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Stock Plans and Share-Based Compensation | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stock Plans and Share-Based Compensation | Stock Plans and Share-Based Compensation Under CSX's share-based compensation plans, awards consist of performance units, stock options and restricted stock units for management and stock grants for directors. Share-based compensation expense for awards under share-based compensation plans is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Alternatively, expense is recognized upon death or over an accelerated service period for retirement-eligible employees whose agreements allow for continued vesting upon retirement. Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards.
| Third Quarters |  | Nine Months
(Dollars in millions) | 2023 | 2022 |  | 2023 | 2022
Share-Based Compensation Expense: |  |  |  |  |
Performance Units | $ | 5 |  | $ | 1 |  |  | $ | 14 |  | $ | 27 |
Restricted Stock Units | 5 |  | 2 |  |  | 14 |  | 11 |
Stock Options | 3 |  | 3 |  |  | 9 |  | 13 |
Employee Stock Purchase Plan | 2 |  | 2 |  |  | 6 |  | 4 |
Stock Awards for Directors | — |  | — |  |  | 2 |  | 2 |
Total Share-Based Compensation Expense | $ | 15 |  | $ | 8 |  |  | $ | 45 |  | $ | 57 |
Income Tax Benefit | $ | 3 |  | $ | 3 |  |  | $ | 10 |  | $ | 15 |
Long-term Incentive Plan In February 2023, the Company granted the following awards under a new long-term incentive plan ("LTIP") for the years 2023 through 2025, which was adopted under the CSX 2019 Stock and Incentive Award Plan.
| Granted (Thousands) | Weighted Avg. Fair Value
Performance Units | 680 | $ | 32.77 |
Restricted Stock Units | 648 | 31.67 |
Stock Options | 1,067 | 9.86 |
NOTE 3. Stock Plans and Share-Based Compensation, continued Performance Units Payouts will be made in CSX common stock with a payout range for most participants between 0% and 200% of the target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to formulaic upward or downward adjustment by up to 25%, capped at an overall payout of 250%, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair values of performance units granted to certain executive officers were calculated using a Monte-Carlo simulation model. Measurement against goals related to both average annual operating income growth and economic profit (CSX Cash Earnings or "CCE"), in each case excluding non-recurring items as defined in the plan, will each comprise 50% of the payout. As defined under the plan, CCE is a cash-flow based measure of economic profit that incentivizes strategic investments earning more than the required return and is calculated as CSX’s gross cash earnings (after-tax EBITDA) minus the required return on gross operating assets. Stock Options Stock options were granted with ten-year terms and vest over three years in equal installments each year on the anniversary of the grant date. These awards are time-based and are not based upon attainment of performance goals. The fair values of stock option awards were estimated at the grant date using the Black-Scholes valuation model. Restricted Stock Units The restricted stock units awarded vest over three years in equal installments each year on the anniversary of the grant date and are settled in CSX common stock on a one-for-one basis. These awards are time-based and are not based upon CSX's attainment of performance goals. For more information related to the Company's outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.

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