Cigna GroupCI
Cigna Group Stock Compensation Disclosure
Note 18 – Employee Incentive Plans
A.About Our Plans
The People Resources Committee (the "Committee") of the Board of Directors awards stock options, restricted stock grants, restricted stock units, deferred stock and strategic performance shares to certain employees. The Company issues original issue shares for these awards.
The Company records compensation expense for stock and option awards over their vesting periods primarily based on the estimated fair value at the grant date. Fair value is determined differently for each type of award as discussed below.
Shares of common stock available for award were as follows:
| (In millions) | December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||||
| Common shares available for award | 10.4 | 12.4 | 14.4 | |||||||||||||||||
B.Stock Options
Accounting Policy. The Company awards options to purchase The Cigna Group common stock at the market price of the stock on the grant date. Options vest over periods ranging from one year to three years and expire no later than 10 years from grant date. Fair value is estimated using the Black-Scholes option pricing model by applying the assumptions presented below. That fair value is reduced by options expected to be forfeited during the vesting period. The Company estimates forfeitures at the grant date based on our experience and adjusts the expense to reflect actual forfeitures over the vesting period. The fair value of options, net of forfeitures, is recognized in Selling, general and administrative expenses on a straight-line basis over the vesting period.
Black-Scholes option pricing model assumptions and the resulting fair value of options are presented in the following table:
| 2025 | 2024 | 2023 | |||||||||||||||||||||
| Dividend yield | 2.04 | % | 1.74 | % | 1.58 | % | |||||||||||||||||
| Expected volatility | 31.0 | % | 30.0 | % | 30.0 | % | |||||||||||||||||
| Risk-free interest rate | 4.4 | % | 4.0 | % | 3.6 | % | |||||||||||||||||
| Expected option life | 4.9 years | 4.8 years | 4.7 years | ||||||||||||||||||||
| Weighted average fair value of options | $ | 86.13 | $ | 92.36 | $ | 79.66 | |||||||||||||||||
The dividend yield reflects expected future dividends. The Company intends to continue to pay dividends for the foreseeable future. The expected volatility reflects the past daily stock price volatility of The Cigna Group stock. The Company does not consider volatility implied in the market prices of traded options to be a good indicator of future volatility because remaining traded options will expire within one year. The risk-free interest rate is derived using the four-year U.S. Treasury bond yield rate as of the award date for the primary annual grant. Expected option life reflects the Company's historical experience.
The following table shows the status of, and changes in, common stock options:
| For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Options in thousands) | Options | Weighted Average Exercise Price | Options | Weighted Average Exercise Price | Options | Weighted Average Exercise Price | ||||||||||||||||||||||||||||||||
| Outstanding - January 1 | 5,655 | $ | 226.38 | 6,696 | $ | 202.02 | 6,992 | $ | 186.54 | |||||||||||||||||||||||||||||
| Granted | 857 | $ | 305.86 | 781 | $ | 336.48 | 915 | $ | 294.37 | |||||||||||||||||||||||||||||
| Exercised | (1,088) | $ | 192.40 | (1,727) | $ | 178.82 | (1,080) | $ | 174.66 | |||||||||||||||||||||||||||||
| Expired or canceled | (222) | $ | 314.78 | (95) | $ | 278.78 | (131) | $ | 246.95 | |||||||||||||||||||||||||||||
| Outstanding - December 31 | 5,202 | $ | 242.81 | 5,655 | $ | 226.38 | 6,696 | $ | 202.02 | |||||||||||||||||||||||||||||
| Options exercisable at year-end | 3,806 | $ | 216.90 | 3,941 | $ | 196.01 | 4,616 | $ | 179.28 | |||||||||||||||||||||||||||||
Compensation expense of $62 million related to unvested stock options as of December 31, 2025 will be recognized over the next two years (weighted average period).
The table below summarizes information for stock options exercised:
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Intrinsic value of options exercised | $ | 128 | $ | 275 | $ | 126 | ||||||||||||||
| Cash received for options exercised | $ | 203 | $ | 305 | $ | 187 | ||||||||||||||
| Tax benefit from options exercised | $ | 16 | $ | 34 | $ | 17 | ||||||||||||||
The following table summarizes information for outstanding common stock options:
| December 31, 2025 | ||||||||||||||
| Options Outstanding | Options Exercisable | |||||||||||||
| Number (in thousands) | 5,202 | 3,806 | ||||||||||||
| Total intrinsic value (in millions) | $ | 246 | $ | 246 | ||||||||||
| Weighted average exercise price | $ | 242.81 | $ | 216.90 | ||||||||||
| Weighted average remaining contractual life | 5.7 years | 4.6 years | ||||||||||||
C.Restricted Stock
The Company awards restricted stock (grants and units) to the Company's employees that vest over periods ranging from one year to three years. Recipients of restricted stock awards accumulate dividends during the vesting period but generally forfeit their awards and accumulated dividends if their employment terminates before the vesting date.
Accounting Policy. Fair value of restricted stock awards is equal to the market price of The Cigna Group common stock on the date of grant. This fair value is reduced by awards that are expected to be forfeited. At the grant date, the Company estimates forfeitures based on experience and adjusts the expense to reflect actual forfeitures over the vesting period. This fair value, net of forfeitures, is recognized in Selling, general and administrative expenses over the vesting period on a straight-line basis.
The following table shows the status of, and changes in, restricted stock awards:
| For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Awards in thousands) | Grants/Units | Weighted Average Fair Value at Award Date | Grants/Units | Weighted Average Fair Value at Award Date | Grants/Units | Weighted Average Fair Value at Award Date | ||||||||||||||||||||||||||||||||
| Outstanding - January 1 | 1,250 | $ | 302.42 | 1,404 | $ | 257.38 | 1,535 | $ | 219.25 | |||||||||||||||||||||||||||||
| Awarded | 701 | $ | 305.67 | 624 | $ | 319.39 | 700 | $ | 294.60 | |||||||||||||||||||||||||||||
| Vested | (664) | $ | 284.20 | (713) | $ | 245.35 | (759) | $ | 214.70 | |||||||||||||||||||||||||||||
| Forfeited | (149) | $ | 316.12 | (65) | $ | 283.62 | (72) | $ | 256.24 | |||||||||||||||||||||||||||||
| Outstanding - December 31 | 1,138 | $ | 313.25 | 1,250 | $ | 302.42 | 1,404 | $ | 257.38 | |||||||||||||||||||||||||||||
The fair value of vested restricted stock at the vesting date was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Fair value of vested restricted stock | $ | 203 | $ | 238 | $ | 220 | ||||||||||||||
Approximately 8,400 employees held 1.1 million restricted stock awards at the end of 2025 with $187 million of related compensation expense to be recognized over the next two years (weighted average period).
D.Strategic Performance Shares ("SPSs")
The Company awards SPSs to executives and certain other key employees generally with a performance period of three years. Half of these shares are subject to a market condition (total shareholder return relative to industry peer companies), and half are subject to a performance condition (cumulative adjusted net income). These targets are set by the Committee at the beginning of the performance period. Holders of these awards receive shares of The Cigna Group common stock at the end of the performance period ranging anywhere from 0% to 200% of the original awards.
Accounting Policy. Compensation expense for SPSs is recorded over the performance period. Fair value is determined at the grant date for "market condition" SPSs using a Monte Carlo simulation model and not subsequently adjusted regardless of the final outcome. Expense is initially accrued for "performance condition" SPSs based on the most likely outcome but evaluated for adjustment each period for updates in the expected outcome. Expense is adjusted to the actual outcome (number of shares awarded multiplied by the share price at the grant date) at the end of the performance period.
The following table shows the status of, and changes in, SPSs:
| For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Awards in thousands) | Shares | Weighted Average Fair Value at Award Date | Shares | Weighted Average Fair Value at Award Date | Shares | Weighted Average Fair Value at Award Date | ||||||||||||||||||||||||||||||||
| Outstanding - January 1 | 601 | $ | 282.83 | 686 | $ | 243.90 | 780 | $ | 212.68 | |||||||||||||||||||||||||||||
| Awarded | 217 | $ | 305.28 | 195 | $ | 336.81 | 219 | $ | 293.85 | |||||||||||||||||||||||||||||
| Vested | (233) | $ | 231.75 | (242) | $ | 214.93 | (250) | $ | 191.78 | |||||||||||||||||||||||||||||
| Forfeited | (80) | $ | 317.01 | (38) | $ | 289.35 | (63) | $ | 237.50 | |||||||||||||||||||||||||||||
| Outstanding - December 31 | 505 | $ | 310.78 | 601 | $ | 282.83 | 686 | $ | 243.90 | |||||||||||||||||||||||||||||
The weighted average fair value per share of SPSs for expense purposes, including the Monte Carlo factor, at the award date for the years ended December 31, 2025, 2024 and 2023 was $323.60, $377.23 and $329.11, respectively.
The fair value of vested SPSs at the vesting date was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Shares in thousands; $ in millions) | Shares | Fair Value | Shares | Fair Value | Shares | Fair Value | ||||||||||||||||||||||||||||||||
Shares of The Cigna Group common stock distributed upon SPS vesting | 301 | $ | 92 | 257 | $ | 86 | 257 | $ | 76 | |||||||||||||||||||||||||||||
Approximately 600 employees held 505,000 SPSs at the end of 2025, and $43 million of related compensation expense is expected to be recognized over the next two years. The amount of expense for "performance condition" SPSs will vary based on actual performance in 2026 and 2027.
E.Compensation Cost and Tax Effects of Share-Based Compensation
The Company records tax benefits in Shareholders' net income during the vesting period based on the amount of expense being recognized. The difference between tax benefits based on the expense and the actual tax benefit realized are also recorded in income tax expense when stock options are exercised, or when restricted stock and SPSs vest.
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Total compensation cost for shared-based awards | $ | 291 | $ | 308 | $ | 286 | ||||||||||||||
| Tax benefits recognized | $ | 69 | $ | 94 | $ | 92 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
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.