Issue link: http://catalog.e-digitaleditions.com/i/114936
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) Options outstanding at January 1, 2012 Granted Exercised Cancelled Options outstanding at December 31, 2012 Exercisable at December 31, 2012 Options expected to vest 22.8 2.6 (3.7) (2.0) 19.7 12.9 6.4 Weighted-Average Remaining Contractual Term (in years) Weighted Average Exercise Price $ $ $ $ 50.32 53.71 40.07 54.71 52.23 51.72 53.13 5.2 3.9 7.7 Aggregate Intrinsic Value $ $ $ 105.2 81.3 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: Weighted Average Grant date Fair value RSUs PSUs Shares (in millions) RSUs Nonvested at January 1, 2012 Granted Vested Cancelled Nonvested at December 31, 2012 1.2 1.0 (0.5) (0.2) 1.5 PSUs 0.1 0.1 ��� ��� 0.2 $ $ 54.17 50.90 53.17 52.69 52.53 $ $ 59.70 54.13 ��� 58.07 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. 35 Dollar amounts in millions except per share amounts or as otherwise specified