Note 18—Share-Based Compensation Plans

Overview—We have (i) a long-term incentive plan (the “Long-Term Incentive Plan”) for executives, key employees and outside directors under which awards can be granted in the form of deferred units, restricted shares, stock options, stock appreciation rights and cash performance awards and (ii) other incentive plans under which awards are currently outstanding. Awards that may be granted under the Long-Term Incentive Plan include time-vesting awards (“time-based awards”) and awards that are earned based on the achievement of certain performance criteria (“performance-based awards”) or market factors (“market-based awards”). Our executive compensation committee of our board of directors determines the terms and conditions of the awards granted under the Long-Term Incentive Plan. As of December 31, 2013, we had 36.0 million shares authorized and 7.9 million shares available to be granted under the Long-Term Incentive Plan.

Time-based awards typically vest either in three equal annual installments beginning on the first anniversary date of the grant or in an aggregate installment at the end of the stated vesting period. Performance-based and market-based awards are typically awarded subject to either a two-year or a three-year measurement period during which the number of options, shares or deferred units remains uncertain. At the end of the measurement period, the awarded number of options, shares or deferred units is determined (the “determination date”) subject to the stated vesting period. The performance-based and market-based awards generally vest in one aggregate installment following the determination date. Once vested, stock options and stock appreciation rights generally have a 10-year term during which they are exercisable.

As of December 31, 2013, total unrecognized compensation costs related to all unvested share-based awards were $93 million, which are expected to be recognized over a weighted-average period of 1.7 years. In the years ended December 31, 2013, 2012 and 2011, we recognized additional share-based compensation expense of $22 million, $4 million and $3 million, respectively, in connection with modifications of share-based awards.

Option valuation assumptions—We estimated the fair value of each option award under the Long-Term Incentive Plan on the grant date using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:

	Years ended December 31,
	2013		2012		2011
Dividend yield		2%		—		4%
Expected price volatility		39%		43%		40%
Risk-free interest rate		0.94%		0.87%		1.97%
Expected life of options		5.3 years		5.0 years		4.9 years
Weighted-average fair value of options granted	$	17.37	$	18.87	$	19.75

Time-based awards

Deferred units—A deferred unit is a unit that is equal to one share but has no voting rights until the underlying shares are issued. The following table summarizes unvested activity for time-based vesting deferred units (“time-based units”) granted under our incentive plans during the year ended December 31, 2013:

	Number of units		Weighted-average grant-date fair value per share
Unvested at January 1, 2013	2,870,051		$	58.09
Granted	1,691,029			58.91
Vested	(1,556,840	)		61.32
Forfeited	(271,912	)		57.28
Unvested at December 31, 2013	2,732,328		$	56.84

The total grant-date fair value of the time-based units that vested during the year ended December 31, 2013 was $95 million.

There were 2,183,853 and 1,090,747 time-based units granted during the years ended December 31, 2012 and 2011, respectively. The weighted-average grant-date fair value of time-based units granted was $50.07 and $77.55 per share for the years ended December 31, 2012 and 2011, respectively. There were 1,064,359 and 832,252 time-based units that vested during the years ended December 31, 2012 and 2011, respectively. The total grant-date fair value of the time-based units that vested was $74 million and $66 million for the years ended December 31, 2012 and 2011, respectively.

Restricted shares—We did not grant time-based vesting restricted shares (“time-based shares”) during the years ended December 31, 2013, 2012 and 2011. There were no time-based shares that vested during the years ended December 31, 2013 and 2012. There were 3,939 time-based shares that vested during the year ended December 31, 2011. The total grant-date fair value of time-based shares that vested was $1 million for the year ended December 31, 2011.

Stock options—The following table summarizes activity for vested and unvested time-based vesting stock options (“time-based options”) outstanding under our incentive plans during the year ended December 31, 2013:

	Number of shares under option		Weighted-average exercise price per share		Weighted-average remaining contractual term (years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2013	1,616,055		$	71.69	6.30	$	—
Granted	455,915			59.30
Exercised	(102,254	)		36.64
Forfeited	(102,973	)		56.97
Expired	(12,579	)		27.15
Outstanding at December 31, 2013	1,854,164		$	71.49	6.55	$	—

Vested and exercisable at December 31, 2013	1,176,140		$	79.25	5.32	$	—

The weighted-average grant-date fair value of time-based options granted during the year ended December 31, 2013 was $17.37 per time-based option. The total grant-date fair value of time-based options that vested during the year ended December 31, 2013 was $7 million. The total pre-tax intrinsic value of time-based options exercised during the year ended December 31, 2013 was $5 million. At January 1 and December 31, 2013, we have presented the aggregate intrinsic value as zero since the weighted-average exercise price per share exceeded the market price of our shares on these dates. There were unvested time-based options to purchase 678,024 shares as of December 31, 2013.

There were time-based options to purchase 395,673 and 194,342 shares granted during the years ended December 31, 2012 and 2011, respectively. The weighted-average grant-date fair value of time-based options granted was $18.87 and $19.75 per time-based option for the years ended December 31, 2012 and 2011, respectively. The total grant-date fair value of time-based options that vested was $5 million and $8 million for the years ended December 31, 2012 and 2011, respectively. There were time-based options to purchase 264,707 and 210,997 shares exercised during the years ended December 31, 2012 and 2011, respectively. The total pretax intrinsic value of time-based options exercised was $3 million and $5 million during the years ended December 31, 2012 and 2011, respectively.

Stock appreciation rights—The following table summarizes activity for stock appreciation rights outstanding under our incentive plans during the year ended December 31, 2013:

	Number of awards	Weighted-average exercise price per share		Weighted-average remaining contractual term (years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2013	187,739	$	93.39	3.76	$	—
Outstanding at December 31, 2013	187,739	$	93.39	2.76	$	—

Vested and exercisable at December 31, 2013	187,739	$	93.39	2.76	$	—

We did not grant stock appreciation rights during the years ended December 31, 2013, 2012, and 2011. At January 1 and December 31, 2013, we have presented the aggregate intrinsic value as zero since the weighted-average exercise price per share exceeded the market price of our shares on those dates. There were no stock appreciation rights exercised for the years ended December 31, 2013 and 2012. There were 1,400 stock appreciation rights exercised with a total pre-tax intrinsic value of zero for the year ended December 31, 2011. There were no unvested stock appreciation rights outstanding as of December 31, 2013.

Market-based awards

Deferred units—We grant market-based deferred units (“market-based units”) that can be earned depending on the achievement of certain market conditions. The number of units earned is quantified upon completion of the specified period at the determination date. The following table summarizes unvested activity for market-based units granted under our incentive plans during the year ended December 31, 2013:

	Number of units		Weighted-average grant-date fair value per share
Unvested at January 1, 2013	231,451		$	65.50
Granted	171,001			74.05
Vested	(78,136	)		78.69
Forfeited	(18,153	)		69.87
Unvested at December 31, 2013	306,163		$	66.65

Total grant date fair value of the market-based units that vested during the year ended December 31, 2013 was $6 million.

There were 163,319 and 98,797 market-based units granted during the years ended December 31, 2012 and 2011 with a weighted-average grant-date fair value of $58.52 and $78.69 per share, respectively. The total grant-date fair value of the market-based units that vested was $24 million for the year ended December 31, 2012. No market-based units vested in the year ended December 31, 2011.

Performance-based awards

Stock options—We have previously granted performance-based stock options (“performance-based options”) that could be earned depending on the achievement of certain performance targets. The number of options earned is quantified upon completion of the performance period at the determination date. The following table summarizes activity for vested and unvested performance-based options outstanding under our incentive plans during the year ended December 31, 2013:

	Number of shares under option		Weighted-average exercise price per share		Weighted-average remaining contractual term (years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2013	179,262		$	75.30	3.22	$	—
Exercised	(7,385	)		22.58
Outstanding at December 31, 2013	171,877		$	77.57	2.28	$	—

Vested and exercisable at December 31, 2013	171,877		$	77.57	2.28	$	—

We did not grant performance-based options during the years ended December 31, 2013, 2012 and 2011. At January 1 and December 31, 2013, we have presented the aggregate intrinsic value as zero since the weighted-average exercise price per share exceeded the market price of our shares on that date. There were no performance-based options exercised during the years ended December 31, 2012 and 2011. There were no unvested performance-based stock options outstanding as of December 31, 2013.