NXP Semiconductors N.V.NXPI
NXP Semiconductors N.V. Stock Compensation Disclosure
Share-based Compensation
Share-based compensation expense is included in the following line items in our statement of operations:
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | 59 | 59 | 54 | ||||||||||||||
| Research and development | 237 | 234 | 211 | ||||||||||||||
| Selling, general and administrative | 166 | 168 | 146 | ||||||||||||||
| 462 | 461 | 411 | |||||||||||||||
The income tax (expense) benefit recognized in net income related to share-based compensation expenses was $36 million (includes $5 million of excess tax benefits), $46 million (includes $15 million of excess tax benefits) and $36 million (includes $9 million of excess tax benefits) for the years ended December 31, 2025, 2024 and 2023, respectively.
Long Term Incentive Plan (LTIP)
The LTIP was introduced in 2010 and is a broad-based long-term retention program to attract, retain and motivate talented employees as well as align stockholder and employee interests. The LTIP provides share-based compensation (“awards”) to both our eligible employees and non-employee directors. Awards that may be granted include performance shares, stock options and restricted shares. Awards granted generally will become fully vested upon a termination event occurring within one year following a change in control, as defined. A termination event is defined as either termination of employment or services other than for cause or constructive termination resulting from a significant reduction in either the nature or scope of duties and responsibilities, a reduction in compensation or a required relocation. The number of shares authorized and available for awards at December 31, 2025, was 14.4 million.
A charge of $450 million was recorded in 2025 for the LTIP (2024: $448 million; 2023: $398 million).
A summary of the activity for our LTIP during 2025 is presented below.
Stock options
At December 31, 2025, there were no (2024: none) unrecognized compensation cost related to non-vested stock options.
| Stock options | Weighted average exercise price in USD | Weighted average remaining contractual term | Aggregate intrinsic value | ||||||||||||||||||||
| Outstanding at January 1, 2025 | 143,867 | 74.01 | |||||||||||||||||||||
| Exercised | 126,121 | 73.74 | |||||||||||||||||||||
| Forfeited | 2,370 | 73.00 | |||||||||||||||||||||
| Outstanding at December 31,2025 | 15,376 | 76.31 | 0.1 | 2 | |||||||||||||||||||
| Exercisable at December 31,2025 | 15,376 | 76.31 | 0.1 | 2 | |||||||||||||||||||
No options were granted in 2025, 2024 and 2023.
The intrinsic value of the exercised options was $18 million (2024: $21 million; 2023: $13 million), whereas the amount received by NXP was $9 million (2024: $7 million; 2023: $5 million). The tax benefit realized from stock options exercised during fiscal 2025, 2024, and 2023 was $36 million, $45 million, and $36 million, respectively.
Performance share units
Market performance conditions
The Company grants PSU awards to certain executives of the Company with a performance measure of Relative Total Shareholder Return (“Relative TSR”). Each PSU, which generally cliff vests on the third anniversary of the date of grant, entitles the grant recipient to receive from 0 to 2 common shares for each of the target units awarded based on the Relative TSR of the Company's share price as compared to a set of peer companies.
The fair value of the PSUs is calculated using a Monte Carlo valuation model, utilizing assumptions underlying the Black-Scholes methodology:
| PSU grant assumptions | 2025 | 2024 | 2023 | ||||||||||||||
| Expected life (years) | 3 | 3 | 3 | ||||||||||||||
| Risk-free interest rate | 3.47% | 4.07% | 4.59% | ||||||||||||||
| Dividend yield | 1.9% | 1.8% | 2.2% | ||||||||||||||
| NXP share price volatility | 39% | 39% | 39% | ||||||||||||||
| Initial TSR | (3.5)% | (5.7)% | (0.2)% | ||||||||||||||
| Shares | Weighted average grant date fair value in USD | ||||||||||
| Outstanding at January 1, 2025 | 970,348 | 218.85 | |||||||||
| Granted | 255,721 | 236.69 | |||||||||
Performance based adjustment 1) | (167,034) | 188.49 | |||||||||
| Vested | 166,929 | 188.64 | |||||||||
| Forfeited | 158,068 | 234.25 | |||||||||
| Outstanding at December 31, 2025 | 734,038 | 235.53 | |||||||||
1) The amount shown represents performance adjustments for performance-based awards granted on November 1, 2022. These units vested at 50.00% during 2025 based on the achievement of Relative TSR performance conditions. | |||||||||||
In 2025, the weighted average grant date fair value of performance share units granted was $236.69 (2024: $258.20; 2023: $214.02). The fair value of the performance share units at the time of vesting was $34 million (2024: $38 million; 2023: $83 million).
At December 31, 2025, there was a total of $97 million (2024: $118 million; 2023: $109 million) of unrecognized compensation cost related to non-vested performance share units. This cost is expected to be recognized over a weighted-average period of 2.2 years (2024: 1.8 years; 2023: 2.0 years).
Restricted share units
| Shares | Weighted average grant date fair value in USD | ||||||||||
| Outstanding at January 1, 2025 | 4,411,640 | 190.76 | |||||||||
| Granted | 1,982,993 | 205.23 | |||||||||
| Vested | 2,226,724 | 178.97 | |||||||||
| Forfeited | 309,920 | 195.23 | |||||||||
| Outstanding at December 31, 2025 | 3,857,989 | 204.64 | |||||||||
The weighted average grant date fair value of restricted share units granted in 2025 was $205.23 (2024: $218.60; 2023: $178.69). The fair value of the restricted share units at the time of vesting was $461 million (2024: $526 million; 2023: $372 million).
At December 31, 2025, there was a total of $672 million (2024: $700 million; 2023: $685 million) of unrecognized compensation cost related to non-vested restricted share units. This cost is expected to be recognized over a weighted-average period of 1.6 years (2024: 1.6 years; 2023: 1.6 years).
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
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.