SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Bausch Health’s Long-Term Incentive Plan

In May 2014, shareholders approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”) which replaced the Company’s 2011 Omnibus Incentive Plan (the “2011 Plan”) for future equity awards granted by the Company. The Company transferred the common shares available under the 2011 Plan to the 2014 Plan. The maximum number of common shares that may be issued to participants under the 2014 Plan was equal to 18,000,000 common shares, plus the number of common shares under the 2011 Plan reserved but unissued and not underlying outstanding awards and the number of common shares becoming available for reuse after awards are terminated, forfeited, cancelled, exchanged or surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan. The Company registered 20,000,000 common shares for issuance under the 2014 Plan. The 2014 Plan was amended and restated effective April 30, 2018 and April 28, 2020 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective June 21, 2022, the Company further amended and restated the 2014 Plan, as subsequently amended and restated (the “Amended and Restated 2014 Plan”). Such amendment and restatement increased the number of common shares authorized for issuance under the Amended and Restated 2014 Plan by an additional 11,500,000 common shares, among other things.

Approximately 21,627,000 common shares were available for future grants under the Amended and Restated 2014 Plan as of June 30, 2022. The Company uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

The Company has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on improving its tangible capital usage and allocation while maintaining focus on improving total shareholder return over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based restricted share units (“RSUs”) and performance-based RSUs. Performance-based RSUs are comprised of awards that: (i) vest upon achievement of certain share price appreciation conditions that are based on total shareholder return (“TSR”), (ii) vest upon attainment of certain performance targets that are based on the Company’s return on tangible capital (“ROTC”) and (iii) vest fully or partially upon attainment of certain goals that are linked to the B+L Separation.

Bausch + Lomb Long-Term Incentive Plan

Bausch + Lomb participated in Bausch Health’s long-term incentive program prior to the establishment of the Bausch + Lomb Incentive Plan. Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan (the “B+L Plan”). A total of 28,000,000 common shares of Bausch + Lomb are authorized under the B+L Plan. The B+L Plan provides for the grant of various types of awards including RSUs, stock appreciation rights, stock options, performance-based awards and cash awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

On May 5, 2022, in connection with the B+L IPO, Bausch + Lomb granted certain awards to certain eligible recipients (the “IPO Founder Grants”). Eligible recipients are individuals employed by Bausch + Lomb or employed by an affiliate of Bausch + Lomb. Approximately 3,900,000 IPO Founder Grants were issued to Bausch + Lomb executive officers and were awarded 50% in the form of stock options and 50% in the form of RSUs. Additionally, Bausch + Lomb granted approximately 5,700,000 stock options and RSUs to non-executive eligible recipients, of which approximately 4,300,000 were IPO Founder Grants. The options have a three-year graded vesting period and the RSUs vest 50% in the second year and 50% in the third year after the grant. Vesting of the IPO Founder Grants are contingent on the completion of the B+L Separation and expense recognition will begin near the time of the B+L Separation.

Approximately 18,400,000 Bausch + Lomb common shares were available for future grants as of June 30, 2022 under the B+L Plan. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

The following table summarizes the components and classification of Bausch Health share-based compensation expenses related to stock options and RSUs for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Stock options	$	3	$	3	$	7	$	7
RSUs	23		28		51		55
	$	26	$	31	$	58	$	62

Research and development expenses	$	3	$	2	$	6	$	5
Selling, general and administrative expenses	23		29		52		57
	$	26	$	31	$	58	$	62

Share-based awards granted for the six months ended June 30, 2022 and 2021 consist of:


	2022		2021
Bausch Health Share-Based Awards
Stock options
Granted	2,570,000		1,466,000
Weighted-average exercise price	$	23.95	$	32.52
Weighted-average grant date fair value	$	6.60	$	11.18
Time-based RSUs
Granted	2,680,000		2,861,000
Weighted-average grant date fair value	$	18.49	$	32.26
TSR performance-based RSUs
Granted	—		400,000
Weighted-average grant date fair value	$	—	$	56.04
ROTC performance-based RSUs
Granted	369,000		413,000
Weighted-average grant date fair value	$	9.40	$	31.72
B+L Separation performance-based RSUs
Granted	—		132,000
Weighted-average grant date fair value	$	—	$	32.56
Bausch+ Lomb Share-Based Awards
Stock options
Granted	6,455,000		—
Weighted-average exercise price	$	18.00	$	—
Weighted-average grant date fair value	$	4.55	$	—
Time-based RSUs
Granted	3,207,000		—
Weighted-average grant date fair value	$	17.92	$	—

As of June 30, 2022, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs under the Amended and Restated 2014 Plan amounted to $139 million, which will be amortized over a weighted-average period of 1.74 years.

As of June 30, 2022, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs under the B+L Plan amounted to $59 million, which will be amortized over a weighted-average period of 1.77 years.