v3.24.0.1
Share-Based Compensation
12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation
Note 13: Share-Based Compensation
Year ended December 31 (in millions)
202320222021
Share-based compensation expense$1,021 $1,100 $1,081 
Our share-based compensation plans consist primarily of awards of RSUs and stock options to certain employees and directors as part of our approach to long-term incentive compensation. Awards generally vest over a period of 5 years and, in the case of stock options, have a 10 year term. Additionally, through our employee stock purchase plans, employees are able to purchase shares of our common stock at a discount through payroll deductions. As of December 31, 2023, virtually all of our stock options outstanding were net settled stock options, which result in fewer shares being issued and no cash proceeds being received by us when the options are exercised.
Stock Options and Restricted Share Units
As of December 31, 2023, unless otherwise stated (in millions, except per share data)Stock
Options
RSUs
Awards granted during 202358 26 
Weighted-average exercise price of awards granted during 2023$36.58  
Stock options outstanding and nonvested RSUs257 50 
Weighted-average exercise price of stock options outstanding$41.16 
Weighted-average fair value at grant date of nonvested RSUs $42.21 
The cost associated with our share-based compensation is based on an award’s estimated fair value at the date of grant and is recognized over the period in which any related services are provided. RSUs are valued based on the closing price of our common stock on the date of grant and are discounted for the lack of dividends, if any, during the vesting period. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards.
The table below presents the weighted-average fair value on the date of grant of RSUs and stock options awarded under our various plans and the related weighted-average valuation assumptions.
Year ended December 31202320222021
RSUs fair value$37.14 $45.20 $54.52 
Stock options fair value$8.41 $8.77 $9.72 
Stock Option Valuation Assumptions:
Dividend yield3.2 %2.4 %1.8 %
Expected volatility26.2 %25.0 %22.8 %
Risk-free interest rate4.2 %1.8 %0.9 %
Expected option life (in years)5.95.85.9
As of December 31, 2023, we had unrecognized pretax compensation expense of $2.0 billion related to nonvested RSUs and nonvested stock options that will be recognized over a weighted-average period of approximately 1.6 years. In 2023, 2022 and 2021, we recognized $4 million, $(30) million and $(209) million, respectively, as an increase (decrease) to income tax expense as a result of excess tax benefits associated with our share-based compensation plans.