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## PART II NOTE 14 Share-Based Compensation 

At December 31, 2010 and 2009, there were restricted stock units representing an aggregate of 41,374 shares and 35,828 shares of common stock, respectively, credited to the directors’ accounts. 

## Stock Compensation 

We recognized a total of $14.7 million ($9.1 million after-tax), $11.2 million ($6.9 million after-tax) and $10.6 million ($6.6 million after-tax) in share-based compensation expense during the years ended December 31, 2010, 2009 and 2008, respectively. This expense is classified as selling, general and administrative in our consolidated statements of income. 

We received $18.1 million, $10.2 million and $13.1 million in cash related to stock option exercises for the years ended December 31, 2010, 2009 and 2008, respectively. The shares used for the exercise of stock options occurring during the years ended December 31, 2010, 2009 and 2008 came from treasury shares. 

For tax purposes, share-based compensation expense is deductible in the year of exercise or vesting based on the intrinsic value of the award on the date of exercise or vesting. For fi nancial reporting purposes, share-based compensation expense is based upon grant-date fair value and amortized over the vesting period. Excess tax benefits represent the difference between the share-based compensation expense for fi nancial reporting purposes and the deduction taken for tax purposes. Th  ese excess tax benefits cannot be reported in our fi nancial statements while a net operating loss exists. From the adoption of share-based compensation accounting in 2006 through March 31, 2010 we did 

not recognize any excess tax benefits in our consolidated balance sheets from the exercise of stock options and the vesting of restricted awards, due to our U.S. net operating loss carryforward position. 

During the second and third quarter of 2010 we utilized the remaining U.S. financial net operating losses as we generated U.S. income during 2010 suffi cient to absorb the remaining unrecognized excess tax benefi ts. As a result, we recognized all of the excess tax benefi ts from the exercise of stock options and the vesting of restricted stock awards from 2006 through 2009 as well as the excess tax benefi ts generated during the period from January 1, 2010 through December 31, 2010. As of December 31, 2010, we recognized $56.3 million of excess tax benefits, of which $44 million related to years 2006 through 2009, on our consolidated balance sheet as a component of equity. Th  is amount is also included as a financing activity in our consolidated statements of cash flows for the year ended December 31, 2010. 

## Stock Options 

The grant-date fair values of the stock options we granted in the years ended December 31, 2010, 2009 and 2008 were estimated using the Black-Scholes option valuation model, the key assumptions for which are listed in the table below. The expected volatility assumption is based on the actual historical experience of our common stock. Th  e expected life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury securities with terms equal to the expected timing of stock option exercises as of the grant date. The dividend yield assumption refl ects our announcement of the payment of a dividend on our common stock. 

## BLACK SCHOLES VALUATION ASSUMPTIONS FOR 2010, 2009 AND 2008 STOCK OPTION GRANTS 

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The weighted-average grant-date fair value of options granted during the years ended December 31, 2010, 2009 and 2008 was $24.50, $18.17 and $19.53 per share, respectively. 

