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SHARE-BASED COMPENSATION (Notes) | 9 Months Ended
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Jul. 31, 2018
Share-based Compensation [Abstract] |
SHARE-BASED COMPENSATION | 3. SHARE-BASED COMPENSATION Agilent accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors including employee stock option awards, restricted stock units, employee stock purchases made under our employee stock purchase plan (“ESPP”) and performance share awards granted to selected members of our senior management under the long-term performance plan (“LTPP”) based on estimated fair values. Participants in the LTPP are entitled to receive unrestricted shares of the company's stock after the end of a three-year period, if specified performance targets are met. Certain LTPP awards are generally designed to meet the criteria of a performance award with the performance metrics and peer group comparison based on the Total Stockholders’ Return (“TSR”) set at the beginning of the performance period. Effective November 1, 2015, the Compensation Committee of the Board of Directors approved another type of performance stock award, for the company's executive officers and other key employees. Participants in this program are also entitled to receive unrestricted shares of the company's stock after the end of a three-year period, if specified performance targets over the three-year period are met. The performance target for grants made in 2016 were based on Operating Margin (“OM”) and the performance grants made in 2017 and 2018 were based on Earnings Per Share ("EPS"). The performance targets for the LTPP-EPS grants for year 2 and year 3 of the performance period are set in the first quarter of year 2 and year 3, respectively. All LTPP awards granted after November 1, 2015, are subject to a one-year post-vest holding period. The final LTPP award may vary from zero to 200 percent of the target award. The maximum award value for awards granted in 2016 and 2017 cannot exceed 300 percent of the grant date target value. We consider the dilutive impact of these programs in our diluted net income per share calculation only to the extent that the performance conditions are expected to be met. Restricted stock units generally vest, with some exceptions, at a rate of 25 percent per year over a period of four years from the date of grant. The impact on our results for share-based compensation was as follows:
| Three Months Ended |  | Nine Months Ended
| July 31, |  | July 31,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in millions)
Cost of products and services | $ | 3 |  |  | $ | 3 |  |  | $ | 13 |  |  | $ | 12 |
Research and development | 1 |  |  | 1 |  |  | 5 |  |  | 4 |
Selling, general and administrative | 9 |  |  | 8 |  |  | 38 |  |  | 32 |
Total share-based compensation expense | $ | 13 |  |  | $ | 12 |  |  | $ | 56 |  |  | $ | 48 |
At July 31, 2018 and October 31, 2017, there was no share-based compensation capitalized within inventory. The following assumptions were used to estimate the fair value of awards granted.
| Three Months Ended |  | Nine Months Ended
| July 31, |  | July 31,
| 2018 |  | 2017 |  | 2018 |  | 2017
LTPP: |  |  |  |  |  |  |
Volatility of Agilent shares | 21% |  | 23% |  | 21% |  | 23%
Volatility of selected peer-company shares | 14%-66% |  | 15%-63% |  | 14%-66% |  | 15%-63%
Price-wise correlation with selected peers | 32% |  | 36% |  | 32% |  | 36%
Post-vest holding restriction discount for all executive awards | 4.8% |  | 5.3% |  | 4.8% |  | 5.3%
Shares granted under the LTPP (TSR) were valued using a Monte Carlo simulations model. The Monte Carlo simulation fair value model requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. For the volatility of our 2017 and 2018 LTPP (TSR) grants, we used our own historical stock price volatility. The ESPP allows eligible employees to purchase shares of our common stock at 85 percent of the closing market price at purchase date and uses the purchase date to establish the fair market value. The estimated fair value of restricted stock units, LTPP (OM) and LTPP (EPS) awards is determined based on the market price of Agilent’s common stock on the date of grant adjusted for expected dividend yield. The compensation cost for LTPP (OM) and LTPP (EPS) reflects the cost of awards that are probable to vest at the end of the performance period. All awards granted in 2016 and thereafter to our senior management employees have a one-year post-vest holding restriction. The estimated discount associated with post-vest holding restrictions is calculated using the Finnerty model (see table above). The model calculates the potential lost value if the employee were able to sell the shares during the lack of marketability period, instead of being required to hold the shares. The model used the same historical stock price volatility and dividend yield assumption used for the Monte Carlo simulations model and an expected dividend yield to compute the discount.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + 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 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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