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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation
NOTE 19: STOCK-BASED COMPENSATION
RTX’s long-term incentive plans authorize various types of market and performance-based incentive awards that may be granted to officers and key employees. The RTX Corporation Long-Term Incentive Plan, as amended and restated (LTIP), was approved by shareowners on May 2, 2024. A total of 231 million shares have been authorized for issuance pursuant to awards under the LTIP including shares assumed from predecessor plans and adjustments associated with the separation of Carrier and Otis. As of December 31, 2024, approximately 116 million shares remain available for awards under the LTIP. The LTIP does not contain aggregate annual award limits, however, it sets an annual award limit per participant. The LTIP will expire after all authorized shares have been awarded or on May 2, 2034, whichever is sooner.
Under the LTIP, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock appreciation rights and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions. In the event of retirement, annual stock appreciation rights, stock options, and restricted stock units (RSUs) held for more than one year may become vested and exercisable, subject to certain terms and conditions. LTIP awards with performance-based vesting generally have a minimum three-year vesting period and vest based on actual performance against pre-established metrics. In the event of retirement, performance-based awards held for more than one year, remain eligible to vest based on actual performance relative to performance goals. We have historically repurchased shares of our common stock in an amount at least equal to the number of shares issued under our equity compensation arrangements and will continue to evaluate this policy in conjunction with our overall share repurchase program.
We measure the cost of all share-based payments, including stock options and stock appreciation rights, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:
(dollars in millions)202420232022
Total compensation cost recognized$437 $425 $420 
The associated future income tax benefit recognized was $85 million, $80 million, and $91 million for the years ended December 31, 2024, 2023, and 2022, respectively.
For the years ended December 31, 2024, 2023, and 2022, the amount of cash received from the exercise of stock options was $26 million, $22 million, and $20 million, respectively, with an associated tax benefit realized of $63 million, $27 million, and $32 million, respectively. In addition, for the years ended December 31, 2024, 2023, and 2022, the associated tax benefit realized from the vesting of performance share units (PSUs), restricted stock awards, and RSUs was $106 million, $57 million, and $80 million, respectively.
At December 31, 2024, there was $300 million of total unrecognized compensation cost related to non-vested equity awards granted under long-term incentive plans. This cost is expected to be recognized ratably over a weighted-average period of 2.3 years.
A summary of the transactions under our long-term incentive plans for the year ended December 31, 2024 follows.
 Stock OptionsStock Appreciation RightsPerformance Share UnitsRestricted Stock and RSUs
(shares and units in thousands)Shares
Average Price (1)
Shares
Average Price (1)
Units
Average Price (2)
Units
Average Price (2)
Outstanding at:
December 31, 20231,461 $81.72 31,155 $82.36 3,001 $87.33 9,730 $86.53 
Granted (3)
117 91.04 2,993 91.03 1,535 83.67 3,761 91.95 
Exercised / earned (3)
(322)79.37 (8,089)79.62 (1,762)71.69 (4,166)74.18 
Cancelled(1)83.58 (313)90.12 (73)94.58 (422)90.08 
December 31, 20241,255 $83.18 25,746 $84.13 2,701 $95.26 8,903 $94.32 
(1)    Weighted-average exercise price per share.
(2)    Weighted-average grant date fair value per share.
(3)    Performance Share Units includes an adjustment for actual performance achieved on the 2021 award of 513 thousand units.
The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2024, 2023, and 2022 was $21.72, $24.66, and $21.80, respectively. The weighted-average grant date fair value of PSUs, which vest upon achieving certain performance metrics, granted during 2024, 2023, and 2022 was $93.48, $96.39, and $96.15, respectively. The total fair
value of awards vested during 2024, 2023, and 2022 was $447 million, $273 million, and $346 million, respectively. The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of stock options and stock appreciation rights exercised during 2024, 2023, and 2022 was $245 million, $46 million, and $110 million, respectively. The total intrinsic value (which is the stock price at vesting multiplied by the number of underlying shares) of PSUs and other restricted awards vested was $506 million, $263 million, and $427 million during 2024, 2023, and 2022, respectively.
The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2024:
 Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)AwardsAverage PriceAggregate Intrinsic Value
Remaining Term (3)
AwardsAverage PriceAggregate Intrinsic Value
Remaining Term (3)
Stock Options (1)
1,252 $83.16 $41 4.9970 $80.04 $35 3.93
Stock Appreciation Rights (1)
25,624 84.09 811 5.3218,325 80.22 650 4.19
Performance Share Units (2)
2,659 95.28 308 1.14
Restricted Stock and RSUs (2)
8,581 94.35 993 1.58
(1)    Average Price is weighted-average exercise price per share.
(2)    Average Price is weighted-average grant date fair value per share.
(3)    Weighted-average contractual remaining term in years.
The fair value of each option award is estimated on the date of grant using a binomial lattice model. The following table indicates the assumptions used in estimating fair value for awards granted during 2024, 2023, and 2022. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
202420232022
Expected volatility
24.7%
26.2%
27.9%
Weighted-average volatility25 %26 %28 %
Expected term (in years)
6.9
6.7
6.5
Expected dividend yield2.6 %2.3 %2.2 %
Risk-free rate
4.1% - 5.4%
3.6% - 4.8%
0.02% - 2.1%
Expected volatilities are based on the returns of our stock, including implied volatilities from traded options on our stock for the binomial lattice model. We use historical data to estimate equity award exercise and employee termination behavior within the valuation model. The expected term represents an estimate of the period of time equity awards are expected to remain outstanding. The risk-free rate is based on the term structure of interest rates at the time of equity award grant.