Share-Based Payments

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Share-Based Payments

Note 16: Share-Based Payments

Share-Based Compensation Expense

The following table summarizes share-based compensation expense included in our consolidated statements of income:

	For the Years Ended December 31,
(In millions)	2022		2021		2020
Research and development	$	98.5	$	89.3	$	80.0
Selling, general and administrative	175.1		169.5		131.3
Subtotal	273.6		258.8		211.3
Capitalized share-based compensation costs	(9.3)		(8.0)		(6.2)
Share-based compensation expense included in total cost and expense	264.3		250.8		205.1
Income tax effect	(49.2)		(46.7)		(33.5)
Share-based compensation expense included in net income attributable to Biogen Inc.	$	215.1	$	204.1	$	171.6

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:

	For the Years Ended December 31,
(In millions)	2022		2021		2020
Market stock units	$	13.2	$	45.6	$	40.5
Time-vested restricted stock units	202.3		159.8		142.6
Cash settled performance units	—		—		(1.7)
Performance units	—		—		(0.1)
Performance stock units settled in stock	35.0		23.9		7.9
Performance stock units settled in cash	10.1		12.2		8.6
Employee stock purchase plan	12.7		17.3		13.5
Stock options	0.3		—		—
Subtotal	273.6		258.8		211.3
Capitalized share-based compensation costs	(9.3)		(8.0)		(6.2)
Share-based compensation expense included in total cost and expense	$	264.3	$	250.8	$	205.1

As of December 31, 2022, unrecognized compensation cost related to unvested share-based compensation was approximately $290.5 million, net of estimated forfeitures. We expect to recognize the cost of these unvested awards over a weighted-average period of 2.0 years.

Share-Based Compensation Plans

We have three share-based compensation plans pursuant to which awards are currently being made: (i) the Biogen Inc. 2006 Non-Employee Directors Equity Plan (2006 Directors Plan); (ii) the Biogen Inc. 2017 Omnibus Equity Plan (2017 Omnibus Equity Plan); and (iii) the Biogen Inc. 2015 Employee Stock Purchase Plan (2015 ESPP).

Directors Plan

In May 2006 our shareholders approved the 2006 Directors Plan for share-based awards to our directors. Awards granted from the 2006 Directors Plan may include stock options, shares of restricted stock, RSUs, stock appreciation rights and other awards in such amounts and with such terms and conditions as may be determined by

a committee of our Board of Directors, subject to the provisions of the 2006 Directors Plan. We have reserved a total of 1.6 million shares of common stock for issuance under the 2006 Directors Plan. The 2006 Directors Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares reserved under the plan in a 1.5-to-1 ratio. In June 2015 our shareholders approved an amendment to extend the term of the 2006 Directors Plan until June 2025.

Omnibus Plan

In June 2017 our shareholders approved the 2017 Omnibus Equity Plan for share-based awards to our employees. Awards granted from the 2017 Omnibus Equity Plan may include stock options, shares of restricted stock, RSUs, performance shares, stock appreciation rights and other awards in such amounts and with such terms and conditions as may be determined by a committee of our Board of Directors, subject to the provisions of the 2017 Omnibus Equity Plan. Shares of common stock available for grant under the 2017 Omnibus Equity Plan consist of 8.0 million shares reserved for this purpose, plus shares of common stock that remained available for grant under the Biogen Idec Inc. 2008 Omnibus Equity Plan (2008 Omnibus Equity Plan) as of June 7, 2017, or that could again become available for grant if outstanding awards under the 2008 Omnibus Equity Plan as of June 7, 2017, are cancelled, surrendered or terminated in whole or in part. The 2017 Omnibus Equity Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares available under the plan in a 1.5-to-1 ratio.

We have not made any awards pursuant to the 2008 Omnibus Equity Plan since our shareholders approved the 2017 Omnibus Equity Plan, and do not intend to make any awards pursuant to the 2008 Omnibus Equity Plan in the future, except that unused shares under the 2008 Omnibus Equity Plan have been carried over for use under the 2017 Omnibus Equity Plan.

Stock Options

During the year ended December 31, 2022, we granted approximately 81,000 stock options to our Chief Executive Officer (CEO) (2022 CEO Grant) under the 2017 Omnibus Plan with a grant date fair value of $139.10 per option for a total of approximately $11.2 million. The fair values of our stock option grants are estimated as of the date of grant using a Black-Scholes option valuation model. The estimated fair values of the stock options are then expensed over the options' vesting periods. The 2022 CEO Grant is eligible to vest in equal annual installments over a three-year period from the grant date, subject to the CEO’s continued employment. The outstanding stock options have a 10-year term and are exercisable at a price per share not less than the fair market value of the underlying common stock on the date of grant.

The total intrinsic value related to the remaining stock options previously granted in 2010 that were exercised in 2020 totaled $2.9 million.

The following table summarizes the amount of tax benefit realized for stock options and cash received from the exercise of the remaining stock options previously granted in 2010:

	For the year ended December 31,
(In millions)	2020
Tax benefit realized for stock options	$	2.9
Cash received from the exercise of stock options	0.7

Market Stock Units (MSUs)

MSUs awarded to employees prior to 2014 vested in four equal annual increments beginning on the first anniversary of the grant date. Participants may ultimately earn between zero and 150.0% of the target number of units granted based on actual stock performance.

MSUs awarded to employees in 2014 and thereafter vest in three equal annual increments beginning on the first anniversary of the grant date, and participants may ultimately earn between zero and 200.0% of the target number of units granted based on actual stock performance.

The vesting of these awards is subject to the respective employee’s continued employment. The number of MSUs granted represents the target number of units that are eligible to be earned based on the attainment of certain market-based criteria involving our stock price. The number of MSUs earned is calculated at each annual anniversary from the date of grant over the respective vesting periods, resulting in multiple performance periods.

Accordingly, additional MSUs may be issued or currently outstanding MSUs may be cancelled upon final determination of the number of awards earned.

Beginning in 2022 we no longer grant MSUs as part of our long term incentive program and have replaced with granting performance-vested RSUs.

The following table summarizes our MSU activity:

	December 31, 2022
	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	257,000	$	372.08
Granted	—	—
Vested	(87,000)	369.22
Forfeited	(57,000)	371.24
Unvested at December 31, 2022	113,000	$	366.52

We value grants of MSUs using a lattice model with a Monte Carlo simulation. This valuation methodology utilizes several key assumptions, the 30 calendar day average closing stock price on the date of grant for MSUs, expected volatility of our stock price, risk-free rates of return and expected dividend yield.

The assumptions used in our valuation are summarized as follows:

	For the Years Ended December 31,
		2021	2020
Expected dividend yield		—%	—%
Range of expected stock price volatility		54.8% - 61.6%	37.8% - 44.1%
Range of risk-free interest rates		0.06% - 0.21%	1.41% - 1.48%
30 calendar day average stock price on grant date		$262.23 - $360.31	$257.83 - $325.40
Weighted-average per share grant date fair value		$358.77	$398.61

The fair values of MSUs vested in 2022, 2021 and 2020 totaled $18.8 million, $22.5 million and $26.9 million, respectively.

Cash Settled Performance Units (CSPUs)

CSPUs awarded to employees vest in three equal annual increments beginning on the first anniversary of the grant date. The vesting of these awards is subject to the respective employee’s continued employment with such awards settled in cash. The number of CSPUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established at the beginning of the performance period, which ends on December 31 of each year. Participants may ultimately earn between zero and 200.0% of the target number of units granted based on the degree of actual performance metric achievement. Accordingly, additional CSPUs may be issued or currently outstanding CSPUs may be cancelled upon final determination of the number of units earned. CSPUs are classified as liability awards and will be settled in cash based on the 30 calendar day average closing stock price through each vesting date, once the actual vested and earned number of units is known. Since no shares are issued, these awards do not dilute equity. All remaining CSPUs were fully vested as of December 31, 2020.

The cash paid in settlement of CSPUs vested in 2020 totaled $3.8 million. 

Performance-vested Restricted Stock Units (PUs)

PUs are granted to certain employees in the form of RSUs that may be settled in cash or shares of our common stock at the sole discretion of the Compensation and Management Development Committee of our Board of Directors. These awards are structured and accounted for the same way as the CSPUs, and vest in three equal annual increments beginning on the first anniversary of the grant date. The number of PUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established at the beginning of the performance period, which ends on December 31 of each year. Participants may ultimately earn between zero and 200.0% of the target number of units granted based on the degree of actual performance metric achievement. Accordingly, additional PUs may be issued or currently outstanding PUs may be cancelled upon final determination of the number of units earned. PUs settling in cash are based on the 30 calendar

day average closing stock price through each vesting date once the actual vested and earned number of units is known. All remaining PUs were fully vested as of December 31, 2020.

All PUs that vested in 2020 were settled in cash totaling $3.4 million.

Performance Stock Units (PSUs)

PSUs Settled in Stock

During the first quarter of 2018 we began granting awards for performance-vested RSUs that will settle in stock. PSUs awarded to employees have a three-year performance period and vest on the third anniversary of the grant date. The vesting of these awards is subject to the respective employee’s continued employment. The number of PSUs granted represents the target number of units that are eligible to be earned based on the achievement of cumulative three-year performance measures established at the beginning of the performance period, which ends on December 31 of the third year of the performance period.

Participants may ultimately earn between zero and 200.0% of the target number of PSUs granted based on the degree of achievement of the applicable performance metric. Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned.

Beginning in 2022 we no longer grant MSUs as part of long term incentive program and have replaced with granting PSUs with a performance metric based on a three-year cumulative relative total shareholder return (rTSR) metric. The PSUs will vest on the third anniversary of the date of grant, with the number of PSUs earned based on this cumulative rTSR metric.

The following table summarizes our PSUs that settle in stock activity:

	December 31, 2022
	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	196,000	$	289.94
Granted (1)	270,000	294.43
Vested	(44,000)	316.83
Forfeited	(86,000)	279.09
Unvested at December 31, 2022	336,000	$	292.95

(1) PSUs settled in stock granted in 2022 include awards granted in conjunction with our annual awards made in February 2022 and PSUs granted in conjunction with the hiring of employees. These grants reflect the target number of shares eligible to be earned at the time of grant.

We value grants of PSUs using a lattice model with a Monte Carlo simulation. This valuation methodology utilizes several key assumptions, the 30 calendar day average closing stock price on the date of grant for PSUs, expected volatility of our stock price, risk-free rates of return and expected dividend yield.

The assumptions used in our valuation are summarized as follows:

	December 31, 2022
Expected dividend yield	—%
Range of expected stock price volatility	44.0% - 45.9%
Range of risk-free interest rates	1.8% - 3.9%
30 calendar day average stock price on grant date	$231.31 - $294.86
Weighted-average per share grant date fair value	$294.43

The fair values of PSUs settled in stock that vested in 2022 and 2021 totaled $9.5 million and $15.5 million, respectively

PSUs Settled in Cash

During the first quarter of 2018 we began granting awards for performance-vested restricted stock units that will settle in cash. PSUs awarded to employees have three performance periods and vest on the third anniversary of the grant date. The vesting of these awards is subject to the respective employee’s continued employment. The number of PSUs granted represents the target number of units that are eligible to be earned based on the

achievement of three annual performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

Participants may ultimately earn between zero and 200.0% of the target number of PSUs granted based on the degree of achievement of the applicable performance metric. Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned. PSUs are classified as liability awards and will be settled in cash based on the 30 calendar day average closing stock price through the vesting date, once the actual vested and earned number of PSUs is determined. Since no shares are issued, these awards do not dilute equity.

Beginning in 2022 we no longer grant this type of PSUs as part of our long term incentive program and have replaced with granting time-vested RSUs.

The following table summarizes our PSUs that settle in cash activity:

	December 31, 2022
	Shares
Unvested at December 31, 2021	134,000
Granted (1)	24,000
Vested	(49,000)
Forfeited	(26,000)
Unvested at December 31, 2022	83,000

(1) PSUs settled in cash granted in 2022 include awards granted in conjunction with our annual awards made in February 2022 and PSUs granted in conjunction with the hiring of employees. These grants reflect the target number of shares eligible to be earned at the time of grant.

The fair values of PSUs settled in cash that vested in 2022 and 2021 totaled $11.0 million and $9.9 million, respectively.

Time-Vested Restricted Stock Units (RSUs)

RSUs awarded to employees generally vest no sooner than one-third per year over three years on the anniversary of the date of grant, or upon the third anniversary of the date of the grant, provided the employee remains continuously employed with us, except as otherwise provided in the plan. Shares of our common stock will be delivered to the employee upon vesting, subject to payment of applicable withholding taxes. RSUs awarded to directors for service on our Board of Directors vest on the first anniversary of the date of grant, provided in each case that the director continues to serve on our Board of Directors through the vesting date. Shares of our common stock will be delivered to the director upon vesting and are not subject to any withholding taxes.

The following table summarizes our RSU activity:

	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	1,202,000	$	291.54
Granted (1)	1,751,000	221.28
Vested	(539,000)	297.72
Forfeited	(468,000)	244.03
Unvested at December 31, 2022	1,946,000	$	237.90

(1) RSUs granted in 2022 primarily represent RSUs granted in conjunction with our annual awards made in February 2022 and awards made in conjunction with the hiring of new employees. RSUs granted in 2022 also include approximately 15,000 RSUs granted to our Board of Directors.

RSUs granted in 2021 and 2020 had weighted average grant date fair values of $276.90 and $318.87, respectively.

The fair values of RSUs vested in 2022, 2021 and 2020 totaled $116.3 million, $132.2 million and $140.5 million, respectively. 

Employee Stock Purchase Plan (ESPP)

In June 2015 our shareholders approved the 2015 ESPP. The maximum aggregate number of shares of our common stock that may be purchased under the 2015 ESPP is 6.2 million.

The following table summarizes our ESPP activity:

	For the Years Ended December 31,
(In millions, except share amounts)	2022		2021		2020
Shares issued under the 2015 ESPP	241,000		248,000		212,000
Cash received under the 2015 ESPP	$	44.2	$	54.4	$	48.6