Share-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

We have a stockholder-approved stock incentive plan, the 2008 Stock Incentive Plan (Amended and Restated as of April 17, 2013) (Plan) which provides for the granting of options, restricted stock awards (RSUs), stock appreciation rights, performance awards (PSUs) and other share-based awards to our employees and officers.  The Management Compensation and Development Committee of the Board of Directors (Compensation Committee) may determine the type, amount and terms, including vesting, of any awards made under the Plan.

On June 12, 2013, our stockholders approved an amendment and restatement of the Plan, which included the following key modifications: adoption of an aggregate share reserve of 104,981,641 shares of Common Stock, which includes 9,000,000 new shares of Common Stock; increase in the maximum payment to an eligible employee under a cash-based performance award from $4.0 million to $6.0 million; and extension of the term of the plan through April 17, 2023.

The following table summarizes the components of share-based compensation expense in the Consolidated Statements of Income for the three- and nine-month periods ended September 30, 2013 and 2012:

	Three-Month Periods Ended September 30,				Nine-Month Periods Ended September 30,
	2013		2012		2013		2012
Cost of goods sold (excluding amortization of acquired intangible assets)	$	6.1	$	3.3	$	12.6	$	9.2
Research and development	41.7		27.2		100.5		75.8
Selling, general and administrative	44.2		32.1		114.3		86.0
Total share-based compensation expense	92.0		62.6		227.4		171.0
Tax benefit related to share-based compensation expense	29.9		17.0		66.1		45.7
Reduction in income	$	62.1	$	45.6	$	161.3	$	125.3

Share-based compensation cost included in inventory was $1.7 million and $1.2 million at September 30, 2013 and December 31, 2012, respectively.

We utilize share-based compensation in the form of stock options, RSUs and PSUs.  The following table summarizes the activity for stock options, RSUs and PSUs for the nine-month period ended September 30, 2013 (in thousands):

	Stock Options		Restricted Stock Units		Performance- Based Restricted Stock Units
Outstanding at December 31, 2012	42,592		4,463		26
Changes during the Year:
Granted	6,639		1,517		45
Exercised / Released	(9,951	)	(832	)	(6	)
Forfeited	(863	)	(173	)	(8	)
Expired	(36	)	N/A		N/A
Outstanding at September 30, 2013	38,381		4,975		57

Total compensation cost related to nonvested awards not yet recognized and the weighted-average periods over which the awards are expected to be recognized at September 30, 2013 were as follows (dollars in millions):

	Stock Options		Restricted Stock Units		Performance- Based Restricted Stock Units
Unrecognized compensation cost	$	369.7	$	243.6	$	4.4
Expected weighted-average period in years of compensation cost to be recognized	2.2		1.6		1.8