110.45 |
Restricted at December 31, 2017(2) |  | 5,142,041 |  |  | $ | 82.00 |  |  | 1,820,332 |  |  | $ | 114.98 |
__________
(1) | Performance share and performance unit awards reflect the target units awarded, reduced for forfeitures and releases to date. The actual number of units to be awarded at the end of each performance period will range between 0% and 125% of the target number of units granted, based upon a measure of the reported performance for the Company relative to stated goals.
(2) | For performance share and performance unit awards, the grant date is the same as the date the grant vests. The features of the grant are such that a mutual understanding of the key terms and conditions of the award between the employee and employer have not been reached until the grant is vested. Consequently, the weighted average grant date fair value as of December 31, 2017 and December 31, 2016 is the closing stock price of Prudential Financial’s common stock on those dates.
(3) | Represents the difference between the target units granted and the actual units awarded based upon the attainment of performance goals for the Company.
The fair market value of restricted stock units, performance shares and performance units released for the years ended December 31, 2017, 2016 and 2015 was $196 million, $128 million and $162 million, respectively. The weighted average grant date fair value for restricted stock units granted during the years ended December 31, 2017, 2016 and 2015 was $110.39, $64.12 and $78.4, respectively. The weighted average grant date fair value for performance shares and performance units granted during the years ended December 31, 2017, 2016 and 2015 was $114.98, $104.06 and $81.41, respectively. Unrecognized Compensation Cost Unrecognized compensation cost for stock options as of December 31, 2017 was $3 million with a weighted average recognition period of 1.64 years. Unrecognized compensation cost for restricted stock units, performance shares and performance units as of December 31, 2017 was $152 million with a weighted average recognition period of 1.71 years. Tax Benefits Realized The tax benefit realized for exercises of stock options during the years ended December 31, 2017, 2016 and 2015 was $39 million, $41 million and $20 million, respectively. The tax benefit realized upon vesting of restricted stock units, performance shares and performance units for the years ended December 31, 2017, 2016 and 2015 was $70 million, $46 million and $58 million, respectively. Settlement of Awards The Company’s policy is to issue shares from Common Stock held in treasury upon exercise of stock options, the release of restricted stock units and performance shares. The Company uses cash to settle performance units. The amount of cash used to settle performance units during the years ended December, 31, 2017, 2016 and 2015 was $27 million, $18 million and $21 million, respectively.

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- Definition Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=96867065&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=96867065&loc=d3e5047-113901 + Details
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