W.W. GRAINGER, INC.GWW

W.W. GRAINGER, INC. Stock Compensation Disclosure

10-KFiled Feb 19, 20262 min read
STOCK INCENTIVE PLANS
The Company maintains stock incentive plans under which the Company may grant a variety of incentive awards to team members and executives, which include restricted stock units (RSUs), performance shares and deferred stock units. As of December 31, 2025, there were 1.3 million shares available for grant under the plans. When awards are exercised or settled, shares of the Company’s treasury stock are issued.

Pretax stock-based compensation expense included in SG&A was $64 million, $62 million, and $62 million in 2025, 2024 and 2023, respectively, and was primarily comprised of RSUs. Related income tax benefits recognized in earnings were $24 million, $34 million, and $34 million in 2025, 2024 and 2023, respectively.

Restricted Stock Units
The Company awards RSUs to certain team members and executives. RSUs vest generally over periods from one to seven years from issuance. The RSU grant date fair value is based on the closing price of the Company's common stock on the last trading day preceding the date of the grant. RSU expense for the years ended December 31, 2025, 2024 and 2023 was approximately $50 million, $48 million and $43 million, respectively.

The following table summarizes RSU activity (in millions of dollars, except for share and per share amounts):
202520242023
SharesWeighted
Average Price Per Share		SharesWeighted
Average Price Per Share		SharesWeighted
Average Price Per Share
Beginning nonvested units136,200 $768.64 172,984 $550.62 191,032 $409.77 
Issued59,031 993.21 57,012 1,008.98 81,174 692.02 
Cancelled(7,505)869.44 (10,221)701.36 (7,943)512.31 
Vested(70,956)684.06 (83,575)489.57 (91,279)384.92 
Ending nonvested units116,770 $927.09 136,200 $768.64 172,984 $550.62 
Fair Value of Shares Vested$49 $41 $35 

As of December 31, 2025, there was $68 million of total unrecognized compensation expense related to nonvested RSUs the Company expects to recognize over a weighted average period of two years.

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 20, 2025
2023Feb 22, 2024
2022Feb 21, 2023
2021Feb 23, 2022
2020Feb 24, 2021
2019Feb 20, 2020
2018Feb 28, 2019
2017Feb 26, 2018
2016Feb 28, 2017
2015Feb 29, 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.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsNew Standards