Amgen 2012 Annual Report Download - page 116

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F-17
average expected dividend yield of 2.0% over the weighted-average vesting period, discounted at a weighted-average risk-free
interest rate of 1.0%. The weighted-average grant date fair values of RSUs granted in 2012, 2011 and 2010 were $72.99, $51.83
and $58.19, respectively. The following summarizes select information regarding our RSUs during the year ended December 31,
2012:
Units
(in millions)
Weighted-average
grant date
fair value
Balance nonvested at December 31, 2011 9.0 $ 52.64
Granted 3.9 $ 72.99
Vested (2.8) $ 50.64
Forfeited (0.7) $ 58.38
Balance nonvested at December 31, 2012 9.4 $ 61.14
The total fair values of shares associated with RSUs that vested during the years ended December 31, 2012, 2011 and 2010,
were $139 million, $176 million and $184 million, respectively.
As of December 31, 2012, there was approximately $388 million of unrecognized compensation costs related to nonvested
stock option and RSU awards, which is expected to be recognized over a weighted-average period of 1.7 years.
Performance units
Certain management-level employees also receive annual grants of performance units, which give the recipient the right to
receive common stock that is contingent upon achievement of specified pre-established goals over the performance period, which
is generally three years. The performance goals for the units granted in 2012, 2011 and 2010, which are accounted for as equity
awards, are based upon Amgen’ s stockholder return compared with a comparator group of companies, which are considered market
conditions and are reflected in the grant date fair value of the units, and for units granted in 2010, Amgen’s standalone financial
performance, which are considered performance conditions. The expense recognized for the awards granted in 2012 and 2011 is
based on the grant date fair value of a unit multiplied by the number of units granted, net of estimated forfeitures. The expense
recognized for the awards granted in 2010 was based on the grant date fair value of a unit multiplied by the number of units
expected to be earned with respect to the performance conditions, net of estimated forfeitures. Depending on the outcome of these
performance goals, a recipient may ultimately earn a number of units greater or less than the number of units granted. Shares of
our common stock are issued on a one-for-one basis for each performance unit earned. In general, participants vest in their
performance unit awards at the end of the performance period. The performance award program provides for accelerated or
continued vesting in certain circumstances as defined in the plan, including upon death, disability, a change in control and retirement
of employees who meet certain service and/or age requirements. Performance units granted in 2012 and later accrue dividend
equivalents which are typically payable in shares only when and to the extent the underlying performance units vest and are issued
to the recipient, including with respect to market conditions that affect the number of performance units earned.
We used payout simulation models to estimate the grant date fair value of performance units granted in 2012, 2011 and
2010. The weighted-average assumptions used in these models and the resulting weighted-average grant date fair values of our
performance units were as follows for the years ended December 31, 2012, 2011 and 2010:
2012 2011 2010
Closing price of our common stock on grant date $ 68.75 $ 51.67 $ 56.90
Volatility 22.9% 32.8% 34.7%
Risk-free interest rate 0.5% 1.2% 1.3%
Expected dividend yield 2.2% 0.1% 0%
Fair value of unit $ 78.21 $ 49.50 $ 62.06
The payout simulation models also assumed correlations of returns of the stock prices of our common stock and the common
stocks of the comparator groups of companies and stock price volatilities of the comparator groups of companies.
As of December 31, 2012 and 2011, a total of 5.8 million and 4.1 million performance units were outstanding with weighted-
average grant date fair values of $65.15 and $51.92 per unit, respectively. During the year ended December 31, 2012, 2.9 million
performance units with a weighted-average grant date fair value of $78.21 were granted, 1.2 million performance units with a