2012 Annual Report  Note 19 EMPLOYEE STOCK BENEFIT PLANS  On May 1, 2012, the shareholders approved the 2012 Stock Award and Incentive Plan (the 2012 Plan), which replaced the 2007 Stock  Incentive Plan. Shares of common stock reserved for issuance pursuant to stock plans, options and conversions of preferred stock  were 283 million at December 31, 2012. Shares available to be granted for the active plans, adjusted for the combination of plans,  were 116 million at December 31, 2012. Shares for the stock option exercise and share unit vesting are issued from treasury stock. Only shares actually delivered to participants in connection with an award after all restrictions have lapsed will reduce the number of  shares reserved. Shares tendered in a prior year to pay the purchase price of options and shares previously utilized to satisfy  withholding tax obligations upon exercise continue to be available and reserved.  Executive officers and key employees may be granted options to purchase common stock at no less than the market price on the date  the option is granted. Options generally become exercisable ratably over 4 years and have a maximum term of 10 years. Additionally, the plan provides for the granting of stock appreciation rights whereby the grantee may surrender exercisable rights and  receive common stock and/or cash measured by the excess of the market price of the common stock over the option exercise price.  Common stock may be granted to key employees, subject to restrictions as to continuous employment. Restrictions expire over a four  year period from date of grant. Compensation expense is recognized over the vesting period. A stock unit is a right to receive stock at  the end of the specified vesting period but has no voting rights.  Market share units were granted to certain executives beginning in 2010. Vesting is conditioned upon continuous employment until  vesting date and the payout factor equals at least 60%. The payout factor is the share price on vesting date divided by share price on  award date, with a maximum of 200%. The share price used in the payout factor is calculated using an average of the closing prices  on the grant or vest date, and the nine trading days immediately preceding the grant or vest date. Vesting occurs ratably over four  years.  Long-term performance awards have a three year cycle and are delivered in the form of a target number of performance share units. The number of shares ultimately issued is calculated based on actual performance compared to earnings targets and other performance  criteria established at the beginning of the performance period. The awards have annual goals with a maximum payout of 167.5%. If  threshold targets are not met for a performance period, no payment is made under the plan for that annual period. Vesting occurs at  the end of the three year period.  $^{ }$Stock-based compensation expense is based on awards ultimately expected to vest and is recognized over the vesting period. The  acceleration of unvested stock options and restricted stock units in connection with the acquisition of Amylin resulted in stock-based  compensation expense in 2012. Forfeitures are estimated based on historical experience at the time of grant and revised in subsequent  periods if actual forfeitures differ from those estimates. Stock-based compensation expense was as follows:  $^{ }$Share-based compensation activities were as follows:  Years Ended December 31,  Dollars in Millions 2012 2011 2010 Stock options $ 7  $  27 $ 50 Restricted stock  64  79 83 Market share units  23  23 13 Long-term performance awards  60  32 47 Amylin stock options and restricted stock units (see Note 4)   94   -  - Total stock-based compensation expense  $ 248  $  161 $ 193 Income tax benefit  $  82  $   56 $  63 63  Long-Term Stock Options  Restricted Stock Units Market Share Units  Performance Awards Weighted-  Number Weighted- Number Weighted- Number Weighted-  Number of Average of Average of  Average  of  Average Options  Exercise Price Nonvested  Grant-Date  Nonvested  Grant-Date Nonvested  Grant-Date  Shares in Thousands Outstanding  of Shares  Awards  Fair Value  Awards  Fair Value  Awards  Fair Value  Balance at January 1, 2012  70,224 $   27.04   8,416 $  23.10   1,982 $   25.39  3,411 $  23.53  Granted   -  -   3,036  32.71   1,076  31.85  1,717  32.33  Released/Exercised   (16,560)  24.18   (3,341)  22.13   (562)  25.29  (1,087)  19.63  Adjustments for actual payout   -  -   -  -   (166)  225  32.55  Forfeited/Cancelled   (11,699)  44.85   (543)  25.96   (126)  27.38  (170)  28.90  Balance at December 31, 2012   41,965  23.21   7,568  27.18   2,204  28.46  4,096  28.44  Vested or expected to vest   41,875  23.22   6,826  27.18   1,988  28.46  3,694  28.44 