Masco corporation

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

M. EMPLOYEE RETIREMENT PLANS (Concluded)

The fair value of our plan assets is subject to risk including significant concentrations of risk in our plan assets related to equity, interest rate and operating risk. In order to ensure plan assets are sufficient to pay benefits, a portion of plan assets is allocated to equity investments that are expected, over time, to earn higher returns with more volatility than fixed-income investments which more closely match pension liabilities. Within equity, risk is mitigated by targeting a portfolio that is broadly diversified by geography, market capitalization, manager mandate size, investment style and process.

In order to minimize asset volatility relative to the liabilities, a portion of plan assets are allocated to fixed-income investments that are exposed to interest rate risk. Rate increases generally will result in a decline in fixed-income assets, while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities.

Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks. To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing manager oversight, plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance and audit reviews to ensure adherence to these policies. In addition, we periodically seek the input of our independent advisor to ensure the investment policy is appropriate.

Other.     We sponsor certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents in the United States based upon age and length of service. Substantially all of these plans were frozen several years ago. The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $9 million and $10 million at December 31, 2016 and 2015 , respectively.

Cash Flows.     At December 31, 2016 , we expect to contribute approximately $45 million to our domestic qualified defined-benefit pension plans in 2017 , which will exceed ERISA requirements. We also expect to contribute $7 million and $12 million to our foreign and non-qualified (domestic) defined-benefit pension plans, respectively, in 2017 .

At December 31, 2016 , the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions:

	Qualified Plans				Non-Qualified Plans
2017	$	49			$	12
2018	$	50			$	12
2019	$	50			$	12
2020	$	52			$	12
2021	$	52			$	12
2022 - 2026	$	272			$	58

N. SHAREHOLDERS' EQUITY

On September 30, 2014 , we announced that our Board of Directors authorized the repurchase of up to 50 million shares for retirement of our common stock in open-market transactions or otherwise, replacing the previous Board of Directors authorization established in 2007. At December 31, 2016 , we have 12.9 million shares remaining under the authorization.

During 2016 , we repurchased and retired 14.9 million shares of our common stock for cash aggregating $459 million (including 1.1 million shares to offset the dilutive impact of long-term stock awards granted in 2016 ). During 2015 , we repurchased and retired 17.2 million shares of our common stock for cash aggregating $456 million (including 741 thousand shares to offset the dilutive impact of long-term stock awards granted in 2015 ). During 2014 , we repurchased and retired 6.7 million shares of our common stock for cash aggregating $158 million (including 1.7 million shares to offset the dilutive impact of long-term stock awards granted in 2014 ).

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MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

N. SHAREHOLDERS' EQUITY (Concluded)

On June 30, 2015, we completed the spin off of Top Build as an independent publicly traded company. As a result of the separation, our retained earnings decreased by $828 million in 2015.

On the basis of amounts paid (declared), cash dividends per common share were $0.385 ( $0.390 ) in 2016 , $0.365 ( $0.370 ) in 2015 and $0.330 ( $0.345 ) in 2014 .

Accumulated Other Comprehensive Loss.     The components of accumulated other comprehensive loss attributable to Masco Corporation were as follows, in millions:

	At December 31
	2016				2015
Cumulative translation adjustments, net	$	177			$	245
Unrealized loss on available-for-sale securities, net	—				(12		)
Unrealized loss on interest rate swaps, net	(15		)		(16		)
Unrecognized net loss and prior service cost, net	(397		)		(382		)
Accumulated other comprehensive loss	$	(235	)		$	(165	)

The cumulative translation adjustment, net, is reported net of income tax benefit of $2 million at both December 31, 2016 and 2015 . The unrealized loss on available-for-sale securities, net, is reported net of income tax expense of $14 million at December 31, 2015. The $14 million of income tax expense was recognized into our consolidated statement of operations during 2016. Refer to Note S to the consolidated financial statements for additional information. The unrealized loss on interest rate swaps, net, is reported net of income tax expense of $2 million at both December 31, 2016 and 2015 . The unrecognized net loss and prior service cost, net, is reported net of income tax benefit of $164 million and $186 million at December 31, 2016 and 2015 , respectively.

O. RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS)

The reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations were as follows, in millions:

Accumulated Other Comprehensive Income (Loss)		2016				2015				2014				Statement of Operations Line Item
Amortization of defined benefit pension and other postretirement benefits:
Actuarial losses, net		$	19			$	21			$	13			Selling, general and administrative expenses
Tax (benefit)		(7		)		(8		)		(5		)
Net of tax		$	12			$	13			$	8
Interest rate swaps		$	2			$	2			$	2			Interest expense
Tax (benefit)		(1		)		—				(1		)
Net of tax		$	1			$	2			$	1
Available-for-sale securities		$	(3	)		$	—			$	—			Other, net
Tax expense		15				—				—
Net of tax		$	12			$	—			$	—