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Share-Based Compensation Plans | 9 Months Ended
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Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation Plans | Share-Based Compensation Plans Share-based compensation expense was $3 million and $11 million during the three and nine months ended September 30, 2015, respectively, and $5 million and $14 million during the three and nine months ended September 30, 2014. The unrecognized compensation expense related to our stock options, restricted stock and performance based shares was $7 million, $23 million and $4 million, respectively, at September 30, 2015 and is expected to be recognized over a weighted average period of 2.0, 2.0 and 2.1 years, respectively. The amount of cash received from the exercise of stock options was $14 million and $17 million for the nine months ended September 30, 2015 and 2014, respectively. Stock Option Grants The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2015:
(shares in thousands) | Shares |  | Weighted Average Exercise Price / Share |  | Weighted Average Remaining Contractual Term (Years)
Outstanding at January 1, 2015 | 2,989 |  |  | $ | 28.60 |  |  | 6.5
Granted | 708 |  |  | 35.88 |  |  | 10.0
Exercised | (519 | ) |  | 26.85 |  |  | 5.6
Forfeited and expired | (178 | ) |  | 34.04 |  |  | 8.5
Outstanding at September 30, 2015 | 3,000 |  |  | $ | 30.30 |  |  | 6.7
Options exercisable at September 30, 2015 | 1,939 |  |  | $ | 27.44 |  |  | 5.4
Vested and expected to vest as of September 30, 2015 | 2,877 |  |  | $ | 30.09 |  |  | 6.6
The aggregate intrinsic value of the outstanding, exercisable, and vested and expected to vest stock options as of September 30, 2015 was $12 million, $11 million and $12 million, respectively. The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended September 30, 2015 was $4 million. Stock Option Fair Value 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 2015 grants:
Dividend yield | 1.57 |  | %
Volatility | 27.77 |  | %
Risk-free interest rate | 1.64 |  | %
Expected term (in years) | 5.58 |  |
Weighted-average fair value / share | $ | 8.49 |  |
Expected volatility is calculated based on a weighted analysis of historic and implied volatility measures for a set of peer companies and Xylem. We use historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected term represents an estimate of the period of time options are expected to remain outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant. Restricted Stock Grants The following is a summary of restricted stock activity for the nine months ended September 30, 2015:
(shares in thousands) | Shares |  | Weighted Average Grant Date Fair Value /Share
Outstanding at January 1, 2015 | 1,171 |  |  | $ | 31.80 |
Granted | 411 |  |  | 35.84 |
Vested | (345 | ) |  | 27.82 |
Forfeited | (105 | ) |  | 32.50 |
Outstanding at September 30, 2015 | 1,132 |  |  | $ | 34.43 |
Performance-Based Share Grants The following is a summary of performance-based share grants for the nine months ended September 30, 2015:
(shares in thousands) | Shares |  | Weighted Average Grant Date Fair Value /Share
Outstanding at January 1, 2015 | 124 |  |  | $ | 33.95 |
Granted | 103 |  |  | 35.91 |
Vested | — |  |  | — |
Forfeited | (48 | ) |  | 33.11 |
Outstanding at September 30, 2015 | 179 |  |  | $ | 35.30 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 3: 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=6415400&loc=d3e5070-113901 Reference 4: 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=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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