Note 13: Share-Based Compensation
Year ended December 31 (in millions)
202520242023
Share-based compensation expense$1,108 $1,069 $1,021 
Related income tax benefit
$181 $222 $203 
Our share-based compensation plans consist primarily of awards of RSUs and stock options to certain employees and directors as part of our long-term incentive compensation structure. Awards generally vest over a period of 5 years and, in the case of stock options, have a 10 year term. RSUs include performance stock units awarded to certain senior executives with vesting after 3 years based upon the achievement of certain performance conditions. These performance stock units are not material to our consolidated results of operations in any period presented. As of December 31, 2025, 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. Additionally, eligible employees may purchase shares of our common stock at a discount under our employee stock purchase plans.
Stock Options and Restricted Share Units
As of December 31, 2025, unless otherwise stated (in millions, except per share data)Stock
Options
RSUs
Awards granted during 202546 
Weighted-average exercise price of awards granted during 2025$35.98  
Stock options outstanding and unvested RSUs
204 78 
Weighted-average exercise price of stock options outstanding$41.93 
Weighted-average fair value at grant date of unvested RSUs
 $37.71 
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 primarily 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 31202520242023
RSUs fair value$34.49 $42.23 $37.14 
Stock options fair value$7.21 $9.93 $8.41 
Stock Option Valuation Assumptions:
Dividend yield3.7 %2.9 %3.2 %
Expected volatility25.3 %24.8 %26.2 %
Risk-free interest rate4.0 %4.2 %4.2 %
Expected option life (in years)5.95.15.9
As of December 31, 2025, we had unrecognized pre-tax compensation expense of $2.1 billion related to unvested RSUs and unvested stock options that will be recognized over a weighted-average period of approximately 1.5 years.

Historical Timeline

Fiscal YearFiled
2025Feb 3, 2026Showing above
2024Jan 31, 2025
2023Jan 31, 2024
2022Feb 3, 2023
2021Feb 2, 2022
2020Feb 4, 2021
2019Jan 30, 2020
2018Jan 31, 2019
2017Jan 31, 2018
2016Feb 3, 2017
2015Feb 5, 2016

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.