Capital Stock

12 Months Ended

Dec. 31, 2012

Class of Stock Disclosures [Abstract]

Capital Stock

CAPITAL STOCK

In December of 2012, 2011 and 2010, we announced that our Board of Directors had authorized us to purchase up to $405, $500 and $500, respectively, of our common stock (the 2012, 2011 and 2010 Repurchase Programs, respectively). The manner, timing and amount of purchases is determined by management based on an evaluation of market conditions, stock price and other factors and is subject to regulatory considerations. Purchases are to be made from time to time in the open market, in privately negotiated transactions or otherwise.

Under the 2010 Repurchase Program, we repurchased 2.1 million shares at a cost of $108 during 2012. At December 31, 2012, the maximum dollar value of shares that may yet be purchased under the authorized Repurchase Programs was $1,000. We had not made any repurchases pursuant to the 2012 or 2011 Repurchase Programs at December 31, 2012. Shares repurchased under the share repurchase programs are available for general corporate purposes, including offsetting dilution associated with stock option and other equity-based employee benefit plans.

Shares reserved for future compensation grants of Stryker common stock were 29 million at December 31, 2012 and 32 million at December 31, 2011.

We have 0.5 million authorized shares of $1 par value preferred stock, none of which is outstanding.

Stock Options

We have long-term incentive plans from which we grant stock options to certain key employees and non-employee directors at an exercise price not less than the fair market value of the underlying common stock, which is the closing quoted price of our common stock on the day prior to the date of grant. The options are granted for periods of up to 10 years and become exercisable in varying installments.

A summary of stock option activity follows:

	Shares (in millions)		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2012	22.8		$	50.32
Granted	2.6		53.71
Exercised	(3.7	)	40.07
Cancelled	(2.0	)	54.71
Options outstanding at December 31, 2012	19.7		$	52.23	5.2	$	105.2
Exercisable at December 31, 2012	12.9		$	51.72	3.9	$	81.3
Options expected to vest	6.4		$	53.13	7.7	$	23.0

The aggregate intrinsic value, which represents the cumulative difference between the fair market value of the underlying common stock and the option exercise prices, of options exercised during the years ended December 31, 2012, 2011 and 2010 was $52, $69 and $73, respectively. Exercise prices for options outstanding at December 31, 2012 ranged from $37.86 to $67.80. At December 31, 2012, there was $64 of unrecognized compensation cost related to nonvested stock options granted under the long-term incentive plans; that cost is expected to be recognized over the weighted-average period of 1.5 years.

Restricted Stock Units (RSUs) and Performance Stock Units (PSUs)

We grant RSUs to key employees and non-employee directors and PSUs to key employees under our long-term incentive plans. The fair value of RSUs is determined based on the number of shares granted and the closing quoted price of our common stock on the day prior to the date of grant less anticipated dividends. RSUs generally vest in one-third increments over a three-year period and are settled in stock. PSU's are earned over a three-year performance cycle and vest in March of the year following the end of that performance cycle. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals during that three-year performance cycle. The fair value of PSUs is determined based on the closing quoted price of our common stock on the day prior to the date of grant. A summary of RSU and PSU activity follows:

	Shares (in millions)			Weighted Average Grant date Fair value
	RSUs		PSUs	RSUs		PSUs
Nonvested at January 1, 2012	1.2		0.1	$	54.17	$	59.70
Granted	1.0		0.1	50.90		54.13
Vested	(0.5	)	—	53.17		—
Cancelled	(0.2	)	—	52.69		58.07
Nonvested at December 31, 2012	1.5		0.2	$	52.53	$	54.78

At December 31, 2012, there was $51 of unrecognized compensation cost related to nonvested RSUs; that cost is expected to be recognized as expense over the weighted-average period of 1.0 year. The weighted-average grant date fair value per share of RSUs granted in 2012 and 2011 was $50.90 and $56.49, respectively. The fair value of RSUs vested in 2012 was $25. At December 31, 2012, there was $5 of unrecognized compensation cost related to nonvested PSUs; that cost is expected to be recognized as expense over the weighted-average period of 1.0 year.

Employee Stock Purchase Plans (ESPP)

Full-time and part-time employees may participate in our ESPP provided they meet certain eligibility requirements. The purchase price for our common stock under the terms of the ESPP is defined as 95% of the closing stock price on the last trading day of a purchase period. During 2012 and 2011, we issued 196,267 and 185,529 shares, respectively, under the ESPP.