Pfizer 2010 Annual Report Download - page 99

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
price of Pfizer common stock during the 20 trading days ending on the fifth anniversary of the grant; the grant price is the closing
price of Pfizer common stock on the date of the grant.
The TSRUs are automatically settled on the fifth anniversary of the grant but vest on the third anniversary of the grant, after which
time there no longer is a risk of forfeiture, other than a loss or recapture due to a violation by the holder of the restrictive covenants
set forth in the TSRU grant documents. TSRUs are accounted for using a fair-value-based method at the date of grant in the
consolidated statements of income and generally are amortized on an even basis over the vesting term into Cost of sales, Selling,
informational and administrative expenses and Research and development expenses, as appropriate.
The fair-value-based method for valuing the TSRUs uses the Monte Carlo simulation model. The model incorporates a number of
valuation assumptions noted in the following table, shown at their weighted-average values:
TSRUs
2010
TSRUs
2009
Expected dividend yield(a) 3.99% 4.55%
Risk-free interest rate(b) 2.34% 2.35%
Expected stock price volatility(c) 26.76% 36.92%
Expected term(d) (years) 5.00 5.00
(a) Determined using a constant dividend yield during the expected term of the TSRU.
(b) Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
(c) Determined using implied volatility, after consideration of historical volatility.
(d) Determined using the contractual term.
The following summarizes all TSRU activity during 2010:
SHARES
(THOUSANDS)
WEIGHTED-
AVERAGE
GRANT
DATE
VALUE PER
SHARE
Nonvested, December 31, 2009 8,681 $17.04
Granted 5,104 17.67
Vested (78) 16.60
Forfeited (1,070) 16.96
Nonvested, December 31, 2010 12,637 17.30
The following table provides data related to all TSRU activity:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS, EXCEPT PER TSRU AMOUNTS AND YEARS) 2010 2009
Weighted-average grant date fair value per TSRU $4.25 $4.26
Total compensation cost related to nonvested TSRU grants not yet recognized, pre-tax $18 $23
Weighted-average period in years over which TSRU cost is expected to be recognized 1.5 2.1
2010 Financial Report 97