In April 2024, the UL Solutions Inc. 2024 Long-Term Incentive Plan (the “2024 LTIP”) became effective and the Company reserved for issuance 20,000,000 shares of Class A common stock in connection with the 2024 LTIP and the UL Solutions Inc. Long-Term Incentive Plan (the “Pre-IPO LTIP”), as well as 5,000,000 additional shares of Class A common stock reserved for issuance under the UL Solutions Inc. 2024 Employee Stock Purchase Plan (the “2024 ESPP”). Upon settlement of stock-based compensation awards, shares of Class A common stock are issued in respect of such awards. Equity awards that are granted and subsequently expire, are cancelled, forfeited, or are used to satisfy required withholding taxes are recycled back into the total number of shares available for issuance under the 2024 LTIP and the Pre-IPO LTIP. As of December 31, 2024, 19,825,507 shares remain available for issuance under the 2024 LTIP and the Pre-IPO LTIP and 5,000,000 shares remain available for issuance under the 2024 ESPP.

Annual equity awards are issued to certain employees and officers, including named executive officers, in order to attract, motivate and retain talent and to maximize their contribution to the long-term success of the Company. Equity awards are also used as part of the compensation provided to the board of directors in the form of restricted stock units. Directors may elect to defer receipt of some or all of their annual cash retainer amounts, which are converted into restricted stock units when and as such cash retainer amounts would have otherwise been paid, for either five years, 10 years or until termination of service from the board.

In May 2024, the Company granted annual equity awards, comprised of restricted stock units and performance share units, to eligible employees, officers and directors. In addition, in connection with the IPO, the Company granted nonqualified stock options and restricted stock units to the Company’s executive team, including named executive officers, and other key employees under the 2024 LTIP.


(in millions)	2024		2023		2022
Cost of revenue	$	4	$	1	$	(1)
Selling, general and administrative expenses	29		14		(16)
Stock-based compensation expense (benefit)	33		15		(17)
Income tax (benefit) expense	(4)		(3)		4
Stock-based compensation expense (benefit), net	$	29	$	12	$	(13)

Stock-based compensation expense (benefit) by type of award
Restricted stock units	$	10	$	—	$	—
Performance share units	7		—		—
Stock options	4		—		—
Stock-settled stock appreciation rights	2		—		—

Cash-settled awards	10		15		(17)
Stock-based compensation expense (benefit)	$	33	$	15	$	(17)


	Number of RSUs	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023	—	$	—
Granted	847,223	35.65

Forfeited	(45,012)	34.85
Outstanding as of December 31, 2024	802,211	$	35.70

As of December 31, 2024, total unrecognized compensation expense related to RSUs was $18 million and is expected to be recognized over the remaining weighted-average vesting period of 2.2 years.

Performance share units (“PSUs”) represent the right to receive shares of Class A common stock based on the achievement of certain performance conditions and are generally subject to continued employment through a three-year cliff vesting period. The performance conditions are based on company-wide non-GAAP revenue and operating income metrics and the number of Class A common shares issued may range from 0% to a maximum potential value of 200% of the award’s target value based on the satisfaction of the applicable metrics over a three-year cumulative performance period.

Stock options represent the right to purchase shares of Class A common stock and are generally subject to continued employment through a three-year cliff vesting period. Stock options expire ten years from the grant date.


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Term	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2023	—	$	—
Granted	2,074,299	28.00


Forfeited	(79,719)	28.00
Outstanding as of December 31, 2024	1,994,580	$	28.00	9.3 years	$	44
Exercisable as of December 31, 2024	—


			April 12, 2024
Expected dividend yield			1.79%
Risk-free interest rate			4.48%
Weighted average volatility			24.50%
Expected life (in years)			6.50

As of December 31, 2024, total unrecognized compensation expense related to stock options was $12 million and is expected to be recognized over the remaining weighted-average vesting period of 2.3 years.

The Company has stock appreciation rights outstanding from its Pre-IPO LTIP, which represent the right to receive an amount based on the appreciation in the fair value of the Company’s Class A common stock from the grant date up to a specified date or dates. Prior to the IPO, all stock appreciation rights were Cash-settled Stock Appreciation Rights (“CSARs”). Upon completion of the IPO, the majority of outstanding CSARs were converted to the same number of Stock-settled Stock Appreciation Rights (“SSARs”), which will be settled in shares of Class A common stock under the Pre-IPO LTIP. As equity-settled awards, the fair value of the SSARs was determined on the conversion date of April 16, 2024 and, generally, will not be remeasured unless the awards are modified.

The conversion of CSARs to SSARs at the completion of the IPO resulted in a reclassification of $26 million from accrued compensation and benefits and other liabilities to additional paid-in capital on the Company’s Consolidated Balance Sheet. The CSARs were remeasured to fair value at the conversion date, which resulted in additional pre-tax compensation expense of $9 million in the second quarter of 2024, primarily within selling, general and administrative expenses. The pre-tax compensation expense reduced segment operating income by $4 million, $4 million and $1 million for the Industrial, Consumer and Software & Advisory segments, respectively.


	Number of CSAR Awards	Weighted Average Exercise Price		Weighted Average Remaining Term	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2023	3,452,120	$	18.77	1.72 years	$	37
CSARs converted to SSARs	(1,978,761)	21.12

Exercised	(891,866)	7.69
Cancelled	(470,992)	30.06
Forfeited	(19,815)	29.10
Outstanding as of December 31, 2024	90,686	$	15.65	1.05 years	$	3
Exercisable as of December 31, 2024	76,400	$	13.15	0.71 years	$	3

As of December 31, 2024, total unrecognized compensation expense related to CSARs was immaterial. The weighted average grant date fair value per share of CSARs granted was $5.28, $4.83, and $7.66 for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table summarizes the assumptions used in the Black-Scholes-Merton option-pricing models that were used to estimate the fair value of CSARs at the conversion date and as of December 31, 2023 and 2022:


	April 16, 2024	December 31, 2023	December 31, 2022
Expected dividend yield	1.44%	1.70%	—%
Risk-free interest rate	4.78% - 5.41%	3.99% - 5.60%	4.12% - 4.75%
Weighted average volatility	22.50%	22.24%	29.87%
Expected life (in years)	0.11 - 2.96	0.06 - 3.25	0.06 - 3.25

The Company had a short-term liability related to its CSARs of $3 million and $37 million recorded within accrued compensation and benefits in the Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. The Company had a long-term liability of $0 and $2 million recorded within other liabilities in the Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. The fair value of the Company's vested CSAR awards was $3 million and $29 million at December 31, 2024 and 2023, respectively.


	Number of SSAR Awards	Weighted Average Exercise Price		Weighted Average Remaining Term	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2023	—	$	—
SSARs converted from CSARs	1,978,761	21.12

Exercised	(328,476)	12.84

Forfeited	(52,146)	29.13
Outstanding as of December 31, 2024	1,598,139	$	22.55	1.96 years	$	44
Exercisable as of December 31, 2024	660,165	$	13.26	0.75 years	$	24

As of December 31, 2024, total unrecognized compensation expense related to SSARs was $3 million and is expected to be recognized over the remaining weighted-average vesting period of 1.2 years. The weighted average grant date fair value per share of SSARs granted was $6.15 for the year ended December 31, 2024.

The Company has Performance Cash awards outstanding from its Pre-IPO LTIP, which represent the right to receive an amount based on the achievement of certain performance conditions and are generally subject to continued employment through a three-year cliff vesting period. The amount may range from 0% to a maximum potential value of 200% of the award’s target value based on the satisfaction of the performance conditions over a three-year cumulative performance period. Prior to the IPO, all Performance Cash awards were settled in cash. Following the IPO, the majority of the outstanding Performance Cash awards will be settled in shares of Class A common stock under the Pre-IPO LTIP.


(in millions)	2024		2023		2022
Cost of revenue	$	3	$	2	$	2
Selling, general and administrative expenses	18		14		14
Performance Cash compensation expense	21		16		16
Income tax benefit	(4)		(4)		(4)
Performance Cash compensation expense, net	$	17	$	12	$	12

The Company had a short-term liability related to its Performance Cash awards of $16 million recorded within accrued compensation and benefits in the Consolidated Balance Sheets for both years ended December 31, 2024 and 2023. The Company had a long-term liability of $18 million and $13 million recorded within other liabilities in the Consolidated Balance Sheets at December 31, 2024 and 2023 respectively.