

Recognized Share-Based Compensation Expense
Year ended December 31 (in millions)	2019		2018		2017
Restricted share units	$	564	$	402	$	349
Stock options	231		205		205
Employee stock purchase plans	30		32		32
Total	$	825	$	639	$	586

Our share-based compensation plans consist primarily of awards of RSUs and stock options to certain employees and directors as part of our approach to long-term incentive compensation. Awards generally vest over a period of 5 years and in the case of stock options, have a 10 year term. Additionally, through our employee stock purchase plans, employees are able to purchase shares of our common stock at a discount through payroll deductions. As of December 31, 2019, all of our stock options outstanding were net settled stock options. Net settled stock options, as opposed to stock options exercised with a cash payment, result in fewer shares being issued and no cash proceeds being received by us when the options are exercised.



Stock Options and Restricted Share Units
As of December 31, 2019, unless otherwise stated (in millions, except per share data)	Stock Options		RSUs
Awards granted during 2019	42		17
Weighted-average exercise price of awards granted during 2019	$	40.50
Stock options outstanding and nonvested RSUs	192		51
Weighted-average exercise price of stock options outstanding	$	31.84
Weighted-average fair value at grant date of nonvested RSUs			$	36.54

The cost associated with our share-based compensation is based on an award’s estimated fair value at the date of grant and is recognized over the period in which any related services are provided. RSUs are valued based on the closing price of our common stock on the date of grant and are discounted for the lack of dividends, if any, during the vesting period. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards.

The table below presents the weighted-average fair value on the date of grant of RSUs and stock options awarded under our various plans and the related weighted-average valuation assumptions.



Year ended December 31	2019			2018			2017
RSUs fair value	$	40.42		$	35.56		$	37.77
Stock options fair value	$	7.91		$	7.14		$	7.01
Stock Option Valuation Assumptions:
Dividend yield	2.1		%	2.1		%	1.7		%
Expected volatility	22.0		%	22.0		%	20.1		%
Risk-free interest rate	2.5		%	2.7		%	2.2		%
Expected option life (in years)	6.0			6.0			6.1

As of December 31, 2019, we had unrecognized pretax compensation expense of $1.1 billion related to nonvested RSUs and unrecognized pretax compensation expense of $493 million related to nonvested stock options that will be recognized over a weighted-average period of approximately 1.5 years and 1.7 years, respectively. In 2019, 2018, and 2017, we recognized $196 million, $75 million and $297 million, respectively, as a reduction to income tax expense as a result of excess tax benefits associated with our share-based compensation plans.