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STOCK COMPENSATION | 6 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
STOCK COMPENSATION | STOCK COMPENSATION Description of the Plan On April 20, 2023, the Company’s stockholders approved the Owens Corning 2023 Stock Plan (the “2023 Stock Plan”), which authorizes grants of stock options, stock appreciation rights, stock awards (including restricted stock awards, restricted stock units and bonus stock awards), performance share awards and performance share units. At June 30, 2023, the number of shares remaining available under the 2023 Stock Plan for all stock awards was approximately 3.4 million. Prior to the 2023 Stock Plan, employees were eligible to receive stock awards under the Owens Corning 2019 Stock Plan. Total Stock-Based Compensation Expense Stock-based compensation expense included in Marketing and administrative expenses in the accompanying Consolidated Statements of Earnings is as follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Total stock-based compensation expense | $ | 14 |  |  | $ | 13 |  |  | $ | 27 |  |  | $ | 25 |
Stock Options The Company has granted stock options under its stockholder approved stock plans. The Company calculates a weighted-average grant-date fair value using a Black-Scholes valuation model for options granted. Compensation expense for options is measured based on the fair market value of the option on the date of grant, and is recognized on a straight-line basis over a four year vesting period. In general, the exercise price of each option awarded was equal to the closing market price of the Company’s common stock on the date of grant and an option’s maximum term is 10 years. The volatility assumption was based on a benchmark study of our peers prior to 2014. Starting with the options granted in 2014, the volatility was based on the Company’s historic volatility. The Company has not granted stock options since the year ended December 31, 2014. As of June 30, 2023, there was no unrecognized compensation cost related to stock options and the exercise price on outstanding stock options was $37.65. The following table summarizes the Company’s stock option activity:
|  |  | Weighted-Average |  |
| Number of Options |  | Exercise Price |  | Remaining Contractual Life (in years) |  | Intrinsic Value (in millions)
Outstanding, December 31, 2022 | 27,000 |  |  | $ | 37.65 |  |  | 1.1 |  | $ | 1 |
Exercised | (15,400) |  |  | 37.65 |  |  |  |  |
Outstanding, June 30, 2023 | 11,600 |  |  | $ | 37.65 |  |  | 0.6 |  | $ | 1 |
Exercisable, June 30, 2023 | 11,600 |  |  | $ | 37.65 |  |  | 0.6 |  | $ | 1 |
Restricted Stock Units The Company has granted restricted stock units (“RSUs”) under its stockholder approved stock plans. All outstanding RSUs will fully settle in stock. Compensation expense for RSUs is measured based on the closing market price of the stock at date of grant and is recognized on a straight-line basis over the vesting period, which is typically three or four years. The stock plans allow alternate vesting schedules for death, disability, and retirement. The weighted-average grant date fair value of RSUs granted in 2023 was $99.02. The following table summarizes the Company’s RSU activity:
| Number of RSUs | Weighted-Average Fair Value
Balance at December 31, 2022 | 1,276,160 |  | $ | 69.16 |
Granted | 333,291 |  | 99.02 |
Vested | (318,010) |  | 69.93 |
Forfeited | (34,401) |  | 84.18 |
Balance at June 30, 2023 | 1,257,040 |  | $ | 76.25 |
As of June 30, 2023, there was $44 million of total unrecognized compensation cost related to RSUs. That cost is expected to be recognized over a weighted-average period of 2.52 years. The total grant date fair value of shares vested during the six months ended June 30, 2023 and 2022 was $22 million and $20 million, respectively. Performance Share Units The Company has granted performance share units (“PSUs”) as a part of its long-term incentive plan program under its stockholder approved stock plans. All outstanding performance share units will fully settle in stock. The amount of stock ultimately distributed from all performance share units is contingent on meeting internal Company-based metrics or an external-based stock performance metric. In the six months ended June 30, 2023, the Company granted both internal Company-based and external-based metric PSUs. Internal Company-based metrics The internal Company-based metric PSUs are based on various Company metrics and typically vest over a three-year period. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on each award’s design and performance versus the internal Company-based metrics. The initial fair value for all internal Company-based metric PSUs assumes that the performance goals will be achieved and is based on the grant date stock price. This assumption is monitored quarterly and if it becomes probable that such goals will not be achieved or will be exceeded, compensation expense recognized will be adjusted and previous surplus compensation expense recognized will be reversed or additional expense will be recognized. The expected term represents the period from the grant date to the end of the vesting period. Pro-rata vesting may be utilized in the case of death, disability or approved retirement and awards, if earned, will be paid at the end of the vesting period. External-based metrics The external-based metric PSUs vest after a three-year period. Outstanding grants issued in or after 2018 until 2022 were based on the Company’s total stockholder return relative to the performance of the Dow Jones U.S. Construction & Materials Index. Outstanding grants issued in 2023 are based on the Company’s total stockholder return relative to a peer group. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on the relative stockholder return performance. The fair value of external-based metric PSUs has been estimated at the grant date using a Monte Carlo simulation that uses various assumptions. The following table provides a summary of the assumptions for PSUs granted in 2023 and 2022:
| Six Months Ended June 30, |  |  |  |
| 2023 | 2022 |  |  |  |
Expected volatility | 44.66% | 41.65% |  |  |  |
Risk free interest rate | 3.75% | 1.36% |  |  |  |
Expected term (in years) | 2.91 | 2.91 |  |  |  |
Grant date fair value of units granted | $ | 119.33 | $ | 122.69 |  |  |  |
The risk-free interest rate was based on zero-coupon United States Treasury bills at the grant date. The expected term represents the period from the grant date to the end of the three-year performance period. PSU Summary As of June 30, 2023, there was $23 million total unrecognized compensation cost related to PSUs. That cost is expected to be recognized over a weighted-average period of 1.89 years. The following table summarizes the Company’s PSU activity:
| Number of PSUs | Weighted-Average Grant-Date Fair Value
Balance at December 31, 2022 | 303,716 |  | $ | 91.47 |
Granted | 155,469 |  | 101.76 |
Forfeited | (15,186) |  | 95.59 |
Balance at June 30, 2023 | 443,999 |  | $ | 94.59 |
Employee Stock Purchase Plan The Owens Corning Employee Stock Purchase Plan (“ESPP”) is a tax-qualified plan under Section 423 of the Internal Revenue Code. The purchase price of shares purchased under the ESPP is equal to 85% of the lower of the fair market value of shares of Owens Corning common stock at the beginning or ending of the offering period, which is a six-month period ending on May 31 and November 30 of each year. On April 16, 2020, the Company’s stockholders approved the Amended and Restated Owens Corning Employee Stock Purchase Plan, which increased the number of shares available for issuance under the plan by 4.2 million shares. As of June 30, 2023, 3.4 million shares remain available for purchase. Included in total stock-based compensation expense is $2 million and $4 million of expense related to the Company’s ESPP recognized during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2022, the Company recognized expense of $2 million and $3 million, respectively, related to the Company’s ESPP. As of June 30, 2023, there was $3 million of total unrecognized compensation cost related to the ESPP.

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