During 2021, the Company’s Board of Directors adopted, and the shareholders approved, the ODP Corporation 2021 Long-Term Incentive Plan (the “Plan”). The Plan replaces the Office Depot, Inc. 2019 Long-Term Incentive Plan, the Office Depot, Inc. 2017 Long-Term Incentive Plan, the Office Depot, Inc. 2015 Long-Term Incentive Plan, the Office Depot, Inc. 2007 Long-Term Incentive Plan, as amended, and the 2003 OfficeMax Incentive and Performance Plan (together, the “Prior Plans”). No additional awards were granted under the Prior Plans effective March 10, 2021, the effective date of the Plan. The Plan permits the issuance of stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other equity-based incentive awards. Employee share-based awards are generally issued in the first quarter of the year. Total compensation expense for share-based awards was $34 million in 2023, $40 million in 2022 and $38 million in 2021, and the total recognized tax benefit related thereto was $12 million in 2023, $11 million in 2022 and $14 million in 2021.

In 2023, the Company granted 0.4 million shares of restricted stock and restricted stock units to eligible employees which included 26,000 shares granted to the Board of Directors. The Board of Directors are granted restricted stock units as part of their annual compensation which vest immediately on the grant date with distribution to occur following their separation from service with the Company. Restricted stock grants to Company employees typically vest annually over a three-year service period. A summary of the status of the Company’s nonvested shares and changes during 2023, 2022 and 2021 is presented below.


	2023					2022					2021
	Shares			Weighted Average Grant- Date Price		Shares			Weighted Average Grant- Date Price		Shares			Weighted Average Grant- Date Price
Outstanding at beginning of year		1,530,962		$	37.54		1,386,778		$	30.48		1,526,653		$	24.71
Granted		407,028			47.28		933,487			42.81		521,512			39.55
Vested		(616,705	)		34.64		(585,563	)		29.65		(593,249	)		23.72
Forfeited		(117,932	)		43.41		(203,740	)		36.29		(68,138	)		29.20
Outstanding at end of year		1,203,353		$	41.75		1,530,962		$	37.54		1,386,778		$	30.48

As of December 30, 2023, there was approximately $26 million of total unrecognized compensation cost related to nonvested restricted stock. This expense, net of forfeitures, is expected to be recognized over a weighted-average period of approximately 1.7 years. Total outstanding shares of 1.2 million include 0.2 million granted to members of the Board of Directors that have vested but will not be issued until separation from service and one million unvested shares granted to employees. The Company estimates that all one million unvested shares at year end will vest. The total fair value of shares at the time they vested during 2023 was $29 million.

The Company has a performance-based long-term incentive program consisting of performance stock units. Payouts under this program are based on achievement of certain financial targets, including the Company’s financial performance and total shareholder return performance set by the Board of Directors and are subject to additional service vesting requirements, generally three years from the grant date.

A summary of the activity in the performance-based long-term incentive program since inception is presented below.


	2023					2022					2021
	Shares			Weighted Average Grant- Date Price		Shares			Weighted Average Grant- Date Price		Shares			Weighted Average Grant- Date Price
Outstanding at beginning of year		1,457,725		$	31.84		2,175,831		$	29.33		2,458,978		$	24.22
Granted		774,836			51.22		421,038			45.01		1,298,868			41.44
Vested		(1,003,764	)		19.39		(796,019	)		29.71		(1,374,442	)		23.47
Forfeited		(100,590	)		45.29		(343,125	)		30.21		(207,573	)		28.71
Outstanding at end of year		1,128,207		$	45.82		1,457,725		$	31.84		2,175,831		$	29.33

As of December 30, 2023, there was approximately $22 million of total unrecognized compensation expense related to the performance-based long-term incentive program. This expense, net of forfeitures, is expected to be recognized over a weighted-average period of approximately 1.9 years. Forfeitures in the table above include adjustments to the share impact of anticipated performance achievement. The Company estimates that 1.1 million unvested shares at year end will vest. The total fair value of shares at the time they vested during 2023 was $46 million.

In 2023, the Company’s subsidiary Varis, Inc., which comprises its Varis Division, executed the Varis Incentive Plan which permits the grant of share options for up to 250,000 Varis, Inc. shares to the executives, other employees and non-employee directors of the Varis Division. The options issued under the Varis Incentive Plan have a contractual term of ten years, and vest annually over a five-year requisite service period. Vested options become exercisable commencing the fourth year after the grant date. All outstanding options vest and become exercisable upon a liquidity event. The options also include certain put and call rights which can be executed upon certain conditions.

The fair value of the options were determined using the Black-Scholes pricing model at the date of grant. Key assumptions used in the model included volatility, which was estimated as 65% using historical volatility of guideline companies, a risk-free rate of 4%, which was based on Treasury yields, and an expected term of four years. The Company recognizes the fair value of awards as compensation expense on a straight-line basis over five-year requisite service period associated with the award.

A summary of the activity in the Varis Incentive Plan since inception is presented below.


	2023
	Shares			Weighted Average Exercise Price
Outstanding at beginning of year		—		$	—
Granted		182,800			168.60
Exercised		—			—
Forfeited		(20,609	)		168.60
Outstanding at end of year		162,191			168.60
Exercisable at end of year		—		$	—

The weighted average grant-date fair value of options granted in 2023 was $94. In 2023, 741 shares under the options vested, and 161,450 shares remain unvested. The vested and unvested options do not have any intrinsic value as of December 30, 2023. As of December 30, 2023, there was $13 million of total unrecognized compensation cost related to the nonvested options, which is expected to be recognized over a period of approximately 4.3 years. Total compensation expense for stock options under the Varis Incentive Plan was $2 million in 2023.