EMPLOYEE STOCK BENEFIT PLANS

12 Months Ended

Dec. 31, 2013

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

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

Note 20. EMPLOYEE STOCK BENEFIT PLANS

On May 1, 2012, the shareholders approved the 2012 Stock Award and Incentive Plan (the 2012 Plan), which replaced the 2007 Stock Incentive Plan. Shares of common stock reserved for issuance pursuant to stock plans, options and conversions of preferred stock were 262 million at December 31, 2013. Shares available to be granted for the active plans, adjusted for the combination of plans, were 114 million at December 31, 2013. Shares for the stock option exercise and share unit vesting are issued from treasury stock. Only shares actually delivered to participants in connection with an award after all restrictions have lapsed will reduce the number of shares reserved. Shares tendered in a prior year to pay the purchase price of options and shares previously utilized to satisfy withholding tax obligations upon exercise continue to be available and reserved.

Executive officers and key employees may be granted options to purchase common stock at no less than the market price on the date the option is granted. Options generally become exercisable ratably over four years and have a maximum term of ten years. Additionally, the plan provides for the granting of stock appreciation rights whereby the grantee may surrender exercisable rights and receive common stock and/or cash measured by the excess of the market price of the common stock over the option exercise price.

Common stock or stock units may be granted to key employees, subject to restrictions as to continuous employment. Restrictions expire over a four year period from date of grant. Compensation expense is recognized over the vesting period. A stock unit is a right to receive stock at the end of the specified vesting period but has no voting rights.

Market share units were granted to certain executives beginning in 2010. Vesting is conditioned upon continuous employment until vesting date and the payout factor equals at least 60% of the share price on the award date. The payout factor is the share price on vesting date divided by share price on award date, with a maximum of 200%. The share price used in the payout factor is calculated using an average of the closing prices on the grant or vest date, and the nine trading days immediately preceding the grant or vest date. Vesting occurs ratably over four years.

Long-term performance awards have a three year cycle and are delivered in the form of a target number of performance share units. The number of shares ultimately issued is calculated based on actual performance compared to earnings targets and other performance criteria established at the beginning of each year of the three year performance cycle. The awards have annual goals with a maximum payout of 167.5%. If threshold targets are not met for a performance period, no payment is made under the plan for that annual period. Vesting occurs at the end of the three year period.

Stock-based compensation expense is based on awards ultimately expected to vest and is recognized over the vesting period. The acceleration of unvested stock options and restricted stock units in connection with the acquisition of Amylin resulted in stock-based compensation expense in 2012. Forfeitures are estimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense was as follows:

	Years Ended December 31,
Dollars in Millions	2013		2012		2011
Stock options	$	2	$	7	$	27
Restricted stock	74		64		79
Market share units	29		23		23
Long-term performance awards	86		60		32
Amylin stock options and restricted stock units (see Note 4)	—		94		—
Total stock-based compensation expense	$	191	$	248	$	161
Income tax benefit	$	64	$	82	$	56

Share-based compensation activities were as follows:

	Stock Options				Restricted Stock Units				Market Share Units			Long-Term Performance Awards
	Number of Options Outstanding		Weighted- Average Exercise Price of Shares		Number of Nonvested Awards		Weighted- Average Grant-Date Fair Value		Number of Nonvested Awards		Weighted- Average Grant-Date Fair Value	Number of Nonvested Awards		Weighted- Average Grant-Date Fair Value
Shares in Thousands
Balance at January 1, 2013	41,965		$	23.21	7,568		$	27.18	2,204		28.46	4,096		28.44
Granted	—		—		2,653		38.73		1,025		37.40	2,464		37.40
Released/Exercised	(18,029	)	23.62		(3,050	)	24.36		(809	)	27.08	(2,072	)	27.26
Adjustments for actual payout	—		—		—		—		(298	)	27.08	38		37.40
Forfeited/Canceled	(813	)	23.19		(619	)	30.97		(290	)	31.51	(234	)	34.66
Balance at December 31, 2013	23,123		22.88		6,552		32.81		1,832		33.82	4,292		33.75
Vested or expected to vest	23,123		22.88		6,053		32.81		1,692		33.82	3,965		33.75

Total compensation costs related to share-based payment awards not yet recognized and the weighted-average period over which such awards are expected to be recognized at December 31, 2013 were as follows:

	Restricted		Market		Long-Term Performance
Dollars in Millions	Stock Units		Share Units		Awards
Unrecognized compensation cost	$	155	$	32	$	27
Expected weighted-average period in years of compensation cost to be recognized	2.7		2.6		1.4

Additional information related to share-based compensation awards is summarized as follows:

Amounts in Millions, except per share data	2013		2012		2011
Weighted-average grant date fair value (per share):
Restricted stock units	$	38.73	$	32.71	$	26.04
Market share units	37.40		31.85		25.83
Long-term performance awards	37.40		32.33		25.30
Fair value of options or awards that vested during the year:
Stock options	$	11	$	23	$	45
Restricted stock units	74		74		75
Market share units	30		18		8
Long-term performance awards	90		56		21
Total intrinsic value of stock options exercised during the year	$	323	$	153	$	154

The fair value of restricted stock units and long-term performance awards are determined based on the closing trading price of the Company’s common stock on the grant date. The fair value of market share units approximated the closing trading price of the Company's common stock on the grant date and was estimated on the date of the grant considering the payout formula and the probability of satisfying market conditions.

The following table summarizes significant ranges of outstanding and exercisable options at December 31, 2013 (amounts in millions, except per share data):

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding and Exercisable (in thousands)	Weighted-Average Remaining Contractual Life (in years)	Weighted-Average Exercise Price  Per Share		Aggregate Intrinsic Value
$1 - $20	6,457	5.16	$	17.51	$	230
$20 - $30	16,660	2.49	24.96		470
$30 - $40	6	3.47	31.30		—
	23,123	3.24	22.88		$	700

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the closing stock price of $53.15 on December 31, 2013.