SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Bausch Health’s Long-Term Incentive Plan

In May 2014, shareholders approved Bausch Health’s 2014 Omnibus Incentive Plan (the “2014 Plan”) which replaced Bausch Health’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 initially 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 2014 Plan was amended and restated effective April 30, 2018, April 28, 2020 and June 21, 2022 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective May 16, 2023, Bausch Health 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 7,500,000 common shares, among other things.

Approximately 11,054,000 common shares were available for future grants as of March 31, 2024. The Company uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

Bausch Health 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 generating operating cash flow while maintaining focus on improving total shareholder return (“TSR”) over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based RSUs and performance-based RSUs. Performance-based RSUs are comprised of: (i) awards that vest upon achievement of certain share price appreciation conditions that are based on TSR and (ii) awards that vest upon the attainment of certain targets that are based on the Company’s adjusted operating cash flow (“Adjusted Operating Cash Flow”) with a TSR modifier.

Bausch + Lomb Long-Term Incentive Plan

Prior to May 5, 2022, Bausch + Lomb participated in Bausch Health’s long-term incentive program. Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan (as amended and restated by the 2023 Plan Amendment) (the “B+L Plan”). A total of 28,000,000 common shares of Bausch + Lomb were originally authorized under the B+L Plan. Effective April 24, 2023, the shareholders of Bausch + Lomb approved an amendment and restatement of the B+L Plan to increase the number of shares authorized for issuance thereunder by an additional 10,000,000 common shares, resulting in an aggregate of 38,000,000 common shares of Bausch + Lomb authorized for issuance under the Plan (the “Plan Amendment”). The B+L Plan provides for the grant of various types of awards including RSUs, restricted stock, 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.

Approximately 6,800,000 Bausch + Lomb common shares were available for future grants as of March 31, 2024. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

The Talent and Compensation Committee of the B+L Board of Directors approved a Performance Share Unit (“PSU”) award for a limited number of key B+L senior leaders (the “B+L Executives”), effective as of February 28, 2024, including each of B+L’s current named executive officers. This PSU award is designed to reward the B+L Executives for achieving significant outperformance of performance goals (the “OPG PSU”) that Bausch + Lomb believes would ultimately deliver substantial value to shareholders if achieved.

The OPG PSUs may earn between 0% and 300% based on the level of achievement of: (i) a revenue metric (measured for fiscal year 2026) and (ii) a relative TSR metric for B+L measured over the three-year period ending December 31, 2026. In the event that Bausch + Lomb’s absolute TSR during such period is negative, then the maximum payout of the PSU award will be capped at 50%. Any PSUs that are earned will vest on February 28, 2027, subject generally to the B+L Executive’s continued employment through such date, except in limited circumstances set forth in the applicable award agreement.

The fair value of the OPG PSU was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved. Expense recognized for the OPG PSU in each reporting period reflects the latest probability of the Company achieving certain revenue targets in determining the number of PSUs that are expected to vest. If the OPG PSUs do not ultimately vest due to the revenue targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

The following table summarizes the components and classification of the Company’s share-based compensation expenses related to stock options and RSUs for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in millions)	2024		2023
Stock options	$	3	$	6
RSUs	30		35
	$	33	$	41

Research and development expenses	$	3	$	3
Selling, general and administrative expenses	30		38
	$	33	$	41

Share-based awards granted for the three months ended March 31, 2024 and 2023 consist of:


	Three Months Ended March 31,
	2024		2023
Bausch Health Share-Based Awards
Stock options
Granted	—		999,000
Weighted-average exercise price	$	—	$	9.25
Weighted-average grant date fair value	$	—	$	4.87
Time-based RSUs
Granted	4,246,000		4,133,000
Weighted-average grant date fair value	$	9.39	$	9.18
Adjusted Operating Cash Flow performance-based RSUs
Granted	1,232,000		647,000
Weighted-average grant date fair value	$	9.89	$	10.57






Bausch+ Lomb Share-Based Awards
Stock options
Granted	1,317,000		2,679,000
Weighted-average exercise price	$	16.85	$	18.27
Weighted-average grant date fair value	$	4.92	$	5.52
RSUs
Granted	2,967,000		2,358,000
Weighted-average grant date fair value	$	16.84	$	18.04
TSR performance-based RSUs
Granted	826,000		1,175,000
Weighted-average grant date fair value	$	21.21	$	27.65
Organic Revenue Growth performance-based RSUs
Granted	379,000		142,000
Weighted-average grant date fair value	$	16.08	$	17.96
OPG performance-based RSUs
Granted	1,758,000		—
Weighted-average grant date fair value	$	17.04	$	—

As of March 31, 2024, the remaining unrecognized compensation expense related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs under the Company’s 2014 Plan amounted to $264 million, which will be amortized over a weighted-average period of 2.24 years.

As of March 31, 2024, the remaining unrecognized compensation expense related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs under the B+L Plan amounted to $176 million, which will be amortized over a weighted-average period of 2.37 years.