Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

We recorded stock-based compensation expense of $8 million and $6 million ($5 million in each period, net of tax) during the three months ended June 30, 2023 and 2022, respectively, and $16 million and $12 million ($11 million and $9 million, net of tax) during the six months ended June 30, 2023 and 2022, respectively.

In 2020, we granted market-based restricted stock units (“RSUs”) that vest based on absolute stock price attainment. The grant date fair value of this award is estimated using a Monte Carlo simulation model.

The weighted average assumptions used in the model are as follows:

Expected volatility of stock price	91%
Risk-free interest rate	0.18%
Valuation period	3 years
Dividend yield	—%

The activity related to RSUs consisted of (in thousands of shares):

			Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Time-based RSUs
	Outstanding at January 1, 2023		451	$	92.06
		Granted (a)	72	208.55
		Vested (b)	(218)	54.55
		Forfeited	(5)	158.70
	Outstanding and expected to vest at June 30, 2023 (c)		300	$	146.24	1.5	$	68
Performance-based and market-based RSUs
	Outstanding at January 1, 2023		691	$	57.56
		Granted (a)	89	208.49
		Vested (b)	(344)	21.09
		Forfeited	(6)	129.91
	Outstanding at June 30, 2023		430	$	116.90	1.2	$	98
	Outstanding and expected to vest at June 30, 2023 (c)		384	$	106.80	1.2	$	88

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(a)Reflects the maximum number of stock units assuming achievement of all performance-, market- and time-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based RSUs granted during the six months ended June 30, 2022 was $194.74.

(b)The total fair value of RSUs vested during the six months ended June 30, 2023 and 2022 was $19 million, in each period.

(c)Aggregate unrecognized compensation expense related to time-based RSUs and performance-based and market-based RSUs amounted to $58 million and will be recognized over a weighted average vesting period of 1.3 years.