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Equity
 12 Months Ended
Dec. 31, 2023
Equity
NOTE 14—Equity:
 
a.
Ordinary shares and ADSs
As of December 31, 2023 and 2022, 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, 2023, 65.8 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, 2023, 2022 and 2021, 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,
  
    
2023
     
2022
     
2021
  
    
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
      24,119     $ 36.83        29,015     $ 36.96        35,234     $ 37.27  
Changes during the year:
               
Forfeited
      (885 )      34.65        (2,378 )      33.77        (3,644 )      36.09  
Expired
      (531 )      37.57        (2,518 )      41.26        (2,575 )      42.40  
  
 
 
       
 
 
       
 
 
    
Balance outstanding at end of year
      22,703       36.89        24,119       36.83        29,015       36.96  
  
 
 
       
 
 
       
 
 
    
Balance exercisable at end of year
      22,703       36.89        24,119       36.83        26,989       38.30  
  
 
 
       
 
 
       
 
 
    
No options
were
granted during 2023, 2022 and 2021.
The following table summarizes information as of December 31, 2023 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        3.84  
$15.01 - $25.00
      7,374        18.95        4.14  
$25.01 - $35.00
      5,470        34.66        3.17  
$35.01 - $45.00
      61        37.97        2.78  
$45.01 - $55.00
      5,707        51.26        1.36  
$55.01 - $65.00
      3,500        59.04        1.34  
  
 
 
        
Total
      22,703        36.89        2.76  
  
 
 
        
The aggregate intrinsic value represents the total
pre-tax
intrinsic value, based on the Company’s closing stock price of $10.44 on December 31, 2023, 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, 2023, there were no exercisable options that were
in-the-money.
No options were exercised during 2023, 2022 and 2021.
 
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,
  
    
2023
     
2022
     
2021
  
    
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
      32,302     $ 9.11        24,412     $ 11.58        20,720     $ 13.81  
Granted
      16,608       9.77        18,755       7.42        12,748       10.42  
Vested
      (10,195 )      10.28        (7,571 )      13.02        (6,818 )      15.60  
Forfeited
      (3,052 )      9.81        (3,293 )      9.81        (2,238 )      12.18  
  
 
 
       
 
 
       
 
 
    
Balance outstanding at end of year
      35,664       9.07        32,302       9.11        24,412       11.58  
  
 
 
       
 
 
       
 
 
    
The Company expenses compensation costs are based on the grant-date fair value. For the years ended December 31, 2023, 2022 and 2021, the Company recorded stock-based compensation costs as follows:
 
    
Year ended December 31,
  
    
2023
     
2022
     
2021
  
    
(U.S. $ in millions)
  
Employee stock options
    $ —       $ 2      $ 16  
RSUs and PSUs
      121        122        103  
  
 
 
     
 
 
     
 
 
  
Total stock-based compensation expense
      121        124        119  
Tax effect on stock-based compensation expense
      11        9        12  
  
 
 
     
 
 
     
 
 
  
Net effect
    $ 110      $ 115      $ 107  
  
 
 
     
 
 
     
 
 
  
As of December 31, 2023, the total unrecognized compensation cost before tax on RSUs/PSUs amounted to $192 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, 2021
    $ (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 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Other comprehensive income/(loss) before reclassifications
      167       (1 )      (17 )      149  
Amounts reclassified to the statements of income
      —        30       (4 )      26  
  
 
 
    
 
 
    
 
 
    
 
 
  
Net other comprehensive income/(loss) before tax
      167       29       (21 )      175  
Corresponding income tax
      (37 )      —        3       (34 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Net other comprehensive income/(loss) after tax*
      130       29       (18 )      141  
  
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of December 31, 2023
    $ (2,384 )    $ (266 )    $ (46 )    $ (2,697 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
 
*
Amounts do not include foreign currency translation adjustments attributable to
non-controlling
interests of $50 million loss in 2023, $116 million loss in 2022 and $107 million loss in 2021.