Amgen 2012 Annual Report Download - page 114

F-15
The estimated incremental R&D costs to be incurred to obtain necessary regulatory approvals for the IPR&D projects in the
acquisitions discussed above, including AMG 416, blinatumomab and talimogene laherparepvec, are individually immaterial in
any given year. The major risks and uncertainties associated with the timely and successful completion of development and
commercialization of these product candidates include our ability to confirm their safety and efficacy based on data from clinical
trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted
costs. We are not able to market a human therapeutic without obtaining regulatory approvals, and such approvals require completing
clinical trials that demonstrate a product candidate is safe and effective. Consequently, the eventual realized value, if any, of these
acquired IPR&D projects may vary from their estimated fair values at the dates of acquisition.
The preliminary fair value estimates of assets acquired and liabilities assumed with respect to the acquisitions of deCODE,
KAI, and MN were based on preliminary calculations and valuations. Our estimates and assumptions for each of these acquisitions,
particularly with respect to identifiable intangible assets acquired and tax-related items, are subject to change as we obtain additional
information for our estimates during the respective measurement periods (up to one year from the respective acquisition dates).
The operations of each of the acquired businesses discussed above were not material individually or in the aggregate to our
consolidated financial statements. Pro forma supplemental consolidated results of operations for the years ended December 31,
2012, 2011 and 2010, that assumes the acquisitions of the businesses discussed above all occurred on January 1 of the year prior
to the year of acquisition are not provided because the impact would not be material to our consolidated results of operations either
individually or in the aggregate.
3. Stock-based compensation
Our 2009 Equity Incentive Plan (the 2009 Plan) authorizes the issuance of 100 million shares of our common stock through
grants of equity-based awards, including RSUs, stock options 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. 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, 2012, the 2009 Plan provides for future
grants and/or issuances of up to approximately 48 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, 2012, 2011 and 2010 (in millions):
2012 2011 2010
Stock options $ 59 $ 85 $ 124
RSUs 186 188 182
Performance units 117 68 47
Total stock-based compensation expense, pretax 362 341 353
Tax benefit from stock-based compensation expense (134)(124)(120)
Total stock-based compensation expense, net of tax $ 228 $ 217 $ 233
Restricted stock units and stock options
Eligible employees generally receive a grant of 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. Prior to 2012, eligible employees also received a grant of stock options annually.
Prior to February 2013, non-employee members of our Board of Directors (outside directors) received a grant of RSUs and stock
options annually and received a grant of stock options in connection with their appointment to the Board of Directors. Beginning
in April 2013, outside directors will receive only annual grants of RSUs.
Our RSU and stock option 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