MASCO CORP /DE/MAS
MASCO CORP /DE/ Stock Compensation Disclosure
L. STOCK-BASED COMPENSATION
Our 2024 Long Term Stock Incentive Plan (the "2024 Plan") replaced the 2014 Long Term Stock Incentive Plan in May 2024 and provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At December 31, 2025, outstanding stock-based incentives were in the form of restricted stock units, performance restricted stock units, stock options, phantom stock awards and stock appreciation rights.
Pre-tax compensation expense included in income before income taxes for these stock-based incentives was as follows, in millions:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Restricted stock units | $ | 21 | $ | 26 | $ | 15 | |||||||||||
| Performance restricted stock units | 3 | 5 | 3 | ||||||||||||||
| Stock options | 3 | 4 | 5 | ||||||||||||||
| Phantom stock awards and stock appreciation rights | 3 | 4 | 5 | ||||||||||||||
| Long-term stock awards | — | — | 3 | ||||||||||||||
| Total | $ | 30 | $ | 39 | $ | 31 | |||||||||||
At December 31, 2025, approximately 7.0 million shares of our common stock were available under the 2024 Plan for the granting of restricted stock units, performance restricted stock units, stock options and long-term stock awards.
L. STOCK-BASED COMPENSATION (Continued)
Restricted Stock Units. Restricted stock units are granted to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market.
Our restricted stock unit activity was as follows, units in thousands:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Unvested restricted stock units at January 1 | 738 | $ | 66 | 796 | $ | 57 | 1,154 | $ | 57 | ||||||||||||||||||||||||||
| Granted | 347 | 75 | 466 | 73 | 205 | 56 | |||||||||||||||||||||||||||||
| Vested | (372) | 63 | (455) | 57 | (532) | 55 | |||||||||||||||||||||||||||||
| Forfeited | (53) | 74 | (68) | 68 | (32) | 58 | |||||||||||||||||||||||||||||
| Unvested restricted stock units at December 31 | 661 | $ | 72 | 738 | $ | 66 | 796 | $ | 57 | ||||||||||||||||||||||||||
At December 31, 2025, 2024, and 2023, there was $16 million, $15 million, and $11 million, respectively, of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years at December 31, 2025, 2024 and 2023.
The total market value (at the vesting date) of restricted stock units which vested was $28 million, $34 million, and $28 million during 2025, 2024 and 2023, respectively.
Performance Restricted Stock Units. Under our Long Term Incentive Program ("LTIP"), we grant performance restricted stock units to certain executives. These performance restricted stock units will vest and share awards will be issued at no cost to the employees, subject to our achievement over a three-year period of specified return on invested capital performance goals, an earning per share metric, and a relative total shareholder return metric that have been established by our Compensation Committee for the performance period. To receive the award, the participant must be employed through the share award date. Except that, beginning with the 2025 grant, participants who conclude service and are retirement eligible or whose employment ends under certain qualifying conditions will receive an award, if the established performance goals for the respective LTIP are met, prorated to reflect the time the participant was employed during the applicable performance period. Performance restricted stock units are granted at a target number; based on our performance, the number of performance restricted stock units that vest can be adjusted downward to zero and upward to a maximum of 200 percent of the target number.
During 2025, we granted approximately 121,000 performance restricted stock units with a weighted average grant date fair value of approximately $71 per share, no performance restricted stock units were issued and 83,000 performance restricted stock units were forfeited. At December 31, 2025, there were approximately 91,000 shares vested but unissued. During 2024, we granted approximately 70,000 performance restricted stock units with a grant date fair value of approximately $75 per share, approximately 48,000 performance restricted stock units were issued and 6,000 performance restricted stock units were forfeited. During 2023, we granted approximately 99,000 performance restricted stock units with a grant date fair value of approximately $52 per share, approximately 253,000 performance restricted stock units were issued and no performance restricted stock units were forfeited. At December 31, 2023, there were approximately 59,000 shares vested but unissued.
Stock Options. Stock options are granted to certain senior executives. The exercise price equals the market price of our common stock at the grant date and the stock options expire no later than 10 years after the grant date.
L. STOCK-BASED COMPENSATION (Continued)
Our stock option activity was as follows, shares in thousands:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | ||||||||||||||||||||||||||||||
| Outstanding stock options at January 1 | 1,048 | $ | 56 | 2,254 | $ | 45 | 2,988 | $ | 39 | ||||||||||||||||||||||||||
| Granted | 256 | 75 | 201 | 73 | 228 | 57 | |||||||||||||||||||||||||||||
| Exercised | (115) | 42 | (1,397) | 41 | (940) | 29 | |||||||||||||||||||||||||||||
| Forfeited | (90) | 77 | (10) | 57 | (22) | 36 | |||||||||||||||||||||||||||||
| Outstanding stock options at December 31 | 1,099 | $ | 60 | 1,048 | $ | 56 | 2,254 | $ | 45 | ||||||||||||||||||||||||||
The aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares. The aggregate intrinsic value for options exercised during 2025, 2024 and 2023 was $4 million, $48 million and $26 million, respectively. The weighted-average remaining term for options outstanding at December 31, 2025, 2024 and 2023 was six years, seven years and six years, respectively.
The following table summarizes information for stock options vested and expected to vest and exercisable (vested) stock options, shares in thousands:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Vested and Expected to Vest Stock Options | Exercisable (Vested) Stock Options | Vested and Expected to Vest Stock Options | Exercisable (Vested) Stock Options | Vested and Expected to Vest Stock Options | Exercisable (Vested) Stock Options | ||||||||||||||||||||||||||||||
| Number of shares | 1,068 | 726 | 1,040 | 592 | 2,248 | 1,621 | |||||||||||||||||||||||||||||
| Weighted average exercise price | $ | 60 | $ | 55 | $ | 56 | $ | 49 | $ | 45 | $ | 42 | |||||||||||||||||||||||
| Aggregate intrinsic value | $ | 7 | million | $ | 7 | million | $ | 18 | million | $ | 14 | million | $ | 48 | million | $ | 41 | million | |||||||||||||||||
| Weighted-average remaining term | 6 years | 5 years | 7 years | 5 years | 6 years | 5 years | |||||||||||||||||||||||||||||
Unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options was $2 million at December 31, 2025 and $1 million at both December 31, 2024 and 2023; such options had a weighted average remaining vesting period of two years at December 31, 2025, 2024 and 2023.
The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average grant date fair value | $ | 23.98 | $ | 23.71 | $ | 16.91 | |||||||||||
| Risk-free interest rate | 4.51 | % | 4.38 | % | 3.95 | % | |||||||||||
| Dividend yield | 1.66 | % | 1.59 | % | 2.02 | % | |||||||||||
| Volatility factor | 30.42 | % | 31.00 | % | 31.00 | % | |||||||||||
| Expected option life | 6 years | 6 years | 6 years | ||||||||||||||
L. STOCK-BASED COMPENSATION (Concluded)
Phantom Stock Awards and Stock Appreciation Rights. Certain non-U.S. employees are granted phantom stock awards and SARs.
In 2025, 2024 and 2023, we granted approximately 47,000, 42,000, and 57,000 shares, respectively, of phantom stock awards with an aggregate fair value of $4 million in 2025 and $3 million in both 2024 and 2023 and paid cash of $4 million in 2025, $5 million in 2024 and $4 million in 2023 to settle phantom stock awards.
Information related to phantom stock awards was as follows, dollars in millions and shares in thousands:
| At December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Accrued compensation cost liability | $ | 4 | $ | 5 | |||||||
| Unrecognized compensation cost | $ | 1 | $ | 2 | |||||||
| Equivalent common shares | 85 | 96 | |||||||||
No SARs were granted in 2025 and 2024 and we granted 22,000 SARs in 2023. During 2025, 7,000 SARs were forfeited and 15,000 SARs remained outstanding, all of which were vested at December 31, 2025.
Long-Term Stock Awards. Prior to 2020, we granted long-term stock awards to our key employees and non-employee Directors. As of December 31, 2024, all long-term stock awards had vested.
The total market value (at the vesting date) of stock award shares which vested was $5 million and $10 million during 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2022 | Feb 9, 2023 | |
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.