
In millions	Year ended December 31,	2024		2023		2022
Share Units Plan		$	33	$	25	$	31
Voluntary Incentive Deferral Plan (VIDP)		1		2		1
Stock option awards		12		11		8
Employee Share Investment Plan (ESIP)		28		26		23
Total stock-based compensation expense		$	74	$	64	$	63
Income tax impacts of stock-based compensation
Tax benefit recognized in income		$	18	$	15	$	16
Excess tax benefit recognized in income		$	15	$	10	$	14

The objective of the Share Units Plan is to enhance the Company's ability to attract and retain talented employees and to provide alignment of interests between such employees and the shareholders of the Company. Under the Share Units Plan, the Company grants performance share unit (PSU) awards and restricted share unit (RSU) awards.

PSU-ROIC awards settle depending on the level of attainment of a target return on invested capital (ROIC) performance condition, as defined by the award agreement, over the plan period of three years. The level of attainment of the performance condition results in a performance vesting factor that ranges from 0% to 200%. Settlement of the 2022 and 2023 PSU-ROIC awards is also conditional upon the attainment of a minimum share price market condition, calculated using the average of the last three months of the plan period. PSU-ROIC awards granted in 2024 are not subject to a minimum share price condition.

PSU-TSR awards settle depending on the level of attainment of a target total shareholder return (TSR) market condition, as defined by the award agreement, over the plan period of three years. The level of attainment of the market condition results in a performance vesting factor that ranges from 0% to 200% depending on the Company's TSR relative to a Class I Railways peer group and the S&P/TSX 60 companies for awards granted in 2022 and 2023, and relative to the S&P North American LargeMidCap transportation index for awards granted in 2024.

For PSU and RSU awards granted on or after January 1, 2024, dividends declared and paid on common shares accumulate in the form of additional units on a quarterly basis over the plan period.

PSUs and RSUs are settled in common shares of the Company by way of disbursement from the Share Trusts (see Note 18 – Share capital). The number of shares remitted to the participant upon settlement is equal to the sum of the number of PSUs awarded multiplied by the performance vesting factor and the number of RSUs awarded, less shares withheld to satisfy the participant's withholding tax requirement. This calculation also includes units granted in lieu of dividends for the Share Units Plan awards granted as of January 1, 2024.

For the 2022 grant, the level of ROIC attained resulted in a performance vesting factor of 55%, however, the minimum share price condition applicable to the PSU-ROIC awards was not attained, therefore the vesting criteria were not met for the plan period ended December 31, 2024. The level of TSR attained resulted in a performance vesting factor of 50% for the plan period ended December 31, 2024. As the vesting criteria for the PSU-TSR awards was met, settlement of a nominal number of shares, net of withholding tax requirements, is expected to occur in the first quarter of 2025. The total fair value of equity settled PSU awards that vested in 2024 was $19 million (2023 - $44 million; 2022 - $40 million).


	PSU-ROIC (1)			PSU-TSR (2)			RSUs (3)
	Units	Weighted-average grant date fair value		Units	Weighted-average grant date fair value		Units	Weighted-average grant date fair value
	In millions	Weighted-average grant date fair value		In millions	Weighted-average grant date fair value		In millions	Weighted-average grant date fair value
Outstanding at December 31, 2023	0.7	$	78.29	0.4	$	166.89	0.1	$	137.31
Granted (4)	0.2	$	166.63	0.1	$	217.75	0.1	$	166.64
Settled (5)	(0.2)	$	64.50	(0.1)	$	148.02	—	$	—
Forfeited	(0.1)	$	109.76	—	$	186.79	—	$	166.67
Expired (6)	(0.2)	$	81.03	—	$	—	—	$	—
Outstanding at December 31, 2024	0.4	$	123.77	0.4	$	192.33	0.2	$	157.55
Nonvested at December 31, 2023	0.5	$	78.29	0.2	$	166.89	0.1	$	137.31
Granted (4)	0.2	$	166.63	0.1	$	217.75	0.1	$	166.64
Vested (7)	—	$	—	(0.1)	$	180.18	—	$	—
Forfeited	(0.1)	$	109.76	—	$	186.79	—	$	166.67
Expired (6)	(0.2)	$	81.03	—	$	—	—	$	—
Nonvested at December 31, 2024	0.4	$	123.77	0.2	$	195.31	0.2	$	157.55

(1)The grant date fair value of equity settled PSU-ROIC awards granted in 2024 was $32 million. As at December 31, 2024, total unrecognized compensation cost related to all outstanding awards was $nil as the vesting conditions were not probable.

(2)The grant date fair value of equity settled PSU-TSR awards granted in 2024 was $27 million. As at December 31, 2024, total unrecognized compensation cost related to all outstanding awards was $22 million and is expected to be recognized over a weighted-average period of 1.8 years.

(3)The grant date fair value of equity settled RSU awards granted in 2024 was $18 million. As at December 31, 2024, total unrecognized compensation cost related to all outstanding awards was $13 million and is expected to be recognized over a weighted-average period of 1.9 years.

(5)Equity settled PSU-ROIC awards granted in 2021 met the minimum share price condition for settlement and attained a performance vesting factor of 190%. Equity settled PSU-TSR awards granted in 2021 attained a performance vesting factor of 119%. In the first quarter of 2024, these awards were settled, net of the remittance of the participants' withholding tax obligation of $46 million, by way of disbursement from the Share Trusts of 0.3 million common shares.


Year of grant	2024	2023	2022
Assumptions
Stock price ($) (1)	166.67	157.91	153.81
Expected stock price volatility (%) (2)	20	26	25
Expected term (years) (3)	3.0	3.0	3.0
Risk-free interest rate (%) (4)	3.80	3.38	1.58
Dividend rate ($) (5)	3.38	3.16	2.93
Weighted-average grant date fair value ($)
PSU-ROIC	166.63	89.37	81.03
PSU-TSR	217.75	174.04	180.18
RSU	166.64	142.39	132.53

The Company's VIDP provides eligible senior management employees the opportunity to elect to receive their annual incentive bonus payment in deferred share units (DSU) up to specific deferral limits. A DSU is equivalent to a common share of the Company and also earns dividends when normal cash dividends are paid on common shares. The number of DSUs received by each participant is established at the time of deferral. For each participant, the Company will grant a further 25% of the amount elected in DSUs, which will vest over a period of four years. The election to receive eligible incentive payments in DSUs is no longer available to a participant when the value of the participant's vested DSUs have reached their deferral limit, which is expressed as a multiple of their base salary.

DSUs are settled in common shares of the Company at the time of cessation of employment by way of an open market purchase by the Company. The number of shares remitted to the participant is equal to the number of DSUs awarded less shares withheld to satisfy the participant's withholding tax requirement.


	DSUs (1)
	Units	Weighted-average grant date fair value
	In millions
Outstanding at December 31, 2023	0.3	$	112.66
Granted	0.1	$	175.06
Settled (2)	(0.1)	$	106.33
Outstanding at December 31, 2024 (3)	0.3	$	120.55

(1)The grant date fair value of equity settled DSUs granted in 2024 was $4 million. As at December 31, 2024, the aggregate intrinsic value of all equity settled DSUs outstanding amounted to $48 million.

(2)For the year ended December 31, 2024, the shares purchased for the settlement of equity settled DSUs were net of the remittance of the participants' withholding tax obligation of $4 million.

(3)The total fair value of equity settled DSU awards vested, the number of units outstanding that were nonvested, unrecognized compensation cost and the remaining recognition period have not been quantified as they relate to a nominal number of units.

The Company's stock option plan allows for eligible employees to acquire common shares of the Company upon vesting at a price equal to the market value of the common shares at the grant date. The options issued by the Company are conventional options that vest over a period of time. Options generally vest over a period of four years of continuous employment for options granted in 2024 and prior to 2020. Options granted between 2020 and 2023 generally vest over a period of five years. Options are not generally exercisable during the first 12 months after the date of grant and expire after 10 years. As at December 31, 2024, 12.5 million common shares remained authorized for future issuances under these plans.


	Options outstanding			Nonvested options
	Number of options	Weighted-average exercise price		Number of options	Weighted-average grant date fair value
	In millions			In millions
Outstanding at December 31, 2023 (1)	3.3	$	127.64	1.5	$	26.65
Granted (2)	0.4	$	166.61	0.4	$	36.53
Forfeited/Cancelled	(0.1)	$	157.56	(0.1)	$	29.62
Exercised (3)	(0.4)	$	99.40	N/A	N/A
Vested (4)	N/A	N/A		(0.4)	$	24.87
Outstanding at December 31, 2024 (1)	3.2	$	142.55	1.4	$	29.82
Exercisable at December 31, 2024 (1)	1.8	$	127.70	N/A	N/A

(2)The grant date fair value of options granted in 2024 was $14 million ($36.53 per option). As at December 31, 2024, total unrecognized compensation cost related to all outstanding awards was $20 million and is expected to be recognized over a weighted-average period of 2.8 years.

(3)The total intrinsic value of options exercised in 2024 was $29 million (2023 - $33 million; 2022 - $42 million). The cash received upon exercise of options in 2024 was $41 million (2023 - $49 million; 2022 - $61 million) and the related excess tax benefit realized in 2024 was $nil (2023 - $1 million; 2022 - $2 million).

The following table provides the number of stock options outstanding and exercisable as at December 31, 2024 by range of exercise price and their related intrinsic value, and for options outstanding, the weighted-average years to expiration. The table also provides the aggregate intrinsic value for in-the-money stock options, which represents the value that would have been received by option holders had they exercised their options on December 31, 2024 at the Company's closing stock price of $145.97.


		Options outstanding						Options exercisable
		Number of options	Weighted-average years to expiration	Weighted-average exercise price		Aggregate intrinsic value		Number of options	Weighted-average exercise price		Aggregate intrinsic value
Range of exercise prices		In millions				In millions		In millions			In millions
	$ 74.18 - $ 110.00	0.4	2.7	$	97.24	$	21	0.4	$	97.24	$	21
	$ 110.01 - $ 130.00	0.7	4.1	$	120.82	16		0.6	$	120.47	15
	$ 130.01 - $ 150.00	0.7	5.7	$	141.08	5		0.4	$	140.58	3
	$ 150.01 - $ 170.00	0.6	7.9	$	157.78	—		0.2	$	154.45	—
	$ 170.01 - $ 187.11	0.8	8.1	$	173.86	—		0.2	$	172.84	—
Balance at December 31, 2024 (1)		3.2	6.0	$	142.56	$	42	1.8	$	127.70	$	39

(1) Stock options with a US dollar exercise price have been translated to Canadian dollars using the foreign exchange rate in effect at the balance sheet date. The weighted-average years to expiration of exercisable stock options was 4.7 years.


Year of grant	2024	2023	2022
Assumptions
Grant price ($)	166.61	157.89	152.84
Expected stock price volatility (%) (1)	23	23	21
Expected term (years) (2)	5.4	5.5	5.6
Risk-free interest rate (%) (3)	3.50	2.98	1.72
Dividend rate ($) (4)	3.38	3.16	2.93
Weighted-average grant date fair value ($)	36.53	32.96	27.00

The Company has an ESIP giving eligible employees the opportunity to subscribe for up to 10% of their gross salaries to purchase shares of the Company's common stock on the open market and to have the Company invest, on the employees' behalf, a further 35% of the amount invested by the employees, up to 6% of their gross salaries.

Company contributions to the ESIP, which consist of shares purchased on the open market, are subject to a one-year vesting period and are forfeited should certain participant contributions be sold or disposed of prior to vesting. Company contributions to the ESIP are held in Share Trusts until vesting, at which time shares are delivered to the employee.


	ESIP
	Number of shares	Weighted-average share price
	In millions
Unvested contributions, December 31, 2023	0.2	$	156.40
Company contributions	0.3	$	163.93
Vested (1)	(0.2)	$	156.75
Forfeited	(0.1)	$	163.02

Unvested contributions, December 31, 2024 (2)	0.2	$	163.25


Year ended December 31,	2024	2023	2022
Number of participants holding shares	21,492	21,450	19,967
Total number of ESIP shares purchased on behalf of employees (millions)	1.2	1.2	1.0