XML 33 R21.htm IDEA: XBRL DOCUMENT
v3.25.3

Share-Based Compensation Plans | 9 Months Ended
--- | ---
Sep. 30, 2025
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation Plans | Share-Based Compensation Plans Share-based compensation expense was $12 million and $37 million during the three and nine months ended September 30, 2025, respectively, and $12 million and $43 million during the three and nine months ended September 30, 2024, respectively. The unrecognized compensation expense related to our stock options, restricted stock units and performance share units was $10 million, $40 million and $18 million, respectively, at September 30, 2025 and is expected to be recognized over a weighted average period of 2.0, 1.9 and 1.9 years, respectively. The amount of cash received from the exercise of stock options was $11 million and $66 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, there were 4.7 million shares of common stock available for future awards. Stock Option Grants The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2025:
| Share units (in thousands) |  | Weighted Average Exercise Price / Share |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2025 | 1,182 |  |  | $ | 84.76 |  |  | 6.3 |  | $ | 40 |
Granted | 255 |  |  | 129.75 |  |  |  |  |
Exercised | (166) |  |  | 64.74 |  |  |  |  |
Forfeited and expired | (32) |  |  | 111.85 |  |  |  |  |
Outstanding at September 30, 2025 | 1,239 |  |  | $ | 96.01 |  |  | 6.2 |  | $ | 58 |
Options exercisable at September 30, 2025 | 815 |  |  | $ | 80.02 |  |  | 4.7 |  | $ | 51 |
Vested and expected to vest as of September 30, 2025 | 1,190 |  |  | $ | 94.68 |  |  | 6.1 |  | $ | 58 |
The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended September 30, 2025 was $11 million. Stock Option Fair Value The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2025 grants:
Volatility | 26.70 |  | %
Risk-free interest rate | 4.10 |  | %
Dividend yield | 1.23 |  | %
Expected term (in years) | 5.5 |
Weighted-average fair value / share | $ | 36.94 |  |
Expected volatility is calculated based on an analysis of historic volatility measures for Xylem. We use historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected term represents an estimate of the period of time options are expected to remain outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant. Restricted Stock Unit Grants The following is a summary of restricted stock unit activity for the nine months ended September 30, 2025. The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant:
| Share units (in thousands) |  | Weighted Average Grant Date Fair Value / Share
Outstanding at January 1, 2025 | 632 |  |  | $ | 111.33 |
Granted | 253 |  |  | 130.14 |
Vested | (317) |  |  | 105.95 |
Forfeited | (40) |  |  | 119.06 |
Outstanding at September 30, 2025 | 528 |  |  | $ | 122.84 |
ROIC and Adjusted EBITDA Performance Share Unit Grants The following is a summary of our return on invested capital ("ROIC") and adjusted EBITDA grants for the nine months ended September 30, 2025. The fair value of the ROIC and adjusted EBITDA performance share units is determined using the closing share price on the date of the grant:
| Share units (in thousands) |  |  |  |  |  | Weighted Average Grant Date Fair Value / Share
Outstanding at January 1, 2025 | 77 |  |  |  |  |  |  | $ | 105.02 |
Adjustment for Performance Condition Achieved (a) | 19 |  |  |  |  |  |  | 86.77 |
Vested | (44) |  |  |  |  |  |  | 86.77 |
Forfeited | (5) |  |  |  |  |  |  | 113.87 |
Outstanding at September 30, 2025 | 47 |  |  |  |  |  |  | $ | 113.89 |
(a) Represents an increase in the number of original ROIC performance share units awarded based on the final market condition achievement at the end of the performance period of such awards. TSR Performance Share Unit Grants The following is a summary of our Total Shareholder Return ("TSR") performance share unit grants for the nine months ended September 30, 2025:
| Share units (in thousands) |  |  |  |  |  | Weighted Average Grant Date Fair Value / Share
Outstanding at January 1, 2025 | 155 |  |  |  |  |  |  | $ | 125.42 |
Granted | 54 |  |  |  |  |  |  | 180.70 |
Adjustment for Market Condition Achieved (a) | (14) |  |  |  |  |  |  | 71.15 |
Vested | (37) |  |  |  |  |  |  | 71.15 |
Forfeited | (12) |  |  |  |  |  |  | 150.24 |
Outstanding at September 30, 2025 | 146 |  |  |  |  |  |  | $ | 157.41 |
(a) Represents a decrease in the number of original TSR performance share units awarded based on the final market condition achievement at the end of the performance period of such awards. The fair value of TSR performance share units was calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The following are weighted-average assumptions for 2025 grants:
Volatility | 25.80 |  | %
Risk-free interest rate | 4.01 |  | %
Revenue Performance Share Unit Grants The following is a summary of our Revenue performance share unit grants for the nine months ended September 30, 2025 The fair value of the revenue performance share unit awards is determined using the closing price of our common stock on date of grant:
| Share units (in thousands) |  | Weighted Average Grant Date Fair Value / Share
Outstanding at January 1, 2025 | 77 |  |  | $ | 105.06 |
Adjustment for Performance Condition Achieved (a) | 19 |  |  | 86.77 |
Vested | (44) |  |  | 86.77 |
Forfeited | (5) |  |  | 113.87 |
Outstanding at September 30, 2025 | 47 |  |  | $ | 113.89 |
(a) Represents an increase in the number of original revenue performance share units awarded based on the final market condition achievement at the end of the performance period of such awards. EPS Performance Share Unit Grants The following is a summary of our earnings per share ("EPS") performance share unit grants for the nine months ended September 30, 2025 The fair value of the EPS performance share unit awards is determined using the closing price of our common stock on date of grant:
| Share units (in thousands) |  | Weighted Average Grant Date Fair Value / Share
Outstanding at January 1, 2025 | — |  |  | $ | — |
Granted | 54 |  |  | 129.81 |
Forfeited | (2) |  |  | 129.67 |
Outstanding at September 30, 2025 | 52 |  |  | $ | 129.82 |
The performance share units were each awarded at a target of 100% with actual payout for each type of grant contingent upon the achievement of performance targets as follows: •ROIC performance share units — a pre-set, three-year adjusted ROIC performance target •EBITDA performance share units — a third-year adjusted EBITDA performance target •TSR performance share units — a relative TSR performance target •Revenue performance share units — a pre-set third year revenue target •EPS performance share units — a cumulative three-year EPS performance target

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (l) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration