The Company has various equity incentive plans under which it may grant stock awards to directors, officers and employees. The Company also has an employee stock purchase plan (ESPP).

The table below summarizes the components of total stock-based compensation:


(in millions)	2025		2024		2023
Stock options	$	—	$	1	$	2
Stock awards	42		31		39
Deferred stock awards	2		1		1
Employee stock purchase plan	25		19		18
Stock-based compensation	$	69	$	52	$	60

Tax benefit related to stock-based compensation	$	17	$	13	$	14

The Company will recognize $42 million of stock-based compensation for non-vested awards over a weighted-average period of 1.5 years. Unrecognized expense for non-vested stock options was immaterial as of December 31, 2025.

The Company is authorized to issue 31 million shares of common stock under these plans, of which 11 million shares remain available for future grants of either options or stock awards as of December 31, 2025.

Stock options to purchase common stock are granted at the fair market value of the stock on the date of grant. The stock options granted have terms of up to ten years. No stock options were granted in 2025 or 2024.

The fair value of each option grant in 2023 was estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average assumptions used to estimate the fair value of options granted included an expected volatility of 46%, an expected term of 6 years, a risk-free interest rate of 3.64%, and no expected dividend yield. The weighted-average grant date fair value per share was $16.77 and the estimated fair value of options granted was $1 million.

The expected market price volatility and expected term are based on historical results. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected dividend yield is based on the estimated weighted average dividend yield over the expected term. The expected forfeiture rates are based on historical experience.

The tables below summarize stock option activity for the year ended December 31, 2025:


	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2024	1,101,574	$	62.03	4.1	$	5

Exercised	(369,617)	62.87
Canceled	(34,362)	80.76
Forfeited or expired	(435)	55.74
Outstanding, December 31, 2025	697,160	$	60.66	4.0	$	1

Exercisable, December 31, 2025	656,873	$	61.02	3.9	$	1
Vested or expected to vest, December 31, 2025	697,160	$	60.66	4.0	$	1

Cash received from stock option exercises was $23 million for the year ended December 31, 2025, and was not material in 2024 or 2023.

Restricted Stock Units (RSUs) are awarded to eligible employees and entitle the grantee to receive shares of common stock when vested. The fair value of the RSUs is based on the stock price on the date of grant. Generally, RSUs vest over a defined period of time as stated in the grant agreement from the date of grant, subject to the employee's continued employment or the date of the employee’s retirement eligibility, and expense is recognized accordingly.

Performance Share Units (PSUs) are awarded to certain executives and entitle the grantee to receive shares of common stock if specific performance goals and market conditions are achieved at the end of a three-year period from the grant date. There are several tranches of PSUs which vest when performance goals or market conditions are met. The fair value of performance-based tranches is based on the stock price on the date of grant. The fair value of market-based tranches is estimated using the Monte Carlo simulation model on the date of grant. Potential payouts range from 0% to 200% of a target level.

The following table summarizes information about outstanding stock awards:


	Number of Units	Weighted-Average Grant Date Fair Value		Weighted- Average Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Non-vested, December 31, 2024	1,365,702	$	43.80	1.6	$	90
Granted	943,946	64.19
Vested	(800,544)	52.26
Forfeited	(98,837)	52.85
Non-vested, December 31, 2025	1,410,267	$	50.65	1.4	$	71

Deferred Stock Units (DSUs) are awarded to members of the Board of Directors as part of their retainers. The underlying common shares are issued upon retirement from the Board, but require no future service period. As a result, the entire intrinsic value of the awards is expensed on the date of grant.

The ESPP allows employees to purchase common stock at 85% of the stock price on the first day of the offering period or the specified purchase date, whichever is lower. Employees may contribute up to 10% of their base earnings during the offering period to purchase stock. Employees purchased 2.0 million, 2.2 million, and 1.9 million shares in 2025, 2024, and 2023 under the ESPP.