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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
102
2013 Financial Report
The following table provides data related to all PPS activity:
(MILLIONS OF DOLLARS)
Year Ended December 31,
2013 2012
Total fair value of shares vested $—$—
Total compensation cost related to nonvested PPS awards not yet recognized, pre-tax $107 $33
Weighted-average period over which PPS cost is expected to be recognized (years) 2.0 2.2
E. Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management. TSRUs entitle the holders to receive a number of shares of our common stock with a
value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or
seven-year term, if and to the extent the total value is positive. The settlement price is the average closing price of Pfizer common stock during
the 20 trading days ending on the fifth or seventh anniversary of the grant as applicable; 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 or seventh anniversary of the grant but vest on the third anniversary of the grant, after which
time there is no longer a risk of forfeiture. The target number of shares is determined by reference to the fair value of share-based awards to
similar employees in the industry peer group.
We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair
value methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational and
administrative expenses, and Research and development expenses, as appropriate.
The following table provides the weighted average assumptions used in the valuation of TSRUs:
Year Ended December 31,
2013 2012 2011
Expected dividend yield(a) 3.45%4.10%4.15%
Risk-free interest rate(b) 1.03%1.15%2.51%
Expected stock price volatility(c) 19.68%23.80%25.55%
Contractual term (years) 5.98 5.97 5.95
(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.
The following table summarizes all TSRU activity during 2013:
Shares
(Thousands)
Weighted-
Average
Grant Date
Fair Value
Per Share
Weighted-
Average
Grant Price
Per Share
Nonvested, December 31, 2012 20,876 $4.55 $19.64
Granted 7,979 5.14 27.37
Vested(a) (3,819) 4.31 18.13
Forfeited (841)4.80 23.46
Nonvested, December 31, 2013(a) 24,195 $4.77 $22.30
(a) Vested and non-vested shares outstanding, but not paid as of December 31, 2013 are 34,499 with a weighted-average grant price of $20.54. The weighted-
average contractual term to settlement is 3.2 years.
The following table provides data related to all TSRU activity:
Year Ended December 31,
(MILLIONS OF DOLLARS, EXCEPT PER TSRU AMOUNTS) 2013 2012 2011
Weighted-average grant date fair value per TSRU $5.14 $4.48 $4.75
Total compensation cost related to nonvested TSRU grants not yet recognized, pre-tax $31$31$32
Weighted-average period over which TSRU cost is expected to be recognized (years) 1.6 1.7 1.7