Equity-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Equity-Based Compensation [Text Block]

Note 14 – Equity-Based Compensation

Williams’ Plan Information

The Williams Companies, Inc. 2007 Incentive Plan (the Plan) provides common-stock-based awards to both employees and nonmanagement directors. To date, 50 million new shares have been authorized for making awards under the Plan. The Plan permits the granting of various types of awards including, but not limited to, restricted

stock units and stock options. At December 31, 2023, 21 million shares of our common stock were reserved for issuance pursuant to existing and future stock awards, of which 12 million shares were available for future grants.

Additionally, up to 5.2 million new shares of our common stock have been authorized to date to be available for sale under our Employee Stock Purchase Plan (ESPP). Employees purchased 250 thousand shares at a weighted-average price of $27.56 per share during 2023. Approximately 0.9 million shares were available for purchase under the ESPP at December 31, 2023.

We recognize compensation expense on employee stock-based awards on a straight-line basis; forfeitures are recognized when they occur. Operating and maintenance expenses and Selling, general, and administrative expenses in our Consolidated Statement of Income include equity-based compensation expense in 2023, 2022, and 2021 of $77 million, $73 million, and $81 million, respectively. Income tax benefit recognized related to the stock-based compensation expense in 2023, 2022, and 2021 was $19 million, $18 million, and $20 million, respectively. Measured but unrecognized stock-based compensation expense at December 31, 2023, was $70 million, all of which related to restricted stock units. These amounts are expected to be recognized over a weighted-average period of 1.8 years.

Nonvested Restricted Stock Units

At December 31, 2023 and 2022, we had restricted stock units outstanding, including performance-based shares, of 6.6 million shares and 6.9 million shares, respectively, with a weighted-average fair value of $28.34 and $23.63, respectively. During 2023, we granted 3.8 million shares of restricted stock units with a weighted-average fair value of $27.43. Restricted stock units generally vest after three years. Performance-based grants may vest at a range from zero percent to 200 percent of the original shares granted based on performance against a target. At December 31, 2023, there were 1.8 million performance-based shares outstanding.

Stock Options

There were no stock options granted in 2023, 2022, or 2021. At December 31, 2023, we had 1.5 million stock options that were both outstanding and exercisable, with a weighted-average exercise price of $37.17. The weighted-average remaining contractual life for stock options that were both outstanding and exercisable at December 31, 2023, was 1.8 years. Cash received for the exercise of stock options in 2023 and 2022 was $2 million and $49 million, respectively, and the related income tax benefit recognized in both 2023 and 2022 was $2 million.