Pfizer 2008 Annual Report Download - page 81

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Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
The following table provides data related to all stock option activity:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS AND YEARS) 2008 2007 2006
Weighted-average grant date fair value per stock option $3.30 $4.11 $5.42
Aggregate intrinsic value on exercise $9 $ 173 $ 380
Cash received upon exercise $29 $ 532 $ 622
Tax benefits realized related to exercise $3 $ 54 $ 114
Total compensation cost related to nonvested stock options not yet recognized,
pre-tax $ 159 $ 216 $ 330
Weighted-average period in years over which stock option compensation cost is
expected to be recognized 1.1 1.2 1.1
C. Restricted Stock Units
RSUs, which entitle the holder to receive, at the end of a vesting term, a specified number of shares of Pfizer common stock,
including shares resulting from dividend equivalents paid on such RSUs, are accounted for at fair value at the date of grant. For
RSUs granted in 2008 and 2007, in virtually all instances, the units vest after three years of continuous service from the grant date
and the fair values 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. For RSUs granted in 2006, the units vest in substantially equal
portions each year over five years of continuous service and the fair value related to each year’s portion is then amortized evenly
into Cost of sales, Selling, informational and administrative expenses and Research and development expenses, as appropriate. For
certain members of senior and key management, vesting may occur after three years of continuous service.
The fair value of each RSU grant is estimated on the grant date. For RSUs granted in 2008 and 2007, the fair value is set using the
closing price of Pfizer common stock on the date of grant. For RSUs granted in 2006, the fair value is set using the average price of
Pfizer common stock on the date of grant.
The following table summarizes all RSU activity during 2008, 2007 and 2006:
SHARES
(THOUSANDS)
WEIGHTED-
AVERAGE
GRANT DATE
FAIR VALUE
PER SHARE
Nonvested, January 1, 2006 12,803 $26.89
Granted 12,734 26.15
Vested (3,573) 27.29
Reinvested dividend equivalents 700 25.42
Forfeited (2,334) 26.17
Nonvested, December 31, 2006 20,330 26.56
Granted 10,459 25.77
Vested (5,337) 27.29
Reinvested dividend equivalents 1,018 24.87
Forfeited (3,534) 26.09
Nonvested, December 31, 2007 22,936 26.37
Granted 11,454 22.35
Vested (4,559) 26.20
Reinvested dividend equivalents 1,783 19.36
Forfeited (2,650) 25.30
Nonvested, December 31, 2008 28,964 24.47
The following table provides data related to all RSU activity:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS, EXCEPT YEARS) 2008 2007 2006
Total fair value of shares vested $119 $146 $ 98
Total compensation cost related to nonvested RSU awards not yet recognized, pre-tax $257 $254 $270
Weighted-average period in years over which RSU cost is expected to be recognized 1.5 2.1 3.8
D. Performance Share Awards (PSAs) and Performance-Contingent Share Awards (PCSAs)
PSAs in 2008, 2007 and 2006, and PCSAs in earlier years, entitle the holder to receive, at the end of a vesting term, a number of
shares of our common stock, within a specified range of shares, calculated using a non-discretionary formula that measures our
performance relative to an industry peer group. PSAs are accounted for at fair value at the date of grant in the consolidated income
statement beginning with grants in 2006. Further, PSAs are generally amortized on an even basis over the vesting term into Cost of
2008 Financial Report 79