Annual report pursuant to Section 13 and 15(d)

SHAREHOLDERS' EQUITY

v3.6.0.2
SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 13. SHAREHOLDERS' EQUITY
Preferred and Preference Stock
We are authorized to issue one million shares each of zero par value preferred and preference stock with preferred shares being senior to preference shares. We can determine the number of shares of each series, and the rights, preferences and limitations of each series. At December 31, 2016, there was no preferred or preference stock outstanding.
Common Stock
Changes in shares of common stock, treasury stock and common stock held in trust for employee benefit plans were as follows:
In millions
 
Common
Stock
 
Treasury
Stock
 
Common Stock
Held in Trust
Balance at December 31, 2013
 
222.3

 
35.6

 
1.3

Shares acquired
 
—

 
4.8

 
—

Shares issued
 
0.1

 
(0.3
)
 
(0.2
)
Other shareholder transactions
 
(0.1
)
 
—

 
—

Balance at December 31, 2014
 
222.3

 
40.1

 
1.1

Shares acquired
 
—

 
7.2

 
—

Shares issued
 
0.1

 
(0.1
)
 
(0.2
)
Balance at December 31, 2015
 
222.4

 
47.2

 
0.9

Shares acquired
 
—

 
7.3

 
—

Shares issued
 
—

 
(0.3
)
 
(0.2
)
Balance at December 31, 2016
 
222.4

 
54.2

 
0.7


Treasury Stock
Shares of common stock repurchased by us are recorded at cost as treasury stock and result in a reduction of shareholders' equity in our Consolidated Balance Sheets. Treasury shares may be reissued as part of our stock-based compensation programs. When shares are reissued, we use the weighted-average cost method for determining cost. The gains between the cost of the shares and the issuance price are added to additional paid-in-capital. The losses are deducted from additional paid-in capital to the extent of the gains. Thereafter, the losses are deducted from retained earnings. Treasury stock activity for the three-year period ended December 31, 2016, consisting of shares issued and repurchased is presented in our Consolidated Statements of Changes in Equity.
In December 2016, our Board of Directors authorized the acquisition of up to $1 billion of additional common stock upon completion of the 2015 repurchase plan. In November 2015, the Board of Directors authorized the acquisition of up to $1 billion of additional common stock upon completion of the 2014 repurchase program. In 2016, we made the following purchases under the respective purchase programs:
In millions (except per share amounts)
For each quarter ended
 
2016 Shares Purchased
 
Average Cost
Per Share
 
Total Cost of
Repurchases
 
Cash Paid for Shares Not Received
 
Remaining
Authorized
Capacity (1)
July 2014, $1 billion repurchase program
 
 
 
 
 
 
 
 
 
 
April 3
 
2.7

 
$
100.12

 
$
274

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
November 2015, $1 billion repurchase program
 
 
 
 
 
 
 
 
 
 
April 3
 
2.2

 
$
105.50

 
$
229

 
$
100

 
$
671

July 3
 
1.8

 
109.79

 
192

 
(100
)
 
579

October 2
 
0.4

 
126.13

 
50

 
—

 
529

December 31
 
0.2

 
130.70

 
33

 
—

 
496

Subtotal
 
4.6

 
110.29

 
504

 
—

 


Total
 
7.3

 
$
106.48

 
$
778

 
$
—

 



___________________________________________
(1) The remaining authorized capacity under the 2015 Plan was calculated based on the cost to purchase the shares but excludes commission expenses in accordance with the authorized Plan.  
In 2016, we entered into an accelerated share repurchase agreement with a third party financial institution to repurchase $500 million of our common stock under our previously announced share repurchase plans and received 4.7 million shares at an average purchase price of $105.50 per share.
We repurchased $778 million and $900 million of our common stock in the years ended December 31, 2016 and 2015, respectively.
Quarterly Dividends
Total dividends paid to common shareholders in 2016, 2015 and 2014 were $676 million, $622 million and $512 million, respectively. Declaration and payment of dividends in the future depends upon our income and liquidity position, among other factors, and is subject to declaration by our Board of Directors, who meet quarterly to consider our dividend payment. We expect to fund dividend payments with cash from operations.
In July 2016, the Board of Directors authorized an increase to our quarterly dividend of 5.1 percent from $0.975 per share to $1.025. In July 2015, the Board of Directors authorized a 25 percent increase to our quarterly cash dividend on our common stock from $0.78 per share to $0.975 per share. In July 2014, the Board of Directors approved a 25 percent increase to our quarterly dividend on our common stock from $0.625 per share to $0.78 per share. Cash dividends per share paid to common shareholders for the last three years were as follows:
 
 
Quarterly Dividends
 
 
2016
 
2015
 
2014
First quarter
 
$
0.975

 
$
0.78

 
$
0.625

Second quarter
 
0.975

 
0.78

 
0.625

Third quarter
 
1.025

 
0.975

 
0.78

Fourth quarter
 
1.025

 
0.975

 
0.78

Total
 
$
4.00

 
$
3.51

 
$
2.81


Employee Benefits Trust
In 1997, we established the Employee Benefits Trust (EBT) funded with common stock for use in meeting our future obligations under employee benefit and compensation plans. The primary sources of cash for the EBT are dividends received on unallocated shares of our common stock held by the EBT. The EBT may be used to fund matching contributions to employee accounts in the 401(k) Retirement Savings Plan (RSP) made in proportion to employee contributions under the terms of the RSP. In addition, we may direct the trustee to sell shares of the EBT on the open market to fund other non-qualified employee benefit plans. Matching contributions charged to income for the years ended December 31, 2016, 2015 and 2014 were $23 million, $25 million and $24 million, respectively.