Abbott Laboratories 2015 Annual Report Download - page 48

ABBOTT 2015 ANNUAL REPORT
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
andunits comprise the majority of benefits that have been granted
and are currently outstanding under this program and a prior
program. In 2015, Abbott granted 5,577,553 stock options, 662,553
restricted stock awards and 5,940,778 restricted stock units under
this program.
The purchase price of shares under option must be at least equal
to the fair market value of the common stock on the date of grant,
and the maximum term of an option is 10years. Options generally
vest equally over three years. Restricted stock awards generally
vest between 3 and 5years and for restricted stock awards that
vest over 5years, no more than one-third of the award vests in any
one year upon Abbott reaching a minimum return on equity target.
Restricted stock units vest over three years and upon vesting, the
recipient receives one share of Abbott stock for each vested
restricted stock unit. The aggregate fair market value of restricted
stock awards and units is recognized as expense over the requisite
service period, which may be shorter than the vesting period if an
employee is retirement eligible. Restricted stock awards and settle-
ment of vested restricted stock units are issued out of treasury
shares. Abbott generally issues new shares for exercises of stock
options. As a policy, Abbott does not purchase its shares relating
toits share-based programs.
In connection with the separation of AbbVie on January 1, 2013,
Abbott modified its outstanding equity awards granted under
incentive stock programs for its employees. The awards were
generally modified such that immediately following the separation;
the awardees held the same number of awards in Abbott stock and
an equal number of awards in AbbVie stock. The exercise price on
outstanding Abbott options was adjusted and the exercise price
onthe AbbVie options granted under this modification was estab-
lished with the intention of generally preserving the value of the
awards immediately prior to the separation. This modification
didnot result in additional compensation expense.
At December 31, 2015, approximately 87million shares were
reserved for future grants.
The number of restricted stock awards and units outstanding and
the weighted-average grant-date fair value at December31, 2015
and December 31, 2014 was 11,855,327 and $42.54 and 12,671,328
and $35.48, respectively. The number of restricted stock awards
and units, and the weighted-average grant-date fair value, that
were granted, vested and lapsed during 2015 were 6,603,331 and
$46.94, 6,693,743 and $33.72 and 725,589 and $40.77, respectively.
The fair market value of restricted stock awards and units vested
in 2015, 2014 and 2013 was $312million, $281million and
$274million, respectively.
depreciation. The following summarizes the activity related to
these restructurings:
(inmillions)
Restructuring charges recorded in 2012 $«167
Restructuring charges recorded in 2013 78
Payments and other adjustments (97)
Accrued balance at December 31, 2013 148
Restructuring charges 125
Payments and other adjustments (138)
Accrued balance at December 31, 2014 135
Restructuring charges 66
Payments and other adjustments (113)
Accrued balance at December 31, 2015 $÷«88
In 2013 and prior years, Abbott management approved plans to
streamline global manufacturing operations, reduce overall costs
and improve eciencies in its worldwide pharmaceutical, vascular
and core diagnostics businesses as well as selected domestic and
international commercial and research and development opera-
tions. Abbott recorded charges for employee severance as well as
for the impairment of manufacturing facilities and other assets.
In2013 Abbott recorded employee severance charges of approxi-
mately $11million which was classified as cost of products sold.
An additional $41million was recorded in 2013 relating to these
restructurings, primarily for accelerated depreciation. The follow-
ing summarizes the activity related to these restructurings:
(inmillions)
Accrued balance at December 31, 2011 $256
Payments, impairments and other adjustments (71)
Accrued balance at December 31, 2012 185
Transfer of liability to AbbVie (62)
Restructuring charges 11
Payments and other adjustments (73)
Accrued balance at December 31, 2013 61
Payments and other adjustments (22)
Accrued balance at December 31, 2014 39
Payments and other adjustments (28)
Accrued balance at December 31, 2015 $÷11
NOTE9—INCENTIVE STOCK PROGRAM
The 2009 Incentive Stock Program authorizes the granting of
nonqualified stock options, restricted stock awards, restricted
stock units, performance awards, foreign benefits and other
share-based awards. Stock options and restricted stock awards
Options Outstanding Exercisable Options
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Life (Years) Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Life (Years)
December 31, 2014 36,796,700 $27.83 4.1 29,276,499 $25.60 3.0
Granted 5,577,553 47.16
Exercised (7,557,745) 24.68
Lapsed (253,951) 36.19
December31, 2015 34,562,557 $31.57 4.5 25,119,505 $27.18 3.0