Stock-Based Compensation
The CNAF Incentive Compensation Plan (the Plan) authorizes the grant of stock-based compensation to certain management personnel for up to 16 million shares of CNAF common stock. The Plan provides for awards of stock options, stock appreciation rights (SARs), restricted shares, restricted stock units (RSUs), performance-based RSUs and performance share units. Grants to employees are not designed to be spring-loaded. The number of remaining shares available for the granting of stock-based compensation under the Plan as of December 31, 2025 was approximately 2.0 million.
Substantially all of the Company's stock-based compensation is awarded under the Annual Performance Share Plan (PSP). The PSP provides officers with an opportunity to earn an award based upon attainment of specific performance goals achieved over a one-year performance period. Awards are granted in the form of performance share units at the beginning of each performance year and are generally subject to a two-year cliff vesting period after the Company’s annual performance has been determined. The performance share units become payable within a range of 0% to 200% of the number of performance share units initially granted.
Additionally, the Company may grant RSUs under the Plan in certain circumstances. These awards generally vest over a one to three-year service period following the grant date.
Stock-based compensation that is not fully vested prior to termination is generally forfeited upon termination, except in cases of retirement, death or disability, and as otherwise provided by contractual obligations. The fair value of stock-based compensation awards is based on the market value of the Company's common stock as of the date of grant, except for awards made to foreign participants, which is based on the current market value of the Company’s common stock. Payments made under the PSP are made entirely in shares of common stock granted under the Plan, except for awards made to foreign participants, which are paid in cash.
The Company recorded stock-based compensation expense related to the Plan of $41 million, $42 million and $38 million for the years ended December 31, 2025, 2024 and 2023. The related income tax benefit recognized was $9 million, $9 million and $8 million for the years ended December 31, 2025, 2024 and 2023. The compensation cost not yet recognized was $46 million, and the weighted average period over which it is expected to be recognized is 1.8 years as of December 31, 2025.
The total fair value of RSUs and performance share units that vested during the years ended December 31, 2025, 2024 and 2023 was $45 million, $33 million and $34 million, respectively.
The weighted average grant date fair value for RSUs and performance share units granted during the years ended December 31, 2025, 2024 and 2023 was $48.52, $44.28 and $37.06, respectively.
The following table presents activity for non-vested RSUs and performance share units under the Plan in 2025.
| | | | | | | | | | | |
| Number of Awards | | Weighted Average Grant Date Fair Value |
| Balance as of January 1, 2025 | 2,708,789 | | | $ | 42.26 | |
| Awards granted | 1,079,668 | | | 48.52 | |
| Awards vested | (971,657) | | | 45.34 | |
| Awards forfeited, canceled or expired | (279,084) | | | 43.02 | |
| Performance-based adjustment | 32,095 | | | 48.52 | |
| Balance as of December 31, 2025 | 2,569,811 | | | 43.72 | |