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SHARE-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION 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, June 21, 2022 and May 16, 2023 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan. Effective May 14, 2024, 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 20,000,000 common shares. Approximately 32,688,000 common shares were available for future grants as of September 30, 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 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”) and as further amended and restated by the 2024 Plan Amendment (as described below). 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”). In May 2024, Bausch + Lomb’s shareholders approved a further amendment and restatement of the B+L Plan to increase the number of shares authorized for issuance thereunder by an additional 14,000,000 common shares, resulting in an aggregate 52,000,000 common shares of Bausch + Lomb authorized for issuance under the Plan (the “B+L 2024 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 20,900,000 Bausch + Lomb common shares were available for future grants as of September 30, 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 (the “OPG PSU”). This OPG PSU award is designed to reward the B+L Executives for achieving significant outperformance of performance goals that Bausch + Lomb believes would ultimately deliver substantial value to shareholders if achieved. The OPG PSUs may be earned 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 (if applicable). Any OPG 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 PSUs 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 PSUs in each reporting period reflects the latest probability of Bausch + Lomb 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 will be recognized and any previously recognized compensation expense will be reversed. During July 2024, the Talent and Compensation Committee of the B+L Board of Directors approved certain amendments to: (i) the TSR performance metric of certain PSU awards, including the previously granted OPG PSU and (ii) the time-based vesting conditions of awards previously granted to certain eligible recipients in connection with the B+L IPO. 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 and nine months ended September 30, 2024 and 2023:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Stock options |  | $ | 4 |  |  | $ | 4 |  |  | $ | 10 |  |  | $ | 14 |
RSUs |  | 34 |  |  | 25 |  |  | 97 |  |  | 89 |
|  | $ | 38 |  |  | $ | 29 |  |  | $ | 107 |  |  | $ | 103 |
Research and development expenses |  | $ | 4 |  |  | $ | 3 |  |  | $ | 9 |  |  | $ | 8 |
Selling, general and administrative expenses |  | 34 |  |  | 26 |  |  | 98 |  |  | 95 |
|  | $ | 38 |  |  | $ | 29 |  |  | $ | 107 |  |  | $ | 103 |
Share-based awards granted for the nine months ended September 30, 2024 and 2023 consist of:
| Nine Months Ended September 30,
| 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 | 5,173,000 |  |  | 4,881,000 |
Weighted-average grant date fair value | $ | 8.91 |  |  | $ | 9.02 |
Adjusted Operating Cash Flow performance-based RSUs |  |  |
Granted | 1,332,000 |  |  | 647,000 |
Weighted-average grant date fair value | $ | 9.60 |  |  | $ | 10.57 |
Bausch+ Lomb Share-Based Awards |  |  |
Stock options |  |  |
Granted | 1,317,000 |  |  | 3,453,000 |
Weighted-average exercise price | $ | 16.85 |  |  | $ | 18.21 |
Weighted-average grant date fair value | $ | 4.92 |  |  | $ | 5.33 |
RSUs |  |  |
Granted | 3,652,000 |  |  | 3,165,000 |
Weighted-average grant date fair value | $ | 16.77 |  |  | $ | 17.97 |
TSR performance-based RSUs |  |  |
Granted | 826,000 |  |  | 1,175,000 |
Weighted-average grant date fair value | $ | 21.21 |  |  | $ | 27.65 |
Organic Revenue Growth PSUs |  |  |
Granted | 379,000 |  |  | 142,000 |
Weighted-average grant date fair value | $ | 16.08 |  |  | $ | 17.96 |
OPG PSUs |  |  |
Granted | 1,792,000 |  |  | — |
Weighted-average grant date fair value | $ | 17.03 |  |  | $ | — |
As of September 30, 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 and the B+L Plan amounted to $223 million, which will be amortized over a weighted-average period of 1.86 years. As of September 30, 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 $163 million, which will be amortized over a weighted-average period of 1.92 years.

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