Pfizer 2013 Annual Report Download - page 102

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2013 Financial Report 101
The following table summarizes all stock option activity during 2013:
Shares
(Thousands)
Weighted-
Average
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic
Value(a)
(Millions)
Outstanding, December 31, 2012 382,955 $ 24.00
Granted 45,013 27.37
Exercised (80,132) 21.86
Forfeited (5,904) 21.93
Expired (42,279) 29.62
Outstanding, December 31, 2013(b) 299,653 $ 24.33 5.3 $ 2,166
Vested and expected to vest(c), December 31, 2013 293,371 24.32 5.2 2,129
Exercisable, December 31, 2013 163,061 $ 26.06 2.9 $ 1,023
(a) Market price of underlying Pfizer common stock less exercise price.
(b) Includes approximately 42 million stock options which expired on February 25, 2014 at a grant price of $37.15, which were granted under the 2001 Stock Plan.
These options will not be added back into the amount available for grants under the 2004 Stock Plan. However, expired or forfeited share-based payments under
the 2004 Stock Plan will be added back to the amount available for grants.
(c) The number of options expected to vest takes into account an estimate of expected forfeitures.
The following table summarizes data related to all stock option activity:
Year Ended December 31,
(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS) 2013 2012 2011
Weighted-average grant date fair value per stock option $3.13 $2.79 $3.15
Aggregate intrinsic value on exercise $578 $263 $32
Cash received upon exercise $1,750 $568 $153
Tax benefits realized related to exercise $160 $81$10
Total compensation cost related to nonvested stock options not yet recognized, pre-tax $120 $148 $177
Weighted-average period over which stock option compensation cost is expected to be recognized
(years) 1.7 1.7 1.8
D. Portfolio Performance Shares (PPSs)
Beginning in 2012, we have awarded PPSs to select employees which, when vested, entitle the holder to receive, at the end of the performance
period, a number of shares within a possible range of shares of Pfizer common stock, including shares resulting from dividend equivalents paid
on such shares. For PPSs granted during the period presented, the awards vest after three years of continuous service from the grant date and
the number of shares paid, if any, depends on the achievement of predetermined goals related to Pfizer's long-term product portfolio during a
five-year performance period from the year of the grant date. The target number of shares is determined by reference to competitive survey
data. The number of shares that are earned over the performance period ranges from 0% to 200% of the initial award.
We measure the value of PPS grants as of the grant date using the intrinsic value method, for which we use the closing price of Pfizer common
stock. The values are amortized on a straight-line basis over the probable vesting term into Cost of sales, Selling, informational and
administrative expenses and Research and development expenses, as appropriate, and adjusted each reporting period, as necessary, to reflect
changes in the price of Pfizer's common stock, changes in the number of shares that are probable of being earned and changes in
management's assessment of the probability that the specified performance criteria will be achieved and/or changes in management's
assessment of the probable vesting term.
The following table summarizes all PPS activity during 2013, with the shares representing the maximum award that could be achieved:
Shares
(Thousands)
Weighted-
Average
Intrinsic Value
Per Share
Nonvested, December 31, 2012 3,742 $25.08
Granted 8,138 27.37
Vested(a) (13)28.75
Forfeited (543)28.91
Nonvested, December 31, 2013(a) 11,324 $30.63
(a) Vested and non-vested shares outstanding, but not paid as of December 31, 2013 are 11,324.