v2.4.0.6

Stock-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation expense

The following table provides detail related to share-based compensation expense.

Three Months Ended September 30,
(in millions)	2012				2011
	Xylem Employees				Xylem Employees				Other Employee Allocations				2011 Total
Equity-based Compensation	$	6			$	1			$	1			$	2
Liability-based Compensation	—				—				(1		)		(1		)

Nine Months Ended September 30,
(in millions)	2012				2011
	Xylem Employees				Xylem Employees				Other Employee Allocations				2011 Total
Equity-based Compensation	$	16			$	3			$	4			$	7
Liability-based Compensation	—				—				—				—

Summary of restricted stock activity

The following is a summary of restricted stock activity for the nine months ended September 30, 2012:

(in thousands, except for per share amounts)	Shares			Weighted Average Grant Date Fair Value /Share
Outstanding at December 31, 2011	1,488			$	25.93
Granted	546			$	26.54
Vested	(304	)		$	21.39
Forfeited	(110	)		$	27.27
Outstanding at September 30, 2012	1,620			$	26.90

Summary of the changes in outstanding stock options

The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2012:

(in thousands, except for per share amounts)	Shares			Weighted Average Exercise Price /Share				Weighted  Average Remaining Contractual Term (Years)
Outstanding at December 31, 2011	4,590			$	25.83			5.4
Granted	861			$	26.57			10.0
Exercised	(924	)		$	24.03			0.1
Forfeited	(327	)		$	27.85			6.7
Outstanding at September 30, 2012	4,200			$	26.22			6.5
Options exercisable at September 30, 2012	1,642			$	25.49			2.6

Weighted-average assumptions for annual March 2012 grants

The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for our annual March 2012 grants (there were subsequent grants during 2012 which were not material).

Dividend yield	1.52%
Volatility	33.4%
Risk-free interest rate	1.42%
Expected term (in years)	7.0
Weighted-average fair value / share	$8.10

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- Definition

Tabular disclosure of share-based compensation plans that may be presented in a single table for outstanding, vested and expected to vest, and exercisable awards. The information that may be disclosed in this table may include, but is not limited to, number of shares, weighted average exercise price, weighted average remaining contractual life, and aggregate intrinsic value.

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- Definition

Tabular disclosure of the number and weighted-average grant date fair value for restricted stock units that were outstanding at the beginning and end of the year, and the number of restricted stock units that were granted, vested, or forfeited during the year.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (c)(1)

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Tabular disclosure of the number and weighted-average exercise prices (or conversion ratios) for share options (or share units) that were outstanding at the beginning and end of the year, vested and expected to vest, exercisable or convertible at the end of the year, and the number of share options or share units that were granted, exercised or converted, forfeited, and expired during the year.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (c)(1)

-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

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Tabular disclosure of the change in stock options.

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