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Equity
 12 Months Ended
Dec. 31, 2022
Equity
NOTE 14—Equity:
 
a.
Ordinary shares and ADSs
As of December 31, 2022 and 2021, Teva had approximately 1.2 billion ordinary shares issued. Teva ordinary shares are traded on the
Tel-Aviv
Stock Exchange and on the New York Stock Exchange, in the form of American Depositary Shares (“ADSs”), each of which represents one ordinary share.
 

 
b.
Stock-based compensation plans
Stock-based compensation plans are comprised of stock options, RSUs, PSUs, and other equity-based awards to employees, officers, directors and consultants of the Company and its affiliates. The purpose of the plans is to (a) attract, retain, motivate, and reward such individuals, and (b) promote the creation of long-term value for shareholders of the Company by closely aligning the interests of such individuals with those of the shareholders.
On June 29, 2010, the Teva 2010 Long-Term Equity-Based Incentive Plan (“2010 Plan”) was approved by Teva’s shareholders, under which 70 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant. The 2010 Plan expired on June 28, 2015 (except with respect to awards outstanding on that date), and no additional awards under the 2010 Plan may be made.
On September 3, 2015, the Teva 2015 Long-Term Equity-Based Incentive Plan (“2015 Plan”) was approved by Teva’s shareholders, under which 43.7 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.
On April 18, 2016, Teva’s shareholders approved an increase of an additional 33.3 million equivalent share units to the share reserve of the 2015 Plan, so that 77 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.
On July 13, 2017, Teva’s shareholders approved an increase of an additional 65 million equivalent share units to the share reserve of the 2015 Plan, so that 142 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.
The 2015 Plan expired on June 30, 2020 (except with respect to awards outstanding on that date), and no additional awards under the 2015 Plan may be made.
On June 11, 2020, the Teva 2020 Long-Term Equity-Based Incentive Plan (“2020 Plan”) was approved by Teva’s shareholders and became effective on July 1, 2020. Under the 2020 Plan, 68 million shares, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.
As of December 
31, 2022, 74.0
 
million shares remain available for future awards under the 2020 Plan.
In the past, Teva had various employee-stock and incentive plans under which stock options and other share-based awards were granted. Stock options and other share-based awards granted under such prior plans continue in accordance with the terms of the respective plans.
The vesting period of the outstanding options and RSUs is generally between 1 to 4 years from date of grant. The vesting period of PSUs is generally 3 years from date of grant. The rights of ordinary shares obtained from the exercise of options, RSUs or PSUs are identical to those of other ordinary shares of the Company. The contractual term of these options is primarily for ten years.
Status of options
A summary of the status of the options granted by Teva as of December 31, 2022, 2021 and 2020, and changes during the years ended on those dates, is presented below (the number of options represents ordinary shares exercisable in respect thereof).
 
 
  
Year ended December 31,
 
 
  
2022
 
  
2021
 
  
2020
 
 
  
Number

(in thousands)
 
 
Weighted
average
exercise
price
 
  
Number

(in thousands)
 
 
Weighted
average
exercise
price
 
  
Number

(in thousands)
 
 
Weighted
average
exercise
price
 
Balance outstanding at beginning of year
      29,015     $ 36.96        35,234     $ 37.27        40,064     $ 37.90  
Changes during the year:
                                                   
Forfeited
      (2,378 )      33.77        (3,644 )      36.09        (3,610 )      40.24  
Expired
      (2,518 )      41.26        (2,575 )      42.40        (1,220 )      49.35  
    
 
 
             
 
 
             
 
 
          
Balance outstanding at end of year
      24,119       36.83        29,015       36.96        35,234       37.27  
    
 
 
             
 
 
             
 
 
          
Balance exercisable at end of year
      24,119       36.83        26,989       38.30        28,556       40.56  
    
 
 
             
 
 
             
 
 
          
 
No options were granted during 2022, 2021 and 2020.
The following table summarizes information as of December 31, 2022 regarding the number of ordinary shares issuable upon vested options:
 
 Number of ordinary shares issuable upon exercise of vested options
  
Range of exercise prices
   
Balance at end of

period (in thousands)
     
Weighted average
exercise price
     
Weighted average
remaining life
  
    
Number of shares
     
$
     
Years
  
Lower than $15.01
      592        11.40        4.84  
$15.01 - $25.00
      7,781        18.96        5.13  
$25.01 - $35.00
      5,712        34.61        4.16  
$35.01 - $45.00
      509        38.13        0.57  
$45.01 - $55.00
      5,906        51.30        2.36  
$55.01 - $65.00
      3,619        59.10        2.33  
    
 
 
                    
Total
      24,119        36.83        3.70  
    
 
 
                    
The aggregate intrinsic value represents the total
pre-tax
intrinsic value, based on the Company’s closing stock price of $9.12 on December 31, 2022, less the weighted average exercise price in each range. This
represents the potential amount receivable by the option holders had all option holders exercised their options as of such date. As of December 31, 2022, there were no exercisable options that were
in-the-money.
No options were exercised during 2022, 2021 and 2020.
 

Status of
non-vested
RSUs and PSUs
The following table summarizes information about the number of RSUs and PSUs granted and outstanding:

 
 
  
Year ended December 31,
 
 
  
2022
 
  
2021
 
  
2020
 
 
  
Number

(in thousands)
 
 
Weighted
average

grant date

fair value
 
  
Number

(in thousands)
 
 
Weighted
average
grant date
fair value
 
  
Number

(in thousands)
 
 
Weighted
average
grant date
fair value
 
Balance outstanding at beginning of year
      24,412     $ 11.58        20,720     $ 13.81        15,977     $ 16.49  
Granted
      18,755       7.42        12,748       10.42        10,848       11.42  
Vested
      (7,571 )      13.02        (6,818 )      15.60        (4,324 )      19.49  
Forfeited
      (3,293 )      9.81        (2,238 )      12.18        (1,781 )      18.18  
    
 
 
             
 
 
             
 
 
          
Balance outstanding at end of year
      32,302       9.11        24,412       11.58        20,720       13.81  
    
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
  
The Company expenses compensation costs are based on the grant-date fair value. For the years ended December 31, 2022, 2021 and 2020, the Company recorded stock-based compensation costs as
follows:
 
 
  
Year ended December 31,
 
 
  
2022
 
  
2021
 
  
2020
 
 
  
(U.S. $ in millions)
 
Employee stock options
    $ 2      $ 16      $ 30  
RSUs and PSUs
      122        103        99  
    
 
 
     
 
 
     
 
 
  
Total stock-based compensation expense
      124        119        129  
Tax effect on stock-based compensation expense
      9        12        14  
    
 
 
     
 
 
     
 
 
  
Net effect
    $ 115      $ 107      $ 115  
    
 
 
     
 
 
     
 
 
  
As of December 31, 2022, the total unrecognized compensation cost before tax on RSUs/PSUs amounted to $181 
million. The cost is expected
to be recognized over a weighted average period of approximately 2.5 years. There were no unrecognized compensation costs related to employee stock options.
 
c
.
Dividends
Teva has not paid dividends on Teva ordinary shares or ADSs since
December 2017.
 
d
.
Accumulated other comprehensive loss
The components of accumulated other comprehensive loss attributable to Teva are presented in the table below:

 
 
 
Net Unrealized Gains/(Losses)
 
 
Benefit Plans
 
 
 
 
 
 
Foreign
currency
translation
adjustments
 
 
Derivative
financial
instruments
 
 
Actuarial
gains/(losses)
and prior
service
(costs)/credits
 
 
Total
 
 
 
(U.S. $ in millions)
 
Balance as of January 1, 2020
    $ (1,794 )       (420 )       (98 )      (2,312 ) 
Other comprehensive income/(loss) before reclassifications
      (190 )       22        (7 )      (175 ) 
Amounts reclassified to the statements of income
      —          35        (12 )      23  
    
 
 
     
 
 
     
 
 
    
 
 
  
Net other comprehensive income/(loss) before tax
      (190 )       57        (19 )      (152 ) 
Corresponding income tax
      65        —          1       66  
    
 
 
     
 
 
     
 
 
    
 
 
  
Net other comprehensive income/(loss) after tax*
      (125 )       57        (18 )      (86 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
Balance as of December 31, 2020
      (1,919 )       (363 )       (117 )       (2,399 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
Other comprehensive income/(loss) before reclassifications
      (386 )       —          18       (368 ) 
Amounts reclassified to the statements of income
      —          39        18       57  
    
 
 
     
 
 
     
 
 
    
 
 
  
Net other comprehensive income/(loss) before tax
      (386 )       39        36       (311 ) 
Corresponding income tax
 
 
31
 
 
 
—  
 
 
 
(4
) 
 
 
27
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net other comprehensive income/(loss) after tax*
 
 
(355
) 
 
 
39
 
 
 
32
 
 
 
(284
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2021
 
 
(2,274
) 
 
 
(324
) 
 
 
(85
) 
 
 
(2,683
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income/(loss) before reclassifications
 
 
(223
) 
 
 
—  
 
 
 
40
 
 
 
(183
) 
Amounts reclassified to the statements of income
 
 
—  
 
 
 
29
 
 
 
27
 
 
 
56
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net other comprehensive income/(loss) before tax
 
 
(223
) 
 
 
29
 
 
 
67
 
 
 
(127
) 
Corresponding income tax
 
 
(17
) 
 
 
—  
 
 
 
(10
) 
 
 
(27
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net other comprehensive income/(loss) after tax*
 
 
(240
) 
 
 
29
 
 
 
57
 
 
 
(154
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2022
 
$
(2,514
) 
 
$
(295
) 
 
$
(28
) 
 
$
(2,838
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Amounts do not include foreign currency translation adjustments attributable to
non-controlling
interests of $116 million loss in 2022, $107 million loss in 2021 and $56 million gain in 2020.