Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Generally, our annual grant of stock-based awards are made on a broad basis in the first quarter of each year.

Equity Awards

Stock-based compensation expense totaled $48 million, $19 million and $32 million during 2023, 2022 and 2021, respectively. There were no tax benefits recognized related to stock-based compensation during these periods.The following table summarizes RSU and stock option activity:


	RSUs		Stock Options
	Number	Weighted Average Grant Date Fair Value Per Share	Number	Weighted Average Exercise Price Per Share
Outstanding as of December 31, 2020	2,258,594	$21.76	5,752,932	$44.40
Granted	596,391	18.67	481,626	17.96
Forfeited or expired	(132,713)	18.78	(659,216)	58.37
Vested/exercised	(810,560)	30.83	(84,416)	8.81
Outstanding as of December 31, 2021	1,911,712	$17.16	5,490,926	$40.95
Granted	415,356	22.36	250,656	21.90
Forfeited or expired	(2,937)	25.55	(846,621)	61.46
Vested/exercised	(957,640)	22.01	(217,397)	15.20
Outstanding as of December 31, 2022	1,366,491	$15.33	4,677,564	$37.41
Granted	432,654	34.88	178,434	35.76
Forfeited or expired	(4,897)	35.76	(525,994)	61.06
Vested/exercised	(869,753)	13.21	(198,455)	12.64
Outstanding as of December 31, 2023	924,495	$26.36	4,131,549	$35.52
Options exercisable as of December 31, 2023			3,514,925	$37.56
Remaining unvested options outstanding and expected to vest			610,458	$23.93

Our stock-based plans provide that RSUs may not be sold or transferred until service-based restrictions have lapsed. Generally, upon termination of employment, RSUs which have not vested are forfeited. RSUs granted to executives generally vest over 3 years. RSUs granted to directors vest upon grant. The fair value of RSUs that vested during 2023, 2022 and 2021 was $30 million, $23 million and $14 million, respectively. The balance of unamortized RSU expense as of December 31, 2023 was $5 million, which is expected to be recognized over a weighted-average period of 1.2 years.

The exercise price of options represents the closing price of our common stock on the date of grant. The options granted generally vest over 3 years and expire 10 years after the grant date. The aggregate intrinsic value of stock options exercised during 2023, 2022 and 2021 was $4 million, $4 million and $1 million respectively. The balance of unamortized stock option expense as of December 31, 2023 was $1 million, which is expected to be recognized over a weighted-average period of 0.9 years.

The grant date fair value of options and other significant assumptions follow:


	2023		2022		2021
Weighted average grant date fair value	$16.52		$11.19		$8.94
Expected life of options (in years)	4.6		4.5		4.5
Risk-free interest rate	4.0	%	1.9	%	0.7	%
Expected volatility	50	%	62	%	62	%
Expected annual dividend per share	$0.00		$0.00		$0.00

The computation of the expected volatility assumption used in the Black-Scholes calculations is based on a 50/50 blend of historical and implied volatility. Information related to options outstanding as of December 31, 2023 follows:


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price Per Share		Number Exercisable	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price Per Share
$8.81 - $35.76	2,411,890	6.8	$	20.05	1,795,266	6.4	$	18.71
$46.07 - $62.50	1,531,586	2.6	54.53		1,531,586	2.6	54.53
$70.76 - $79.19	188,073	0.1	79.19		188,073	0.1	79.19
	4,131,549	4.9	$	35.52	3,514,925	4.4	$	37.56

As of December 31, 2023, options outstanding and options exercisable had an aggregate intrinsic value of $46 million and $37 million, respectively .

_______________________

Performance-based award units totaling 274,755 were awarded to certain senior executive and all of Section 16 officers during 2023 and performance-based award units totaling 426,957 and 613,868, respectively, were awarded to Section 16 officers during 2022 and 2021. These awards generally cliff vest after 3 years and contain annual performance conditions for each of the 3 years of the vesting period. Under GAAP, performance-based elements of such awards are not deemed granted until the performance targets have been established. The performance targets for each year are generally established in the first quarter.

For awards granted under the 2023 performance plan, 80% of the award is earned based on achievement of earnings before tax targets over three 1-year periods and 20% of the award is earned based on our 3-year cumulative TSR relative to companies in the S&P 500 on the date of the award. Awards granted under the 2022 and 2021 performance plans are earned based on achievement of EPS and return on invested capital goals over three 1-year periods, and earned or modified based on our 3-year cumulative TSR relative to companies in the S&P 500 on the date of the award. The performance component of these awards is deemed granted when targets are set while the TSR component of these awards is deemed granted upon issuance. During the first quarter of 2023, the following units were granted based upon the establishment of performance targets:


	Performance-based Award Units Granted in 2023	Weighted Average Grant Date Fair Value Per Share
2023 Performance Award Plan	128,213	$42.71
2022 Performance Award Plan	142,319	$35.87
2021 Performance Award Plan	204,622	$46.84

For awards granted under the 2023, 2022 and 2021 performance award plans, the number of units are adjusted at the end of each performance period based on attainment of certain performance targets and on market conditions, pursuant to the terms of the award agreements. As of December 31, 2023, there were 260,398 shares associated with performance awards that had been awarded to employees, but which are not deemed granted due to the underlying performance targets having not yet been established.

The balance of unamortized compensation expense associated with performance-based award units as of December 31, 2023 was less than $3 million, which is expected to be recognized over a weighted-average period of 0.9 years.

Liability Awards

We grant SGI awards in the form of stock units, determined by dividing the target amount by the closing price of our common stock at the grant date. Each stock unit represents the right to receive cash equal to the value of 1 share of our common stock upon vesting. SGI awards granted to executives vest and become payable at a rate of 1/3 of the total award each year. Performance-based awards were awarded to non-Section 16 executives and will be settled in cash.


	Location in Statement of Operations	December 31,
Compensation Expense (in millions)		2023		2022		2021
SGI awards	G&A	$	34	$	54	$	67
Performance-based awards for non-Section 16 executives	G&A	21		14		1


Liabilities (in millions)	Location on Balance Sheet	December 31, 2023		December 31, 2022
SGI awards	Accrued salaries, wages and benefits and Other noncurrent liabilities	$	58	$	92
Performance-based awards for other executives	Accrued salaries, wages and benefits and Other noncurrent liabilities	29		15