Amgen 2013 Annual Report Download - page 91

Results of operations from acquired companies have been included in our consolidated financial statements as of the acquisition date. The goodwill
valued in these acquisitions, excluding Bergamo, is non-deductible for tax purposes.
Filgrastim and pegfilgrastim rights acquisition
In October 2013, we entered into an agreement to acquire the licenses to filgrastim and pegfilgrastim effective January 1, 2014, that were held by F.
Hoffmann-La Roche Ltd. (“Roche”) in approximately 100 markets in Eastern Europe, Latin America, Asia, the Middle East and Africa, for total cash
consideration of $479 million. This transaction will be accounted for as a business combination as the acquired rights and processes are capable of producing
an immediate return to us. We are currently in the process of valuing the assets acquired and liabilities assumed in the business combination.
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On May 22, 2013, our stockholders approved our Amended and Restated 2009 Equity Incentive Plan (the Amended 2009 Plan), which amended and
restated our 2009 Equity Incentive Plan (the 2009 Plan) and increased the number of shares of our common stock authorized for issuance pursuant to equity-
based awards under the 2009 Plan to approximately 104 million shares (plus any additional shares that are added back into the authorized pool as described
below). Like the 2009 Plan, the Amended 2009 Plan provides for 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 replaced our prior equity plans
(the Prior Plans), and no further awards may be made under these Prior Plans. Consistent with the 2009 Plan, the pool of shares available under the Amended
2009 Plan 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
(full-value awards). Generally, if any shares subject to an award granted under the Amended 2009 Plan expire, or are forfeited, terminated or cancelled without
the issuance of shares, the shares subject to such awards are added back into the authorized pool on the same basis that they were removed. In addition, under
the Amended 2009 Plan, shares withheld to pay for minimum statutory tax obligations with respect to full value awards will be added back into the authorized
pool on the basis of 1.9 shares. As of December 31, 2013, the Amended 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, 2013, 2012 and 2011 (in millions):
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RSUs $ 206
$186
$ 188
Performance units 163
117
68
Stock options 34
59
85
Total stock-based compensation expense, pretax 403
362
341
Tax benefit from stock-based compensation expense (149)
(134)
(124)
Total stock-based compensation expense, net of tax $ 254
$ 228
$ 217
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 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 in control and the retirement of employees who meet
certain service and/or age requirements. RSUs and stock options 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. RSUs granted on and after April 27, 2012, accrue dividend equivalents which are typically payable in shares
only when and to the extent the underlying RSUs vest and are issued to the recipient.
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