Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Generally, our annual grant of stock-based awards are made on a broad basis in the first quarter of each year.

Equity Awards

Stock-based compensation totaled $19 million, $32 million and $22 million during 2022, 2021 and 2020, respectively. There were no tax benefits recognized related to stock-based compensation during these periods.The following table summarizes RSU and stock option activity:


	RSUs		Stock Options
	Number	Weighted Average Grant Date Fair Value Per Share	Number	Weighted Average Exercise Price Per Share
Outstanding as of December 31, 2019	1,660,311	$39.88	5,381,477	$52.13
Granted	1,355,975	10.30	975,290	11.06
Forfeited or expired	(114,352)	33.74	(603,835)	59.46
Vested/exercised	(643,340)	42.23	—	—
Outstanding as of December 31, 2020	2,258,594	$21.76	5,752,932	$44.40
Granted	596,391	18.67	481,626	17.96
Forfeited or expired	(132,713)	18.78	(659,216)	58.37
Vested/exercised	(810,560)	30.83	(84,416)	8.81
Outstanding as of December 31, 2021	1,911,712	$17.16	5,490,926	$40.95
Granted	415,356	22.36	250,656	21.90
Forfeited or expired	(2,937)	25.55	(846,621)	61.46
Vested/exercised	(957,640)	22.01	(217,397)	15.20
Outstanding as of December 31, 2022	1,366,491	$15.33	4,677,564	$37.41
Options exercisable as of December 31, 2022			3,689,284	$43.03
Remaining unvested options outstanding and expected to vest			978,397	$16.46

Our stock-based plans provide that RSUs may not be sold or transferred until service-based restrictions have lapsed. Generally, upon termination of employment, RSUs which have not vested are forfeited. RSUs granted to executives in 2022, 2021 and 2020 generally vest over 3 years. RSUs granted to our CEO in 2020 vest over 5 years. RSUs granted to directors in 2022, 2021 and 2020 vested upon grant. The fair value of RSUs that vested during 2022, 2021 and 2020 was $23 million, $14 million and $5 million, respectively. The balance of unamortized RSU expense as of December 31, 2022 was $4 million, which is expected to be recognized over a weighted-average period of 1.7 years.

The exercise price of options represents the closing price of our common stock on the date of grant. The options granted in 2022, 2021 and 2020 generally vest over 3 years and expire 10 years after the grant date. Options granted to our CEO in 2020 vest over 5 years. The aggregate intrinsic value of stock options exercised during 2022 and 2021 was $4 million and $0.8 million respectively. There were no stock option exercises during 2020. The balance of unamortized stock option expense as of December 31, 2022 was $2 million, which is expected to be recognized over a weighted-average period of 1.1 years.

The grant date fair value of options and other significant assumptions follow:


	2022		2021		January 1 - November 30, 2020		December 31, 2020
Weighted average grant date fair value	$11.19		$8.94		$4.59		$9.05
Expected life of options (in years)	4.5		4.5		4.6		7.2
Risk-free interest rate	1.9	%	0.7	%	0.4	%	0.5	%
Expected volatility	62	%	62	%	65	%	61	%
Expected annual dividend per share	$0.00		$0.00		$0.00		$0.00

The computation of the expected volatility assumption used in the Black-Scholes calculations is based on a 50/50 blend of historical and implied volatility. Information related to options outstanding as of December 31, 2022 follows:


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price Per Share		Number Exercisable	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price Per Share
$8.81 - $29.50	2,431,911	7.6	$	18.29	1,443,631	7.1	$	19.54
$46.07 - $62.50	1,986,231	3.1	55.37		1,986,231	3.1	55.37
$70.76 - $79.19	259,422	1.1	79.19		259,422	1.1	79.19
	4,677,564	5.3	$	37.41	3,689,284	4.5	$	43.03

As of December 31, 2022, options outstanding and options exercisable had an aggregate intrinsic value of $41 million and $22 million, respectively .

_______________________

During 2022, 2021 and 2020, performance-based award units totaling 426,957; 613,868; and 1,156,365, respectively, were awarded to Section 16 officers. These awards generally cliff vest after 3 years and contain annual performance conditions for each of the 3 years of the vesting period. Under GAAP, performance-based elements of such awards are not deemed granted until the performance targets have been established. The performance targets for each year are generally established in the first quarter. These awards are earned based on achievement of EPS and return on invested capital goals over three one-year periods, and earned or modified based on our three-year cumulative total shareholder return relative to companies in the S&P 500 on the date of the award. For the majority of awards, generally only one-third of the units awarded in any given year are deemed to be granted each year of the 3 year vesting periods. During the first quarter of 2022, the following units were granted (under GAAP) based upon the establishment of performance targets:


	Performance-based Award Units Granted in 2022	Weighted Average Grant Date Fair Value Per Share
2022 Performance Award Plan	142,319	$24.07
2021 Performance Award Plan	204,623	$25.75
2020 Performance Award Plan	385,455	$27.90

For awards granted under the 2022, 2021 and 2020 performance award plans, the number of units are adjusted at the end of each performance period based on achievement of certain performance targets and market conditions, pursuant to the terms of the award agreements.

The balance of unamortized compensation expense associated with performance-based award units as of December 31, 2022 was less than $1 million, which is expected to be recognized over a weighted-average period of 1.0 years.

Liability Awards

We grant SGI awards in the form of stock units, determined by dividing the target amount by the closing price of our common stock at the grant date. Each stock unit represents the right to receive cash equal to the value of one share of our common stock upon vesting. SGI awards granted to executives vest and become payable at a rate of one-third of the total award each year. Performance-based awards were awarded to non-Section 16 executives and will be settled in cash.


	Location in Statement of Operations	December 31,
Compensation Expense (in millions)		2022		2021		2020
SGI awards	G&A	$	54	$	67	$	25
Performance-based awards for non-Section 16 executives	G&A	14		1		3


Liabilities (in millions)	Location on Balance Sheet	December 31, 2022		December 31, 2021
SGI awards	Accrued salaries, wages and benefits and Other noncurrent liabilities	$	92	$	73
Performance-based awards for non-Section 16 executives	Accrued salaries, wages and benefits and Other noncurrent liabilities	15		8

During the fourth quarter of 2022, compensation expense on our liability awards significantly increased as our stock price grew in comparison to previous balance sheet dates.