On May 1, 2012, the shareholders approved the 2012 Plan, which replaced the 2007 Stock Incentive Plan. The 2012 Plan provides for 109 million shares to be authorized for grants, plus any shares from outstanding awards under the 2007 Plan as of February 29, 2012 that expire, are forfeited, canceled, or withheld to satisfy tax withholding obligations. As of December 31, 2019, 98 million shares were available for award. Shares are issued from treasury stock to satisfy BMS's obligations under this Plan.

As part of the Celgene acquisition, BMS assumed the 2017 Stock Incentive Plan and the 2014 Equity Incentive Plan (referred together with the BMS plans as the “Plans”). These plans provided for the granting of Options, Restricted Stock Units (“RSUs”), Performance Share Units (“PSUs”) and other share-based and performance-based awards to former Celgene employees, officers and non-employee directors. Additionally, the terms of these plans provided for accelerated vesting of awards upon a change in control followed by an involuntary termination without cause. As at the acquisition date, 29 million shares were available for award under the Celgene Plans. Outstanding Celgene equity awards were assumed by BMS and converted into BMS equity awards. The replacement BMS awards generally have the same terms and conditions (including vesting) as the former Celgene awards for which they were exchanged. Shares are issued from treasury stock to satisfy BMS's obligations under the Plans.

CVRs were also issued to the holders of vested and unexercised “in the money” Options that were outstanding at the acquisition date. Celgene RSU holders and unvested “in the money” Options that were outstanding at the acquisition date, with awards vesting prior to March 31, 2021 are also eligible to receive CVRs. Celgene RSU holders and unvested “in the money” Options that were outstanding at the acquisition date with awards vesting after March 31, 2021 are eligible to receive a cash value of $9.00 per pre-converted Celgene RSU and “in the money” Options if all CVR milestones are achieved.

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 10 years. The Plans provide 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. We primarily utilize treasury shares to satisfy the exercise of stock options.

RSUs may be granted to key employees, subject to restrictions as to continuous employment. Generally, vesting occurs ratably over a three to four year period from grant date. 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 (“MSUs”) are granted to executives. Vesting is conditioned upon continuous employment until the vesting date and a payout factor of 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.

PSUs are granted to executives, have a three year cycle and are granted as a target number of units subject to adjustment. The number of shares issued when PSUs vest is determined based on the achievement of performance goals and based on BMS's three-year total shareholder return relative to a peer group of companies. Vesting is conditioned upon continuous employment and occurs on the third anniversary of the grant date.

Stock-based compensation expense for awards ultimately expected to vest is recognized over the vesting period. Forfeitures are estimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. Components of stock-based compensation benefits in the consolidated statement of earnings are as follows:



	Year Ended December 31,
Dollars in Millions	2019		2018		2017
Cost of products sold	$	19	$	15	$	16
Marketing, selling and administrative	162		122		103
Research and development	115		84		80
Other (income)/expense, net	145		—		—
Total stock-based compensation expense	$	441	$	221	$	199

Income tax benefit	$	87	$	41	$	59

The total stock-based compensation expense for the year ended December 31, 2019 includes $66 million related to Celgene post-combination service period and $145 million of accelerated vesting of awards related to the Celgene acquisition. It also includes $10 million related to CVR obligation on unvested stock awards for the post combination service period. Refer to “—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for more information related to the Celgene acquisition.

The replacement stock options granted to Celgene option holders on acquisition were issued consistent with the vesting conditions of the replaced award. Replacement stock options have contractual terms of 10 years from the initial grant date. The majority of stock options outstanding vest in one-fourth increments over a four year period, although certain awards cliff vest or have longer or shorter service periods. Celgene option holders may elect to exercise options at any time during the option term. However, any shares so purchased which have not vested as of the date of exercise shall be subject to forfeiture, which will lapse in accordance with the established vesting time period. The fair value on the acquisition date attributable to post-combination service, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the remaining vesting period. BMS estimated the fair value of replacement options , using a Black-Scholes Option pricing model, with the following assumptions:

The risk‑free interest rate is based on rates available for U.S. Federal Reserve treasury constant maturities with a remaining term equal to the options' expected life at the time of the replacement award. Expected volatility of replacement stock option awards is estimated based on a 50/50 blend of implied volatility and five year historical volatility of BMS' publicly traded stocks. The expected term of an employee share option is the period of time for which the option is expected to be outstanding and is based on historical and forecasted exercise behavior. Dividend yield is estimated based on BMS' annual dividend rate at the time of award replacement.



	Stock Options^(a)				Restricted Stock Units				Market Share Units				Performance Share Units
Shares in Millions	Number of Options		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
Balance at January 1, 2019	1.7		$	17.51	5.0		$	58.83	1.5		$	66.76	2.8		$	63.28
Replacement Awards	105.3		47.77		32.4		56.37		—		—		—		—
Granted	—		—		3.9		47.16		0.8		51.52		1.3		49.99
Released/Exercised	(5.5	)	32.22		(5.9	)	57.24		(0.5	)	65.76		(0.8	)	64.87
Adjustments for actual payout	—		—		—		—		—		—		0.1		—
Forfeited/Canceled	(0.3	)	54.98		(0.7	)	54.43		(0.3	)	59.12		(0.5	)	56.71
Balance at December 31, 2019	101.2		48.08		34.7		55.58		1.6		59.25		3.0		57.46

Expected to vest					32.3		55.66		1.4		59.45		3.6		58.27



Dollars in Millions	Stock Options		Restricted Stock Units		Market Share Units		Performance Share Units
Unrecognized compensation cost	$	121	$	918	$	39	$	78
Expected weighted-average period in years of compensation cost to be recognized	2.0		2.1		2.7		1.6



Amounts in Millions, except per share data	2019		2018		2017
Weighted-average grant date fair value (per share):
Stock options - replacement awards	$	15.00	$	—	$	—
Restricted stock units - replacement awards	56.37		—		—
Restricted stock units	47.16		61.40		54.39
Market share units	51.52		72.33		60.14
Performance share units	49.99		67.60		57.91

Fair value of awards that vested:
Restricted stock units - replacement awards	$	233	$	—	$	—
Restricted stock units	105		98		91
Market share units	30		40		33
Performance share units	53		103		84

Total intrinsic value of stock options exercised	148		89		84

The fair value of RSUs, MSUs and PSUs approximates the closing trading price of BMS's common stock on the grant date after adjusting for the units not eligible for accrued dividends. In addition, the fair value of MSUs and PSUs considers the probability of satisfying the payout factor and total shareholder return, respectively.

The fair value of the replacement RSUs approximates the closing trading price of BMS' common stock on the date of acquisition after adjusting for the units not eligible for accrued dividends. The fair value on the acquisition date attributable to post-combination service, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the remaining vesting period.



Range of Exercise Prices	Number of Options (in millions)	Weighted-Average Remaining Contractual Life (in years)	Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value (in millions)
$10 - $40	27.2	2.7	$	24.81	$	1,071
$40 - $55	31.3	5.7	48.69		485
$55 - $65	30.4	5.0	59.48		143
$65+	12.3	5.7	69.89		—
Outstanding	101.2	4.7	48.08		$	1,700
Exercisable	78.6	3.9	46.65		$	1,430