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Long-Term Incentive Employee Compensation (Tables) | 12 Months Ended
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Dec. 31, 2012
Long-Term Incentive Employee Compensation Costs | Long-term incentive employee compensation costs are primarily recorded within general and administrative expenses, and are reduced by an estimated forfeiture rate. These costs impacted our consolidated results of operations as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Share-based compensation expense, equity-based awards |  | $ | 12.9 |  |  | $ | 23.3 |  |  | $ | 13.7 |
Share-based compensation expense, liability-based awards |  |  | 1.9 |  |  |  | 2.1 |  |  |  | (3.8 | )
Total share-based compensation expense in operating income (loss)(a) |  |  | 14.8 |  |  |  | 25.4 |  |  |  | 9.9 |
Tax benefit |  |  | 5.4 |  |  |  | 8.5 |  |  |  | 3.1 |
Share-based compensation expense, net of tax |  | $ | 9.4 |  |  | $ | 16.9 |  |  | $ | 6.8 |
(a) | Share-based compensation expense incurred during 2012 and 2011 includes $0.5 and $13.0, respectively, classified as a transformation cost in the Consolidated Income Statement related to the modification of equity awards.
Status of Stock Option and Restricted Stock Shares | A summary of the status of our NQOs as of December 31, 2012, 2011 and 2010 and changes during the years then ended is presented below.
|  | 2012 |  |  | 2011 |  |  | 2010 |
STOCK OPTIONS |  | Shares |  |  | Weighted Average Exercise Price |  |  | Shares |  |  | Weighted Average Exercise Price |  |  | Shares |  |  | Weighted Average Exercise Price |
Outstanding – January 1 |  |  | 8.0 |  |  | $ | 16.70 |  |  |  | 3.7 |  |  | $ | 85.08 |  |  |  | 4.0 |  |  | $ | 80.58 |
Granted |  |  | 0.4 |  |  |  | 22.80 |  |  |  | 0.3 |  |  |  | 115.36 |  |  |  | 0.4 |  |  |  | 106.60 |
Exercised |  |  | (3.8 | ) |  |  | 15.35 |  |  |  | (0.7 | ) |  |  | 76.27 |  |  |  | (0.6 | ) |  |  | 62.90 |
Cancelled or expired |  |  | (0.3 | ) |  |  | 17.21 |  |  |  | (1.3 | ) (b) |  |  | 92.76 |  |  |  | (0.1 | ) |  |  | 97.56 |
Outstanding on Distribution Date before Equitable Adjustment |  |  | – |  |  |  | – |  |  |  | 2.0 |  |  |  | 88.52 |  |  |  | – |  |  |  | – |
Outstanding on Distribution Date after Equitable Adjustment |  |  | – |  |  |  | – |  |  |  | 8.0 |  |  |  | 16.18 |  |  |  | – |  |  |  | – |
November/December 2011 Activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | – |  |  |  | – |  |  |  | 0.7 |  |  |  | 20.28 |  |  |  | – |  |  |  | – |
Exercised |  |  | – |  |  |  | – |  |  |  | (0.7 | ) |  |  | 13.87 |  |  |  | – |  |  |  | – |
Outstanding – December 31 |  |  | 4.3 |  |  | $ | 18.46 |  |  |  | 8.0 |  |  | $ | 16.70 |  |  |  | 3.7 |  |  | $ | 85.08 |
Options exercisable – December 31 |  |  | 2.9 |  |  | $ | 17.10 |  |  |  | 6.3 |  |  | $ | 16.03 |  |  |  | 3.0 |  |  | $ | 83.72 |
(b) | Includes 1.2 shares cancelled in connection with the Distribution of Exelis and Xylem, with a corresponding weighted average exercise price of $92.20.
Share-Based Compensation Summary of Stock Options | The following table summarizes information about ITT’s stock options at December 31, 2012:
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  | Number |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Number |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |
$10-$15 |  |  | 1.4 |  |  |  | 1.6 |  |  | $ | 13.30 |  |  | $ | 14.5 |  |  |  | 1.4 |  |  |  | 1.6 |  |  | $ | 13.30 |  |  | $ | 14.5 |
$15-$20 |  |  | 0.9 |  |  |  | 3.8 |  |  |  | 19.85 |  |  |  | 3.4 |  |  |  | 0.7 |  |  |  | 2.8 |  |  |  | 19.82 |  |  |  | 2.7 |
$20-$26 |  |  | 2.0 |  |  |  | 6.3 |  |  |  | 21.52 |  |  |  | 3.9 |  |  |  | 0.8 |  |  |  | 4.1 |  |  |  | 21.51 |  |  |  | 1.6 |
|  |  | 4.3 |  |  |  | 4.2 |  |  | $ | 18.46 |  |  | $ | 21.8 |  |  |  | 2.9 |  |  |  | 2.6 |  |  | $ | 17.10 |  |  | $ | 18.8 |
Weighted Average Assumptions | The following are weighted-average assumptions for 2012, 2011 and 2010:
|  | 2012 |  |  | November 7, 2011 Grants |  |  | 2011 Grants Before Distribution |  |  | 2010 |
Dividend yield |  |  | 1.6 | % |  |  | 1.8 | % |  |  | 1.7 | % |  |  | 1.9 | %
Expected volatility |  |  | 34.1 | % |  |  | 39.3 | % |  |  | 24.7 | % |  |  | 27.1 | %
Expected life (in years) |  |  | 6.9 |  |  |  | 7.0 |  |  |  | 7.0 |  |  |  | 7.0 |
Risk-free rates |  |  | 1.4 | % |  |  | 1.5 | % |  |  | 3.1 | % |  |  | 3.1 | %
Weighted-average grant date fair value |  | $ | 6.71 |  |  | $ | 6.97 |  |  | $ | 29.70 |  |  | $ | 29.00 |
Rollforward of Outstanding Restricted Stock | The table below provides a rollforward of outstanding RSUs and RSAs for each of the previous three years ended.
|  | 2012 |  |  | 2011 |  |  | 2010 |
RESTRICTED STOCK |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding – January 1 |  |  | 1.4 |  |  | $ | 18.55 |  |  |  | 0.9 |  |  | $ | 89.70 |  |  |  | 0.8 |  |  | $ | 88.72 |
Granted |  |  | 0.4 |  |  |  | 22.56 |  |  |  | 0.3 |  |  |  | 115.18 |  |  |  | 0.3 |  |  |  | 106.50 |
Lapsed |  |  | (0.5 | ) |  |  | 15.21 |  |  |  | (0.3 | ) |  |  | 99.53 |  |  |  | (0.2 | ) |  |  | 108.88 |
Cancelled |  |  | (0.1 | ) |  |  | 20.58 |  |  |  | (0.6 | )(c) |  |  | 95.30 |  |  |  | – |  |  |  | 89.50 |
Outstanding on Distribution Date before equitable adjustment |  |  | – |  |  |  | – |  |  |  | 0.3 |  |  |  | 93.42 |  |  |  | – |  |  |  | – |
Outstanding on Distribution Date after equitable adjustment |  |  | – |  |  |  | – |  |  |  | 1.0 |  |  |  | 17.94 |  |  |  | – |  |  |  | – |
November/December 2011 Activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | – |  |  |  | – |  |  |  | 0.4 |  |  |  | 20.27 |  |  |  | – |  |  |  | – |
Outstanding – December 31 |  |  | 1.2 |  |  | $ | 21.06 |  |  |  | 1.4 |  |  | $ | 18.55 |  |  |  | 0.9 |  |  | $ | 89.62 |
(c) | Includes 0.5 RS cancelled in connection with the Distribution of Exelis and Xylem, with a corresponding weighted average grant date fair value of $95.14.
Number of Outstanding Equity Settled RSUs, Cash Settled RSUs and RSAs | The table below provides the number of the outstanding equity settled RSUs, cash settled RSUs and RSAs as of December 31, 2012, 2011 and 2010.
|  | 2012 |  |  | 2011 |  |  | 2010 |
Equity settled RSUs |  |  | 0.9 |  |  |  | 0.8 |  |  |  | 0.1 |
Cash settled RSUs |  |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.1 |
RSAs |  |  | 0.2 |  |  |  | 0.5 |  |  |  | 0.7 |

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