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EMPLOYEE STOCK BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Employee Benefit Plans EMPLOYEE STOCK BENEFIT PLANS
On May 4, 2021, the shareholders approved the 2021 Stock Award and Incentive Plan (the “2021 Plan”). The 2021 Plan replaced the 2012 Plan, under which the authorization to grant awards was set to expire in 2022. The 2021 Plan also replaced our 2014 Equity Incentive Plan (the “2014 Plan”) and 2017 Stock Incentive Plan (the “2017 Plan”), which originated as plans of Celgene Corporation that we assumed, amended and renamed when we acquired Celgene in 2019. The 2021 Plan authorizes awards in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted and unrestricted stock and stock units, dividend equivalents, performance share units, market share units and other stock-based awards. As of December 31, 2021, the 2021 Plan was the only plan under which we were authorized to grant equity awards. The 2021 Plan provides for 85 million shares to be authorized for grants plus shares recaptured upon forfeitures or other terminations of awards under the 2012 Plan, 2014 Plan and 2017 Plan, subject to adjustments in accordance with the terms of the 2021 Plan. As of December 31, 2021, 89 million shares were available for award. Shares generally are issued from treasury stock to satisfy BMS’s obligations under the 2021 Plan and the prior Plans.

As part of the Celgene acquisition, BMS assumed the 2017 Plan and the 2014 Plan. 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. Outstanding Celgene equity awards were assumed by BMS and converted into BMS equity awards at acquisition. The replacement BMS awards generally have the same terms and conditions (including vesting) as the former Celgene awards for which they were exchanged.

CVRs were also issued to the holders of vested and unexercised “in the money” Celgene 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 were 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 were eligible to receive a cash value of $9.00 per pre-converted Celgene RSU and “in the money” options if all CVR milestones were achieved. The contractual obligation to pay the contingent value rights terminated in January 2021 because the FDA did not approve liso-cel (JCAR017) by December 31, 2020.

Under the 2021 Plan, executive officers and other 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 award's exercise price.

RSUs may be granted to executive officers and other 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 and/or deferral period; stock units have 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 grant-date share price on a given measurement date. Attainment of a higher payout factor which is the share price on measurement date divided by share price on award date results in a higher percentage payout of MSUs, up to a maximum of 200% of the target number of MSUs. The share price used in the payout factor is calculated using an average of the closing prices on the grant or measurement date, and the nine trading days immediately preceding the grant or measurement date. Vesting occurs ratably over four years.

PSUs are granted to executives, have a three-year performance 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 specified 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. Stock-based compensation expense was as follows:
 Year Ended December 31,
Dollars in Millions202120202019
Cost of products sold$57 $37 $19 
Marketing, selling and administrative241 332 162 
Research and development272 339 115 
Other (income)/expense, net13 71 145 
Total stock-based compensation expense$583 $779 $441 
Income tax benefit(a)
$120 $158 $87 
(a)    Income tax benefit excludes excess tax benefits from share-based compensation awards that were vested or exercised of $38 million in 2021, $35 million in 2020 and $4 million in 2019.

The total stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 includes $192 million, $382 million and $66 million, respectively, related to Celgene post-combination service period and $13 million, $71 million and $145 million, respectively, of accelerated vesting of awards related to the Celgene acquisition. 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 (by Celgene). 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:
Year Ended December 31, 2019
Weighted average risk-free interest rate1.59%
Expected volatility25.7%
Weighted average expected term (years)2.65
Expected dividend yield2.89%

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 was estimated based on a 50/50 blend of implied volatility and five year historical volatility of BMS’s publicly traded stocks. The expected term of an employee stock 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.

The following table summarizes the stock compensation activity for the year ended December 31, 2021:
 
Stock Options(a)
Restricted Stock UnitsMarket Share UnitsPerformance Share Units
Shares in MillionsNumber of OptionsWeighted-Average Exercise Price of SharesNumber of Nonvested AwardsWeighted-Average Grant-Date Fair ValueNumber of Nonvested AwardsWeighted-Average Grant-Date Fair ValueNumber of Nonvested AwardsWeighted-Average Grant-Date Fair Value
Balance at January 1, 202173.4 $50.25 27.7 $54.58 1.7 $56.01 3.1 $56.72 
Granted— — 8.9 56.58 1.0 58.04 1.5 59.04 
Released/Exercised(23.1)42.70 (13.8)55.36 (0.6)57.25 (0.9)67.60 
Adjustments for actual payout— — — — — — 0.1 67.60 
Forfeited/Canceled(3.3)63.71 (3.7)54.71 (0.3)56.15 (0.4)56.04 
Balance at December 31, 202147.0 53.00 19.1 54.92 1.8 56.51 3.4 55.38 
Expected to vest17.0 54.91 1.6 56.51 3.2 54.85 
(a)    At December 31, 2021 substantially all of the 2 million unvested stock options with a weighted-average exercise price of $48.22, are expected to vest.
Dollars in MillionsStock OptionsRestricted Stock UnitsMarket Share UnitsPerformance Share Units
Unrecognized compensation cost$7 $676 $46 $83 
Expected weighted-average period in years of compensation cost to be recognized0.62.62.81.7
Amounts in Millions, except per share data202120202019
Weighted-average grant date fair value (per share):
Stock options - replacement awards$— $— $15.00 
Restricted stock units - replacement awards— — 56.37 
Restricted stock units56.58 53.65 47.16 
Market share units58.04 53.92 51.52 
Performance share units59.04 55.61 49.99 
Fair value of awards that vested:
Restricted stock units - replacement awards$519 $777 $233 
Restricted stock units246 122 105 
Market share units37 37 30 
Performance share units61 59 53 
Total intrinsic value of stock options exercised512 556 148 

The fair value of RSUs approximates the closing trading price of BMS’s common stock on the grant date after adjusting for the units not eligible for accrued dividends. The fair value of MSUs is estimated as of the grant date using a Monte Carlo simulation. The fair value of PSUs is estimated using the Monte Carlo simulation for the portion related to the relative total shareholder return measure and considers the probability of satisfying the payout factor and adjusting for the units not eligible for accrued dividends relative to the remaining portion of the PSUs.

The fair value of the replacement RSUs approximates the closing trading price of BMS’s 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.

The following table summarizes significant outstanding and exercisable options at December 31, 2021:
Range of Exercise PricesNumber of Options (in millions)Weighted-Average Remaining Contractual Life (in years)Weighted-Average Exercise Price Per ShareAggregate Intrinsic Value (in millions)
$10 - $407.5 1.4$29.54 $246 
$40 - $5515.3 3.948.79 208 
$55 - $6516.2 3.259.54 48 
$65+8.0 3.769.99 — 
Outstanding47.0 3.253.00 $502 
Exercisable44.9 3.153.22 $474 

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the closing stock price of $62.35 on December 31, 2021.