beatandraise : SEC Filings Research with AI

beatandraise.com

2.2.0.25falsefalse10901 - Disclosure - Stock-Based Compensationtruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) USD ($) / shares $Duration_1_1_2010_To_12_31_2010http://www.sec.gov/CIK0000059478duration2010-01-01T00:00:002010-12-31T00:00:00Unit12Standardhttp://www.xbrl.org/2003/iso4217USDiso42170Unit15Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0Unit1Standardhttp://www.xbrl.org/2003/instancesharesxbrli0Unit14Standardhttp://www.xbrl.org/2003/instancepurexbrli0USDUSD$2true0lly_StockBasedCompensationAbstractllyfalsenadurationStock-Based Compensation [Abstract]falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringStock-Based Compensation [Abstract]falsefalseStock-Based Compensation [Abstract]3false0us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<div> <div> <div> Note 9:  Stock-Based Compensation   Stock-based compensation expense in the amount of $231.0 million, $368.5 million, and $255.3 million was recognized in 2010, 2009, and 2008, respectively, as well as related tax benefits of $80.8 million, $128.9 million, and $88.6 million, respectively.  Our stock-based compensation expense consists primarily of performance awards (PAs), shareholder value awards (SVAs), and restricted stock units (RSUs).  We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.  We provide newly issued shares and treasury stock to satisfy stock option exercises and for the issuance of PA, SVA and RSU shares.  We classify tax benefits resulting from tax deductions in excess of the compensation cost recognized for exercised stock options as a financing cash flow in the consolidated statements of cash flows.    At December 31, 2010, additional stock-based compensation awards may be granted under the 2002 Lilly Stock Plan for not more than 82.0 million shares.    <div> Performance Award Program PAs are granted to officers and management and are payable in shares of our common stock.  The number of PA shares actually issued, if any, varies depending on the achievement of certain pre-established earnings-per-share targets over a two-year period.  In 2009, we granted both a one-year and a two-year award to all global management as a transition to a two-year performance period for all PAs granted beginning in 2010.  PA shares are accounted for at fair value based upon the closing stock price on the date of grant and fully vest at the end of the measurement periods.  The fair values of PAs granted in 2010 and 2008 were $30.88 and $51.22, respectively.  The fair values of PAs granted in 2009 were $36.17 for the one-year award and $34.12 for the two-year award.  The number of shares ultimately issued for the PA program is dependent upon the earnings achieved during the vesting period.  Pursuant to this plan, approximately 3.8 million shares, 2.8 million shares, and 2.5 million shares were issued in 2010, 2009, and 2008, respectively.  Approximately 3.8 million shares are expected to be issued in 2011.  As of December 31, 2010, the total remaining unrecognized compensation cost related to nonvested PAs amounted to $31.5 million, which will be amortized over the weighted-average remaining requisite service period of 12 months.</div></div>   <div> Shareholder Value Award Program In 2007, we implemented a SVA program, which replaced our stock option program.  SVAs are granted to officers and management and are payable in shares of common stock at the end of a three-year period.  The number of shares actually issued varies depending on our stock price at the end of the three-year vesting period compared to pre-established target stock prices.  We measure the fair value of the SVA unit on the grant date using a Monte Carlo simulation model.  The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award.  Expected volatilities utilized in the model are based on implied volatilities from traded options on our stock, historical volatility of our stock price, and other factors.  Similarly, the dividend yield is based on historical experience and our estimate of future dividend yields.  The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant.  The weighted-average fair values of the SVA units granted during 2010, 2009, and 2008 were $25.97, $33.97, and $43.46, respectively, determined using the following assumptions:   <div>   <table class="MsoNormalTable" style="font-size: 11pt; font-family: 'Calibri','sans-serif'; border-collapse: collapse;" cellspacing="0" cellpadding="0" width="661" border="0"> <tr><td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 3.2in; padding-top: 0in;" valign="top" width="307"> (Percents)</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 2010</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 85.5pt; padding-top: 0in;" valign="top" width="114"> 2009</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 2008</td></tr> <tr><td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 3.2in; padding-top: 0in;" valign="top" width="307"> Expected dividend yield </td> <td style="padding-right: 5.4pt; border-top: windowtext 1pt solid; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 4.50</td> <td style="padding-right: 5.4pt; border-top: windowtext 1pt solid; padding-left: 5.4pt; padding-bottom: 0in; width: 85.5pt; padding-top: 0in;" valign="top" width="114"> 4.00</td> <td style="padding-right: 5.4pt; border-top: windowtext 1pt solid; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 3.00</td></tr> <tr><td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 3.2in; padding-top: 0in;" valign="top" width="307"> Risk-free interest rate </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> .10– 1.36</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 85.5pt; padding-top: 0in;" valign="top" width="114"> .44- 1.48</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 2.05- 2.29</td></tr> <tr><td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 3.2in; padding-top: 0in;" valign="top" width="307"> Range of volatilities </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 28.00– 28.69</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 85.5pt; padding-top: 0in;" valign="top" width="114"> 24.34- 24.92</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; padding-bottom: 0in; width: 1.25in; padding-top: 0in;" valign="top" width="120"> 20.48- 21.48</td></tr></table></div> <div>   A summary of the SVA activity is presented below: <table class="MsoNormalTable" style="font-size: 11pt; font-family: 'Calibri','sans-serif'; border-collapse: collapse;" cellspacing="0" cellpadding="0" width="56%" border="0"> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%">  </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="bottom" width="31%"> Units Attributable to SVAs (in thousands) </td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Outstanding at January 1, 2008 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 922</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Granted </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 1,282</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Forfeited or expired </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="top" width="31%"> (301)</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Outstanding at December 31, 2008 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 1,903</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Granted </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 1,416</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Forfeited or expired </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="top" width="31%"> (559)</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Outstanding at December 31, 2009 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 2,760</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Granted </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> 1,987</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Issued </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; height: 12.35pt;" valign="top" width="31%"> (365)</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Forfeited or expired </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="top" width="31%"> (745)</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 68.94%; padding-top: 0in; height: 12.35pt;" valign="top" width="68%"> Outstanding at December 31, 2010 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 31.06%; padding-top: 0in; border-bottom: windowtext 1.5pt solid; height: 12.35pt;" valign="top" width="31%"> 3,637</td></tr></table></div>   The maximum number of shares that could ultimately be issued upon vesting of the SVA units outstanding at December 31, 2010, is 4.9 million.  Approximately 0.3 million shares are expected to be issued in 2011.  As of December 31, 2010, the total remaining unrecognized compensation cost related to nonvested SVAs amounted to $46.3 million, which will be amortized over the weighted-average remaining requisite service period of 20 months.    <div> Restricted Stock Unit RSUs are granted to certain employees and are payable in shares of our common stock. RSU shares are accounted for at fair value based upon the closing stock price on the date of grant.  The corresponding expense is amortized over the vesting period, typically three years.  The fair values of RSU awards granted in 2010, 2009, and 2008 were $34.78, $38.12, and $51.22, respectively.  The number of shares ultimately issued for the RSU program remains constant with the exception of forfeitures.  Pursuant to this plan, 1.5 million, 0.5 million and 0.4 million shares were granted in 2010, 2009, and 2008, respectively, and approximately 0.2 million shares were issued in 2010.  Approximately 0.2 million shares are expected to be issued in 2011.  As of December 31, 2010, the total remaining unrecognized compensation cost related to nonvested RSUs amounted to $40.6 million, which will be amortized over the weighted-average remaining requisite service period of 23 months.   Stock Option Program Stock options were granted prior to 2007 to officers and management at exercise prices equal to the fair market value of our stock price at the date of grant.  No stock options were granted subsequent to 2007.  Options fully vest three years from the grant date and have a term of 10 years.   Stock option activity during 2010 is summarized below: <table class="MsoNormalTable" style="font-size: 11pt; font-family: 'Calibri','sans-serif'; border-collapse: collapse;" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%">  </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="bottom" width="16%"> Shares of Common Stock Attributable to Options (in thousands)</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="bottom" width="16%">   Weighted-Average Exercise Price of Options</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="bottom" width="18%"> Weighted-Average Remaining Contractual Term (in years)</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="bottom" width="14%"> Aggregate Intrinsic Value</td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%"> Outstanding at January 1, 2010 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 59,449</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> $69.36</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; height: 12.35pt;" valign="top" width="18%">  </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; height: 12.35pt;" valign="top" width="14%">  </td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%"> Exercised </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> (5)</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 16.60</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; height: 12.35pt;" valign="top" width="18%">  </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; height: 12.35pt;" valign="top" width="14%">  </td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%"> Forfeited or expired </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 12.35pt;" valign="top" width="16%"> (3,937)</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 74.03</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; height: 12.35pt;" valign="top" width="18%">  </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; height: 12.35pt;" valign="top" width="14%">  </td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%"> Outstanding at December 31, 2010 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 55,507</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 69.04</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; height: 12.35pt;" valign="top" width="18%">                   2.1</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; height: 12.35pt;" valign="top" width="14%">        $1.1 </td></tr> <tr style="height: 12.35pt;"><td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 33.68%; padding-top: 0in; height: 12.35pt;" valign="top" width="33%"> Exercisable at December 31, 2010 </td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.36%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 55,507</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 16.56%; padding-top: 0in; height: 12.35pt;" valign="top" width="16%"> 69.04</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 18.62%; padding-top: 0in; height: 12.35pt;" valign="top" width="18%">                   2.1</td> <td style="padding-right: 1.45pt; padding-left: 1.45pt; padding-bottom: 0in; width: 14.78%; padding-top: 0in; height: 12.35pt;" valign="top" width="14%">          1.1 </td></tr></table>   All options were vested as of December 31, 2010.   The intrinsic value of options exercised during 2010, 2009, and 2008 amounted to $0.1 million, $0.3 million, and $4.8 million, respectively.  The total grant date fair value of options vested during 2009, and 2008 amounted to $68.5 million, and $84.1 million, respectively.  We received cash of $0.1 million, $0.2 million, and $2.9 million from exercises of stock options during 2010, 2009, and 2008, respectively.  The recognized related tax benefits for all three years were not material.</div></div></div> </div>Note 9:  Stock-Based Compensation   Stock-based compensation expense in the amount of $231.0 million, $368.5 million, and $255.3 million wasfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 falsefalseStock-Based Compensation [Text Block]12Stock-Based CompensationUnKnownUnKnownUnKnownUnKnownfalsetrue