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Stock-Based Compensation (Tables) | 9 Months Ended
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Sep. 30, 2015
Stock-Based Compensation |
Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives | Pre-tax compensation expense and the related income tax benefit for these stock-based incentives were as follows, in millions:
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Long-term stock awards |  | $ | 6 |  | $ | 6 |  | $ | 19 |  | $ | 27 |
Stock options |  | 1 |  | 1 |  | 5 |  | 3 |
Phantom stock awards and stock appreciation rights |  | — |  | 3 |  | 6 |  | 4 |
Total |  | $ | 7 |  | $ | 10 |  | $ | 30 |  | $ | 34 |
Income tax benefit (37 percent tax rate – before valuation allowance) |  | $ | 3 |  | $ | 4 |  | $ | 11 |  | $ | 13 |
Schedule of the Company's long-term stock award activity | Our long-term stock award activity was as follows, shares in millions:
|  | Nine Months Ended |
|  | September 30, |
|  | 2015 |  | 2014 |
Unvested stock award shares at January 1 |  | 6 |  | 8 |
Weighted average grant date fair value |  | $ | 18 |  | $ | 17 |
Stock award shares granted |  | 1 |  | 1 |
Weighted average grant date fair value |  | $ | 26 |  | $ | 22 |
Stock award shares vested |  | 2 |  | 2 |
Weighted average grant date fair value |  | $ | 17 |  | $ | 17 |
Stock award shares forfeited |  | — |  | 1 |
Weighted average grant date fair value |  | $ | 18 |  | $ | 16 |
Forfeitures upon spin off (A) |  | 1 |  | — |
Weighted average grant date fair value |  | $ | 20 |  | $ | — |
Modification upon spin off (B) |  | 1 |  | — |
Unvested stock award shares at September 30 |  | 5 |  | 6 |
Weighted average grant date fair value |  | $ | 17 |  | $ | 18 |
| (A) |  | In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards.
| (B) |  | Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation. The modification to the outstanding stock awards was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan.
Schedule of the Company's stock option activity | Our stock option activity was as follows, shares in millions:
|  | Nine Months Ended |
|  | September 30, |
|  | 2015 |  | 2014 |
Option shares outstanding, January 1 |  | 18 |  | 24 |
Weighted average exercise price |  | $ | 21 |  | $ | 22 |
Option shares granted |  | — |  | — |
Weighted average exercise price |  | $ | 26 |  | $ | 22 |
Option shares exercised |  | 3 |  | 2 |
Aggregate intrinsic value on date of exercise (A) |  | $ | 32 million |  | $ | 17 million |
Weighted average exercise price |  | $ | 17 |  | $ | 16 |
Option shares forfeited |  | 3 |  | 3 |
Weighted average exercise price |  | $ | 29 |  | $ | 28 |
Forfeitures upon spin off (B) |  | — |  | — |
Weighted average exercise price |  | $ | 19 |  | $ | — |
Modification upon spin off (C) |  | 2 |  | — |
Option shares outstanding, September 30 |  | 14 |  | 19 |
Weighted average exercise price |  | $ | 17 |  | $ | 21 |
Weighted average remaining option term (in years) |  | 4 |  | 4 |
Option shares vested and expected to vest, September 30 |  | 14 |  | 19 |
Weighted average exercise price |  | $ | 17 |  | $ | 21 |
Aggregate intrinsic value (A) |  | $ | 111 million |  | $ | 102 million |
Weighted average remaining option term (in years) |  | 4 |  | 4 |
Option shares exercisable (vested), September 30 |  | 12 |  | 16 |
Weighted average exercise price |  | $ | 18 |  | $ | 22 |
Aggregate intrinsic value (A) |  | $ | 96 million |  | $ | 80 million |
Weighted average remaining option term (in years) |  | 3 |  | 3 |
| (A) |  | Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares.
| (B) |  | In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards.
| (C) |  | Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation. The modification to the outstanding options was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan.
Schedule of weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model |
|  | Nine Months Ended |
|  | September 30, |
|  | 2015 |  | 2014 |
Weighted average grant date fair value |  | $ | 9.67 |  | $ | 9.53 |
Risk-free interest rate |  | 1.75 | % | 1.91 | %
Dividend yield |  | 1.32 | % | 1.34 | %
Volatility factor |  | 42.00 | % | 49.00 | %
Expected option life |  | 6 years |  | 6 years |

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