Amgen 2011 Annual Report Download - page 137

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Stock-based compensation
Our 2009 Equity Incentive Plan (the 2009 Plan) provides for the grant of equity-based awards, including
stock options, RSUs and performance units, to employees and consultants of Amgen, its subsidiaries and
non-employee members of our Board of Directors. The 2009 Plan, which was approved by our stockholders on
May 6, 2009, replaced our prior equity plans (the Prior Plans) and no further awards may be made under these
Prior Plans. The 2009 Plan authorizes the issuance of 100 million shares of our common stock. Under the terms
of the 2009 Plan, the pool of available shares that may be used for all types of awards, including those issued
under our Prior Plans after December 31, 2008, and before May 6, 2009 (the stub period), is reduced by one
share for each stock option granted and by 1.9 shares for other types of awards granted, including RSUs and
performance units. If any shares subject to an award granted under our Prior Plans during the stub period or any
awards granted under the 2009 Plan expire, or are forfeited, terminated or cancelled without the issuance of
shares, the shares subject to such awards are added back to the pool of available shares under the 2009 Plan on
the same basis that they were removed. As of December 31, 2011, the 2009 Plan provides for future grants and/or
issuances of up to approximately 58 million shares of our common stock. Stock-based awards under our
employee compensation plans are made with newly issued shares reserved for this purpose.
The following table reflects the components of stock-based compensation expense recognized in our
Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009 (in millions):
2011 2010 2009
Stock options ............................................................ $ 85 $124 $115
Restricted stock units ...................................................... 188 182 134
Performance units ......................................................... 68 47 35
Total stock-based compensation expense, pre-tax .............................. 341 353 284
Tax benefit from stock-based compensation expense ............................. (124) (120) (97)
Total stock-based compensation expense, net of tax ............................ $217 $233 $187
Employee stock options and restricted stock units
Eligible employees generally receive a grant of stock options and/or RSUs annually with the size and type
of award generally determined by the employee’s salary grade and performance level. In addition, certain
management and professional level employees typically receive RSU grants upon commencement of
employment. Our stock option and RSU grants provide for accelerated or continued vesting in certain
circumstances as defined in the plans and related grant agreements, including upon death, disability, a change in
control, termination in connection with a change in control and retirement of employees who meet certain service
and/or age requirements. Stock options and RSUs granted prior to April 25, 2011, generally vest in equal
amounts on each of the first four anniversaries of the grant date. Stock options and RSUs granted on and after
April 25, 2011, generally vest in approximately equal amounts on the second, third and fourth anniversaries of
the grant date.
Stock options
The exercise price for stock options is set at the closing price of our common stock on the date of grant and
the related number of shares granted is fixed at that point in time. Awards granted to employees on and after
April 26, 2010, expire 10 years from the date of grant; options granted to employees prior to that date expire
seven years from the date of grant.
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