XML 54 R39.htm IDEA: XBRL DOCUMENT v3.22.4
Stock Incentive Plans (Tables)
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Summary of Stock-Based Compensation The following table is a summary of stock-based compensation for the years ended December 31, 2022, 2021 and 2020:
In millions202220212020
Restricted stock units and performance stock units
$369 $404 $329 
Stock options and stock appreciation rights (“SARs”) (1)
78 80 71 
Total stock-based compensation$447 $484 $400 
_____________________________________________
(1)Includes the ESPP.
RSU and Performance Share Unit Activity
The following table is a summary of the restricted stock unit and performance stock unit activity for the year ended December 31, 2022:
In thousands, except weighted average grant date fair valueUnitsWeighted Average
Grant Date
Fair Value
Outstanding at beginning of year, nonvested14,330 $63.02 
Granted5,398 $101.13 
Vested (1)
(5,626)$58.28 
Forfeited(1,421)$72.76 
Outstanding at end of year, nonvested12,681 $80.25 
_____________________________________________
(1)Vested performance stock units have been included at target level performance. Based on actual performance, the number of restricted stock units and performance stock units vested during the year ended December 31, 2022 was 8.0 million.
Summary of Stock Option and SAR Activity
The following table is a summary of stock option and SAR activity that occurred for the years ended December 31, 2022, 2021 and 2020:
In millions202220212020
Cash received from stock options exercised (including ESPP)
$551 $549 $264 
Payments for taxes for net share settlement of equity awards
370 168 88 
Intrinsic value of stock options and SARs exercised
118 105 24 
Fair value of stock options and SARs vested
219 224 252 
Schedule of Valuation Assumptions
The fair value of each stock option is estimated using the Black-Scholes option pricing model based on the following assumptions at the time of grant:
202220212020
Dividend yield (1)
2.18 %2.68 %3.42 %
Expected volatility (2)
27.34 %27.10 %25.22 %
Risk-free interest rate (3)
2.46 %1.13 %0.61 %
Expected life (in years) (4)
6.36.36.3
Weighted-average grant date fair value$24.15 $14.57 $8.78 
_____________________________________________
(1)The dividend yield is based on annual dividends paid and the fair market value of CVS Health Corporation stock at the grant date.
(2)The expected volatility is estimated based on the historical volatility of CVS Health Corporation’s daily stock price over a period equal to the expected life of each option grant after adjustments for infrequent events such as stock splits.
(3)The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued.
(4)The expected life represents the number of years the options are expected to be outstanding from grant date based on historical option or SAR holder exercise experience.
Schedule of Stock Options and Stock Appreciation Rights Award Activity
The following table is a summary of the Company’s stock option and SAR activity for the year ended December 31, 2022:
In thousands, except weighted average exercise price and remaining contractual termSharesWeighted
Average
Exercise
 Price		Weighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
Outstanding at beginning of year19,061 $71.74 
Granted1,993 $101.04 
Exercised(4,921)$75.91 
Forfeited(478)$70.78 
Expired(615)$99.78 
Outstanding at end of year15,040 $73.15 4.52$340,507 
Exercisable at end of year7,730 $72.39 2.76184,904 
Vested at end of year and expected to vest in the future14,757 $72.96 4.47336,664 
Schedule ESPP Valuation Assumptions
The following table is a summary of the assumptions used to value the ESPP awards for the years ended December 31, 2022, 2021 and 2020:
202220212020
Dividend yield (1)
1.12 %1.34 %1.46 %
Expected volatility (2)
23.54 %25.27 %37.21 %
Risk-free interest rate (3)
1.42 %0.08 %0.81 %
Expected life (in years) (4)
0.50.50.5
Weighted-average grant date fair value$16.25 $12.55 $13.85 
_____________________________________________
(1)The dividend yield is calculated based on semi-annual dividends paid and the fair market value of CVS Health Corporation stock at the grant date.
(2)The expected volatility is estimated based on the historical volatility of CVS Health Corporation’s daily stock price over the previous six month period.
(3)The risk-free interest rate is selected based on the Treasury constant maturity interest rate whose term is consistent with the expected term of ESPP purchases (i.e., six months).
(4)The expected life is based on the semi-annual purchase period