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Share-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
For the years ended December 31, 2024, 2023 and 2022 CNH recognized total share-based compensation expense of $19 million, $99 million and $87 million respectively. For the years ended December 31, 2024, 2023 and 2022, CNH recognized a total reduction to taxable income of $29 million, $14 million and $11 million, respectively, related to vesting of share-based compensation awards. Unrecognized share-based compensation costs will be recognized over a weighted-average period of 1.3 years.
CNH’s equity awards are governed by the CNH Industrial N.V. Equity Incentive Plan (“CNH EIP”) and CNH Industrial N.V. Directors’ Compensation Plan (“CNH DCP”).
At the AGM held on April 16, 2014, the Company’s shareholders approved the adoption of the CNH EIP, an umbrella program defining the terms and conditions for any subsequent long-term incentive program. The EIP allows grants of the following specific types of equity awards to any current or prospective executive director, officer, employee of, or service provider to, CNH: stock options, stock appreciation rights, restricted share units, restricted stock, performance shares or performance share units and other stock-based awards that are payable in cash, common shares or any combination thereof subject to the terms and conditions established by the Compensation Committee.
In February 2020, the Board of Directors approved the issuance of up to 50 million common shares under the EIP. At the AGM on April 16, 2020, the Company's shareholders approved the issuance of up to 7 million common shares to executive directors under the 2021-2023 Long-Term Incentive Plan (described below) in accordance with and under the EIP.
As part of the Demerger, any awards outstanding under the CNH EIP, and held by directors, officers and other employees vesting in 2022 were accelerated in December 2021 and the related equity incentives were issued by CNH in CNH stock. As a result of the Demerger, remaining outstanding awards vesting in 2023 and 2024 were converted to the entity the participant is employed with post spin. As such, for Iveco Group employees, the underlying stock awards under the CNH EIP vesting in 2023 and 2024 were converted at the effective date of the Demerger, subject to its terms, to Common Shares of Iveco Group N.V. The conversion of the CNH EIP includes appropriate adjustment mechanisms to ensure that the value of the unvested awards granted to all the beneficiaries under such plan remain unchanged pre and post demerger for employees in both the Iveco Group N.V. and CNH Industrial N.V.
Performance Share Units ("PSU")
2021-2023 Long-Term Incentive Plan
In February 2020, the Board of Directors approved the 2021-2023 Long-Term Incentive Plan under the EIP. In December 2020, CNH issued a new grant of PSUs to its key executive officers and select employees with the financial performance goals covering a three-year period culminating with a cliff vest date of February 28, 2024. Two internal financial metrics, Industrial ROIC (the ratio of Adjusted EBIT (after-tax) over Average Industrial Invested Capital) and Adjusted EPS (the net income (loss) excluding any nonrecurring items (after-tax), divided by the weighted average outstanding number of common shares on a fully diluted basis), weighted 50% each, and a multiplier-based on CNH’s percentile ranking of Total Shareholder Return among a comparator group, will determine the total PSUs earned. The internal financial metrics have a payout factor of up to 200% and the market based TSR determinant has a payout factor of 125%. These metrics are considered performance vesting conditions. As such, compensation cost will be accrued based on whether it is considered probable that the performance conditions will be satisfied. The fair value of the PSU awards issued under this plan will be calculated by using the CNH Industrial N.V. stock price on the grant date adjusted for the present value of future dividends that would not be received during the vesting period.
As of December 31, 2020, CNH issued 5 million PSUs. The total number of shares that will eventually vest may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards
that were issued in 2020 was $10.83 per share. The 2020 PSU awards distributed under this plan were issued on December 4, 2020 to key executive officers and select employees and on December 14, 2020 to the Chair of CNH. During 2021, CNH issued an additional 3 million PSUs to the CEO, key executive officers and select employees. The weighted average fair value of the awards that were issued in 2021 was $13.13 per share.
Effective January 1, 2022, the Iveco Group Business was separated from CNH Industrial N.V. by way of a legal statutory demerger to Iveco Group N.V. (the Demerger) and Iveco Group became a public listed company independent from CNH. As part of the Demerger, any awards outstanding under the CNH Equity Incentive Plan (or “CNH EIP”), and held by directors, officers and other employees vesting in April 2022 were accelerated in December 2021 and the related equity incentives were issued by CNH in CNH stock. Further, as a result of the Demerger, remaining outstanding awards vesting in 2023 and 2024 were converted to the entity the participant is employed with post Demerger. The conversion of the CNH EIP includes appropriate adjustment mechanisms to ensure that the value of the unvested awards granted to all the beneficiaries under such plan remain unchanged pre and post demerger for employees in both the Iveco Group N.V. and CNH Industrial N.V.
2022, 2023, and 2024 Long-Term Incentive Plan
In 2022, 2023, and 2024, the Board of Directors approved the 2022-2024 Long-Term Incentive Plan, the 2023-2025 Long-Term Incentive Plan, and the 2024-2026 Long-Term Incentive Plan respectively, under the EIP. The 2022, 2023, and 2024 Long-Term Incentive Plans feature the same three year vesting period, two internal financial metrics, and financial multiplier as the 2021 Long-Term Incentive plan. Additionally the two internal financial metrics and financial multiplier are calculated as specified in the 2021 Long Term Incentive plan. However, differences between all plans exist in regards to the performance achievement threshold for both ROIC and EPS. Furthermore, the 2022, 2023, and 2024 plans feature a smaller list of comparator group for its TSR percentile ranking when compared to the 2021 plan.
In 2023 and 2024 CNH issued 2.8 million and 9.7 million PSUs, respectively. The total number of shares that will eventually be issued may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards that were issued in 2023 and 2024 was $12.29 and $8.27 per share, respectively.
The following table reflects the activity of PSUs under the Long-Term Incentive Plans during the year ended December 31, 2024:
2024
Performance
Shares
Weighted
Average
Grant Date
Fair Value
Nonvested at beginning of year13,379,487 $9.52 
Granted9,714,110 $8.27 
Forfeited/Cancelled(1,163,447)$13.00 
Vested(15,128,611)$7.66 
Nonvested at end of year6,801,539 $11.28 
Restricted Share Units ("RSU")
In 2022, 2023, and 2024, CNH issued approximately 2 million, 2 million and 4 million Restricted Share Units (“RSUs”) to key executive officers and select employees with a weighted average fair value of $13.90, $11.87 and $9.42 per share, respectively. The fair value of the award is measured using the CNH Industrial N.V. stock price on the grant date adjusted for the present value of future dividends that employees will not receive during the vesting period. The RSUs vest upon a time-based service requirement.
2021-2023 Long-Term Incentive Plan
On December 4, 2020, CNH issued two separate RSU grants to key executive officers and select employees. Under the first RSU grant, 1.1 million RSUs were awarded to select employees with a weighted average fair value of $11.43. These awards vested on December 31, 2020. Under the second RSU grant, 3.3 million RSUs were awarded to select employees and were set to vest in three equal installments over a three-year period. The first tranche, which consisted of 1.1 million RSUs, was set to vest on April 30, 2022. The second and third tranches were set to vest on April 30, 2023, and April 30, 2024, respectively. The weighted average fair value for the December 2020 three tranche award group are $11.23, $11.02, and $10.82, respectively.
On December 14, 2020, CNH issued 120 thousand RSUs to the Chair of CNH, of which 17 thousand vested on December 31, 2020. The weighted average fair value for these awards is $10.96. The remaining 103 thousand RSUs vested in three equal installments on April 30, 2022, 2023, and 2024 respectively. The fair value for these awards was $10.76, $10.55 and $10.35, respectively.
During 2021, CNH issued an additional 1.5 million RSUs to the CEO, key executive officers and select employees. Of the awards that were issued, 1.2 million are set to vest in three equal installments over a three-year period. The first tranche, which consists of
0.4 million RSUs, were set to vest on April 31, 2022. The second and third tranches were set to vest on April 30, 2023, and April 30, 2024, respectively. The weighted average fair value of these awards are $14.04 per share for the first tranche, $13.84 per share for the second tranche, and $13.66 per share for the third tranche. The remaining awards issued in 2021 had a cumulative weighted average fair value of $16.73. In 2021, CNH, in anticipation of the Demerger, accelerated the vesting of awards with a vest date of April 30, 2022 to December 1, 2021, excluding shares awarded to the CEO and Chairperson. As a result, CNH recorded $5 million of expense due to the acceleration of these awards. The weighted average fair value of the shares vested during 2021 was $11.75 per share.
2022-2024 Long-Term Incentive Plan
In 2023 and 2024 CNH issued 2.1 million and 3.5 million RSUs. The total number of shares that will eventually be issued may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards that were issued in 2023 and 2024 were $11.87 and $9.42 per share.
The following table reflects the activity of RSUs under the Long-Term Incentive Plans during the year ended December 31, 2024:
2024
Restricted
Shares
Weighted
Average
Grant Date
Fair Value
Nonvested at beginning of year5,423,057 $11.21 
Granted3,510,065 $9.42 
Forfeited(893,278)$12.15 
Vested(1,835,471)$8.46 
Nonvested at end of year6,204,373 $10.88 
Additional Share-Based Compensation Information
The table below provides additional share-based compensation information for the years ended December 31, 2024, 2023 and 2022:
(in millions of dollars)202420232022
Total intrinsic value of options exercised and shares vested$203 $52 $22 
Fair value of shares vested$126 $14 $3