STRYKER

2013 Form 10-K

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34 Dollar amounts in millions except per share amounts or as otherwise specified NOTE 9 - CAPITAL STOCK In February 2013 we declared a quarterly dividend of $0.265 per share, payable April 30, 2013 to shareholders of record at the close of business on March 28, 2013. In April 2013 we declared a quarterly dividend of $0.265 per share, payable July 31, 2013 to shareholders of record at the close of business on June 28, 2013. In July 2013 we declared a quarterly dividend of $0.265 per share, payable October 31, 2013 to shareholders of record at the close of business on September 30, 2013. In December 2013 we declared a quarterly dividend of $0.305 per share, payable January 31, 2014 to shareholders of record at the close of business on December 31, 2013. In December of 2012, 2011 and 2010, we announced that our Board of Directors had authorized us to purchase up to $405, $500 and $500, respectively, of our common stock (the 2012, 2011 and 2010 Repurchase Programs, respectively). The manner, timing and amount of purchases is determined by management based on an evaluation of market conditions, stock price and other factors and is subject to regulatory considerations. Purchases are to be made from time to time in the open market, in privately negotiated transactions or otherwise. During the year ended December 31, 2013 we repurchased 1.4 million shares at a cost of $95 under the 2010 Repurchase Program and 3.4 million shares at a cost of $222 under the 2011 Repurchase Program. As of December 31, 2013, the 2010 Repurchase Program was complete and the maximum dollar value of shares that may yet be purchased under the 2011 Repurchase Program was $278. We had made no repurchases pursuant to the 2012 Repurchase Program at December 31, 2013. Shares repurchased under the share repurchase programs are available for general corporate purposes, including offsetting dilution associated with stock option and other equity-based employee benefit plans. At December 31, 2013, the maximum dollar value of shares that may be purchased under the authorized Repurchase Programs was $683. Shares reserved for future compensation grants of Stryker common stock were 23 million and 29 million at December 31, 2013 and 2012. 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 2013 stock option activity is as follows: Shares (in millions) Weighted Average Exercise Price Weighted- Average Remaining Term (in years) Aggregate Intrinsic Value Outstanding January 1 19.7 $ 52.23 Granted 3.1 64.11 Exercised (5.0) 47.96 Canceled (0.8) 57.75 Outstanding December 31 17.0 $ 55.35 5.5 $ 337.4 Exercisable December 31 10.1 $ 53.77 3.9 $ 216.7 Options expected to vest 6.5 $ 57.47 7.9 $ 114.0 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, 2013, 2012 and 2011 was $97, $52 and $69, respectively. Exercise prices for options outstanding at December 31, 2013 ranged from $37.86 to $67.80. At December 31, 2013, there was $65 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 1.6 years. Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) We grant RSUs to key employees and non-employee directors and PSUs to certain 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, adjusted for the fact that RSUs do not include anticipated dividends. RSUs generally vest in one- third increments over a three-year period and are settled in stock. PSUs 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 2013 RSU and PSU activity is as follows: Shares (in millions) Weighted Average Grant date Fair value RSUs PSUs RSUs PSUs Nonvested at January 1 1.5 0.2 $ 52.53 $ 54.78 Granted 0.8 0.1 60.81 64.01 Vested (0.7) — 52.92 — Canceled (0.1) — 54.80 — Nonvested at December 31 1.5 0.3 $ 56.19 $ 58.10 At December 31, 2013 there was $50 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 2013 and 2012 was $60.81 and $50.90, respectively. The fair value of RSUs vested in 2013 was $35. At

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