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Employee Stock-based Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2013

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense for the years ended December 31 as follows:

In millions		2013				2012				2011
Stock options		$	14			$	15			$	14
Restricted stock			32				28				21
Employee share repurchase program (compensatory effective 1/1/13)			3				0				0
Total stock-based compensation before income taxes			49				43				35
Tax benefit			(16	)			(14	)			(13	)
Total stock-based compensation, net of tax		$	33			$	29			$	22

Fair Value of Each Option Award on the Grant Date Using the Black-Scholes Option-Pricing Model

The fair value of each option award on the grant date was estimated using the Black-Scholes option-pricing model with the following assumptions:

		2013				2012				2011
Dividend yield			0				0				0
Risk-free interest rate			1.77	%			0.87	%			1.63	%
Expected volatility			37.6	%			35.7	%			39.5	%
Expected term (years)			6.3				6.3				6.3

The Company's Stock Option Activity

The following table summarizes the Company’s stock option activity for the year ended December 31, 2013:

Shares in thousands		Shares Under Option				Weighted- Average Exercise Price per Share				Weighted- Average Remaining Contractual Term (in years)				Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2013			6,638			$	30.69				6.7			$	207
Granted			918			$	45.43
Exercised			(460	)		$	18.62
Canceled			(18	)		$	11.48
Forfeited			(66	)		$	50.50
Outstanding at December 31, 2013			7,012			$	33.27				6.3			$	100
Fully vested and expected to vest at December 31, 2013			6,974			$	33.17				6.3			$	100
Exercisable at December 31, 2013			5,019			$	26.68				5.3			$	99

Restricted Stock and Restricted Stock Unit Activity

The following table reports restricted stock and restricted stock unit activity during the year ended December 31, 2013:

Shares in thousands		Number of Shares				Weighted- Average Grant Date Fair Value per Share
Unvested shares at January 1, 2013			2,373			$	51.37
Granted			995			$	48.24
Vested			(704	)		$	42.88
Forfeited/canceled			(86	)		$	53.75
Unvested shares at December 31, 2013			2,578			$	50.30

The Composition of Teradata Restricted Stock Grants

The following table represents the composition of Teradata restricted stock unit grants in 2013:

Shares in thousands		Number of Shares				Weighted- Average Grant Date Fair Value
Service-based shares			911			$	46.90
Performance-based shares			84			$	62.77
Total stock grants			995			$	48.24

Primary Assumptions Used in Valuation of Market Component of Awards

The primary assumptions used in the valuation of the market component of the awards were as follows:

		2012
Grant date fair value per share of Company common stock		$	58.63
Expected volatility			36.44	%
Risk-free interest rate			0.47	%
Dividend yield			0
Performance vesting hurdle - future fair value per share of Company common stock		$	85.00

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Tabular disclosure of the amount of total share-based compensation cost, including the amounts attributable to each share-based compensation plan and any related tax benefits.

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