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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
126
The tables below summarize RSU and PSU activity under the Plans during the years ended December 31, 2013, 2012 and 2011.
RSUs
2013 2012 2011
Weighted-
Average
Grant Price
Number
of Units
Weighted-
Average
Grant Price
Number
of Units
Weighted-
Average
Grant Price
Number
of Units
Balance at January 1 $148 9,841,461 $129 12,218,601 $110 11,196,446
RSUs granted 189 2,541,081 184 2,635,772 154 5,196,802
RSUs released 131 (2,952,363) 117 (4,338,787)106 (3,508,700)
RSUs canceled/forfeited 154 (794,862) 139 (674,125)122 (665,947)
Balance at December 31 $166 8,635,317 $148 9,841,461 $129 12,218,601
PSUs
2013 2012 2011
Weighted-
Average
Grant Price
Number
of Units
Weighted-
Average
Grant Price
Number
of Units
Weighted-
Average
Grant Price
Number
of Units
Balance at January 1 $151 3,172,201 $122 3,686,991 $111 3,649,288
PSUs granted at target 195 869,875 185 1,004,003 154 1,055,687
Additional shares earned above target* 118 152,069 102 550,399 118 230,524
PSUs released 118 (1,321,784) 102 (1,998,746)118 (1,189,765)
PSUs canceled/forfeited 170 (48,067) 131 (70,446)118 (58,743)
Balance at December 31** $178 2,824,294 $151 3,172,201 $122 3,686,991
* Represents additional shares issued to employees after vesting of PSUs because final performance metrics exceeded specified targets.
**
Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued depends on the company’s
performance against specified targets over the vesting period.
RSUs are stock awards granted to employees that entitle the holder
to shares of common stock as the award vests, typically over a
one- to five-year period. For RSUs, dividend equivalents are not
paid. The fair value of such RSUs is determined and fixed on the
grant date based on the company’s stock price adjusted for the
exclusion of dividend equivalents.
The remaining weighted-average contractual term of RSUs at
December 31, 2013, 2012 and 2011 is the same as the period over
which the remaining cost of the awards will be recognized, which
is approximately three years. The fair value of RSUs granted during
the years ended December 31, 2013, 2012 and 2011 was $481 million,
$486 million and $803 million, respectively. The total fair value of
RSUs vested and released during the years ended December 31,
2013, 2012 and 2011 was $386 million, $509 million and $373 mil-
lion, respectively. As of December 31, 2013, 2012 and 2011, there
was $871 million, $938 million and $1,021 million, respectively, of
unrecognized compensation cost related to non-vested RSUs. The
company received no cash from employees as a result of employee
vesting and release of RSUs for the years ended December 31,
2013, 2012 and 2011. In the second quarter of 2011, the company
granted equity awards valued at approximately $1 thousand each
to about 400,000 non-executive employees. These awards were
made under the Plans and vest in December 2015.
PSUs are stock awards where the number of shares ultimately
received by the employee depends on the company’s performance
against specified targets and typically vest over a three-year period.
For PSUs, dividend equivalents are not paid. The fair value of each
PSU is determined on the grant date, based on the company’s stock
price, adjusted for the exclusion of dividend equivalents, and
assumes that performance targets will be achieved. Over the per-
formance period, the number of shares of stock that will be issued
is adjusted upward or downward based upon the probability of
achievement of performance targets. The ultimate number of shares
issued and the related compensation cost recognized as expense
will be based on a comparison of the final performance metrics to
the specified targets. The fair value of PSUs granted at target during
the years ended December 31, 2013, 2012 and 2011 was $170 mil-
lion, $186 million and $165 million, respectively. Total fair value of
PSUs vested and released during the years ended December 31,
2013, 2012 and 2011 was $156 million, $203 million and $141 million,
respectively.
In connection with vesting and release of RSUs and PSUs,
the tax benefits realized by the company for the years ended
December 31, 2013, 2012 and 2011 were $312 million, $454 million
and $283 million, respectively.