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SHARE-BASED COMPENSATION AWARDS | 3 Months Ended
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Mar. 31, 2022
Share-based Payment Arrangement [Abstract] |
Share-based Payment Arrangement [Text Block] | SHARE-BASED COMPENSATION AWARDS The Company utilizes share-based awards under employee and non-employee director compensation programs. These share-based awards have included restricted and unrestricted stock, restricted stock units, stock options, and performance shares. In first quarter 2022 and 2021, $25 million and $22 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" ("SG&A") in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards of which $8 million and $4 million, respectively, was for stock options. The compensation expense is recognized over the substantive vesting period, which may be a shorter time period than the stated vesting period for qualifying termination eligible employees as defined in the award notices. For first quarter 2022 and 2021, $7 million and $2 million, respectively, of stock option compensation expense was recognized due to qualifying termination eligibility preceding the requisite service period. The impact on first quarter 2022 and 2021 net earnings of $19 million and $17 million, respectively, is net of deferred tax expense related to share-based award compensation for each period. Stock Option Grants In first quarter 2022 and 2021, the number of stock options granted under the 2021 Omnibus Stock Compensation Plan and 2017 Omnibus Stock Compensation Plan, respectively, was approximately 362 thousand and 450 thousand, respectively. Options have an exercise price equal to the closing price of the Company's stock on the date of grant. The term of options is 10 years with vesting periods that vary up to three years. Vesting usually occurs ratably over the vesting period or at the end of the vesting period. The Company utilizes the Black Scholes Merton option valuation model which relies on certain assumptions to estimate an option's fair value. The assumptions used in the determination of fair value for stock options granted in first quarter 2022 and 2021 are provided in the table below:
|  | First Quarter
Assumptions |  | 2022 |  | 2021
Expected volatility rate |  | 28.69% |  | 28.99%
Expected dividend yield |  | 2.46% |  | 3.58%
Average risk-free interest rate |  | 1.93% |  | 0.95%
Expected term years |  | 6.4 |  | 6.0
The grant date exercise price and fair value of options granted during first quarter 2022 were $120.80 and $28.07, respectively, and first quarter 2021 were $109.26 and $19.81, respectively. For options unvested at March 31, 2022, $4 million in compensation expense will be recognized over the next three years. Other Share-Based Compensation Awards In addition to stock option grants, the Company has awarded long-term performance shares, restricted stock and restricted stock units, and stock appreciation rights. The long-term performance share awards are based upon actual return on capital compared to a target return on capital and total stockholder return compared to a peer group ranking by total stockholder return over a three year performance period and pay out in unrestricted shares of common stock at the end of the performance period. The awards are valued using a Monte Carlo Simulation based model and vest pro-ratably over the three year performance period. The number of long-term performance share target awards during first quarter 2022 and 2021 for the 2022-2024 and 2021-2023 periods were approximately 288 thousand and 311 thousand, respectively. The target shares awarded are assumed to be 100 percent. At the end of the three-year performance period, the actual number of shares awarded can range from zero to 250 percent of the target shares based on the award notice. The number of restricted stock unit awards, which pay out in unrestricted shares of common stock at the end of the vesting and performance (if any) period, during first quarter 2022 and 2021 were approximately 71 thousand and 109 thousand, respectively. The fair value of a restricted stock unit award is equal to the closing stock price of the Company's stock on the award date and normally vests over a period of three years. In first quarter 2022 and 2021, $17 million and $18 million, respectively, was recognized as compensation expense before tax for these other share-based awards and was included in the total compensation expense noted above for all share-based awards. The unrecognized compensation expense before tax for these same type awards at March 31, 2022 was approximately $110 million and will be recognized primarily over a period of three years. For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2021 Annual Report on Form 10-K.

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