Total compensation expense related to share-based arrangements was $56 million, $45 million and $48 million for fiscal years 2023, 2022 and 2021, respectively, and is reflected in distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income. The total income tax benefit associated with share-based compensation recorded in the Company’s Consolidated Statements of Comprehensive Income was $12 million, $9 million and $10 million for fiscal years 2023, 2022 and 2021, respectively.

In addition, the Company sponsors an employee stock purchase plan to provide eligible employees with the opportunity to acquire shares of our common stock at a discount of 15% of the fair market value of the common stock on the date of purchase, and as such, the plan is considered compensatory for federal income tax purposes. The Company recorded $4 million of share-based compensation expense for fiscal years 2023, 2022 and 2021, respectively, associated with the employee stock purchase plan.

Stock Options—Certain directors, executive officers and other eligible employees have been granted time-based stock options (the “Time-Based Options”) and performance-based options (the “Performance Options” and, together with the Time-Based Options, the “Options”) to purchase shares of our common stock.

The Time-Based Options generally vest and become exercisable ratably over a three-year period from the date of the grant. Share-based compensation expense related to the Time-Based Options was $3 million, $6 million and $12 million for fiscal years 2023, 2022 and 2021, respectively.

The Performance Options generally vest and become exercisable ratably over a period of three years, from the date of the grant, provided that the Company achieves a predetermined financial performance condition established by the Compensation and Human Capital Committee of our Board of Directors for the respective award tranche. Based on the Company’s performance relative to the award agreements, no share-based compensation expense was recorded in fiscal year 2023, 2022 and 2021 related to the Performance Options.

The Options are nonqualified, with exercise prices equal to the estimated fair value of a share of common stock as of the date of the grant. Exercise prices range from $12.56 to $38.17 per share and generally have a 10-year life. The fair value of each Option is estimated as of the date of grant using a Black-Scholes option-pricing model.

Expected volatility is calculated leveraging the historical volatility of public companies similar to US Foods. The assumed dividend yield is zero because the Company has not historically paid dividends. The risk-free interest rate is the implied zero-coupon yield for U.S. Treasury securities having a maturity approximately equal to the expected term, as of the grant date. Due to a lack of relevant historical data, the simplified approach was used to determine the expected term of the options.


	Time Options	Performance Options	Total Options	Weighted- Average Fair Value		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Years
Outstanding as of December 31, 2022	3,650,606	186,321	3,836,927	$	9.05	$	24.32
Granted	—	—	—	$	—	$	—
Exercised	(1,168,490)	(77,769)	(1,246,259)	$	7.82	$	22.14
Forfeited	(49,335)	(2,547)	(51,882)	$	15.50	$	31.62
Outstanding as of December 30, 2023	2,432,781	106,005	2,538,786	$	9.52	$	25.24	5.2
Vested and exercisable as of December 30, 2023	2,238,231	106,005	2,344,236	$	8.77	$	24.28	5.1

During fiscal years 2023, 2022 and 2021, Options were exercised with total intrinsic values of $22 million, $13 million and $14 million, respectively, representing the excess of fair value over the exercise price.

There was $1 million of total unrecognized compensation costs related to unvested Options expected to vest as of December 30, 2023, which is expected to be recognized over a weighted-average period of one year.

Restricted Stock Awards—Certain executive officers have been granted restricted stock awards (“RSAs”), some of which vest ratably over a three-year period from the date of grant (the “Time-Based RSA”) and others of which vest to the extent certain performance conditions are met (the “Performance RSAs”).

The Performance RSAs were granted assuming the maximum level of performance and vest on the third anniversary of the grant date if specific performance conditions over a three-year performance period are achieved. The number of shares eligible to vest on the vesting date range from zero to 200% of the target award amount, based on the achievement of the performance conditions. The fair value of the Performance RSAs is measured using the fair market value of our common stock on the date of grant and recognized over the three-year vesting period for the portion of the award that is expected to vest. Compensation expense for the Performance RSAs is remeasured as of the end of each reporting period, based on management’s evaluation of whether, and to what extent, it is probable that performance conditions will be met.

Restricted Stock Units—Certain directors, executive officers and other eligible employees have been granted time-based restricted stock units (the “Time-Based RSUs”), performance-based restricted stock units (the “Performance RSUs”) and market performance-based restricted stock units (the “Market Performance RSUs” and collectively with the Time-Based RSUs and Performance RSUs, the “RSUs”). The Time-Based RSUs generally vest ratably over three years, starting on the anniversary date of the grant. For fiscal years 2023, 2022 and 2021, the Company recognized $35 million, $29 million and $26 million, respectively, in share-based compensation expense related to the Time-Based RSUs.

The Performance RSUs generally vest over a three-year period, as and to the extent predetermined performance conditions are met. The fair value of each share underlying the Performance RSUs is measured at the fair market value of our common stock on the date of grant and recognized over the vesting period for the portion of the award that is expected to vest. Compensation expense for the Performance RSUs is remeasured as of the end of each reporting period, based on management’s evaluation of whether it is probable that the performance conditions will be met. The Company recognized $11 million, $4 million and $1 million of share-based compensation expense in fiscal years 2023, 2022 and 2021, respectively, for the Performance RSUs.

During fiscal year 2021, the Company granted Market Performance RSUs to certain executive officers and other eligible employees. These Market Performance RSUs awards vest at the end of a four-year performance period contingent on our achievement of certain total shareholder return performance (“TSR”) targets during the performance period. The grant date fair value of the Market Performance RSUs was estimated using a Monte-Carlo simulation. The Company recognized $2 million, $1 million and $3 million of share-based compensation expense in fiscal years 2023, 2022 and 2021, respectively, for the Market Performance RSUs.


	Time-Based RSUs	Performance RSUs	Market Performance RSUs	Total RSUs	Weighted- Average Fair Value
Unvested as of December 31, 2022	2,172,937	391,776	209,327	2,774,040	$	31.62
Granted	1,441,470	604,074	168,162	2,213,706	$	35.71
Vested	(1,088,926)	—	—	(1,088,926)	$	24.78
Forfeited	(337,853)	(143,475)	(57,089)	(538,417)	$	36.07

Unvested as of December 30, 2023	2,187,628	852,375	320,400	3,360,403	$	35.82

As of December 30, 2023, there was $70 million of unrecognized compensation cost related to the RSUs that is expected to be recognized over a weighted-average period of two years.

Share Repurchase Program—On November 2, 2022, our Board of Directors approved a Share Repurchase Program under which the Company is authorized to repurchase up to $500 million of its outstanding common stock. For the year ended

December 30, 2023, the Company repurchased 7,396,224 shares at an aggregate purchase price of approximately $294 million under the program. Additionally, during the year ended December 30, 2023, the Company recorded $3 million of excise tax associated with common stock repurchases. At December 30, 2023, there was approximately $192 million in remaining funds authorized under this program.

The size and timing of any repurchases will depend on a number of factors, including share price, general business and market conditions and other factors. Under the Share Repurchase Program, repurchases can be made from time to time using a variety of methods, including open market purchases, privately negotiated transactions, accelerated share repurchases and Rule 10b5-1 trading plans. The Share Repurchase Program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The repurchase authorization does not have an expiration date.