Owens CorningOC
Owens Corning Stock Compensation Disclosure
STOCK COMPENSATION
Description of the Plan
On April 20, 2023, the Company's stockholders approved the Owens Corning 2023 Stock Plan (the “2023 Stock Plan”) which authorizes grants of stock options, stock appreciation rights, stock awards (including restricted stock awards, restricted stock units and bonus stock awards), performance share awards and performance share units. At December 31, 2025, the number of shares remaining available under the 2023 Stock Plan for all stock awards was 2.6 million.
Prior to the 2023 Stock Plan, employees were eligible to receive stock awards under the Owens Corning 2019 Stock Plan.
Total Stock-Based Compensation Expense
Stock-based compensation expense included in Marketing and administrative expenses in the accompanying Consolidated Statements of (Loss) Earnings is as follows:
| Twelve Months Ended December 31, | |||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||
| Total stock-based compensation expense from continuing operations | $ | 66 | $ | 87 | $ | 47 | |||||
| Total stock-based compensation expense from discontinued operations | 5 | 6 | 4 | ||||||||
| Total stock-based compensation expense | $ | 71 | $ | 93 | $ | 51 | |||||
| Income tax benefit recognized on stock-based compensation expense from continuing operations | $ | 17 | $ | 20 | $ | 13 | |||||
| Income tax benefit recognized on stock-based compensation expense from discontinued operations | 1 | 1 | 1 | ||||||||
| Income tax benefit recognized on stock-based compensation expense | $ | 18 | $ | 21 | $ | 14 | |||||
Restricted Stock Units
The Company has granted restricted stock units (“RSUs”) under its stockholder-approved stock plans. Generally, all outstanding RSUs will fully settle in stock. Compensation expense for RSUs is measured based on the closing market price of the stock at date of grant and is recognized on a straight-line basis over the vesting period, which is typically or four years. The Stock Plan allows alternate vesting schedules for death, disability and retirement.
The weighted average grant date fair value of RSUs granted in 2025, 2024 and 2023 was $168.11, $155.14 and $104.27, respectively.
Masonite Equity Awards
On May 15, 2024, the Company converted outstanding Masonite stock-based incentive awards to Masonite employees at a 0.8 equity award exchange ratio. Masonite equity awards include outstanding and unvested awards of restricted stock units and performance stock units (“PRSUs”) under the Masonite International Corporation 2021 Omnibus Incentive Plan (“Masonite Stock Plan”) that were held by employees of Masonite, which were exchanged for time-vesting restricted stock units of Owens Corning RSUs in connection with the completion of the transactions contemplated by the Arrangement Agreement. The converted stock-based incentive awards include 0.2 million PRSUs and 0.3 million restricted stock units.
The equity award exchange ratio was determined by the consideration amount of $133 per share divided by the volume weighted average closing sale price of one share of Owens Corning common stock for the ten consecutive trading days ended March 15, 2024 of $174.03 per share, in accordance with the terms of the Arrangement Agreement.
In accordance with the Arrangement Agreement, the number of Masonite shares underlying the PRSUs was equal to (i) 107.33% of target for PRSUs granted in February 2022, (ii) 100% of target for PRSUs granted in August 2022 and (iii) 122% of target for PRSUs granted in February 2023.
The fair value of the Owens Corning RSUs issued for Masonite outstanding equity awards was $85 million as of the date of acquisition, of which $35 million was related to pre-combination expense and was included in the purchase price. The remaining portion of $50 million relates to post-combination expense, of which $27 million was accelerated as of December 31, 2025. As of December 31, 2025, the future unrecognized expense related to the converted outstanding RSUs was approximately $4 million which will be recognized over the remaining service period of approximately 1.02 years. Please refer to Note 8 and 13 of the Consolidated Financial Statements for further information. Future equity-based awards to Company employees who were former Masonite employees may be granted from the remaining available shares under the Masonite Stock Plan. At December 31, 2025, the number of shares remaining available under the Masonite Stock Plan was 0.6 million shares of Owens Corning common stock.
The following table shows a summary of the Company’s RSU activity:
| Number of RSUs | Weighted-Average Fair Value | |||||||
| Balance at December 31, 2024 | 1,249,146 | $ | 107.31 | |||||
| Granted | 321,272 | 168.11 | ||||||
| Vested | (493,950) | 111.25 | ||||||
| Forfeited | (82,267) | 142.20 | ||||||
| Balance at December 31, 2025 | 994,201 | $ | 122.10 | |||||
As of December 31, 2025, there was $44 million of total unrecognized compensation cost related to RSUs. This total includes $4 million of unrecognized compensation related to converted Masonite equity awards and $40 million related to Owens Corning Stock Plans. That cost is expected to be recognized over a weighted-average period of 1.74 years. The total grant date fair value of stock vested during the years ended December 31, 2025, 2024 and 2023 was $55 million, $80 million and $27 million, respectively.
Performance Share Units
The Company has granted performance share units (“PSUs”) as a part of its long-term incentive plan. All outstanding PSUs will fully settle in stock. The amount of shares ultimately distributed from the 2025, 2024 and 2023 grants is contingent on meeting internal company-based metrics or an external-based stock performance metric.
In 2025, 2024 and 2023, the Company granted both internal company-based and external-based metric PSUs.
Internal Company-based metrics
The internal Company-based metric PSUs are based on various Company metrics and typically vest after a three-year period. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on each award's design and performance versus the Company-based metrics.
The initial fair value for all internal Company-based metric PSUs assumes that the performance goals will be achieved and is based on the grant date stock price. This assumption is monitored quarterly and if it becomes probable that such goals will not be achieved or will be exceeded, compensation expense recognized will be adjusted and previous surplus compensation expense recognized will be reversed or additional expense will be recognized. The expected term represents the period from the grant date to the end of the three-year performance period. Pro-rata vesting may be utilized in the case of death, disability or retirement, and awards, if earned, will be paid at the end of the three-year period.
The following table provides a summary of the grant date fair values of the internal Company-based metric PSUs:
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Grant date fair value of units granted | $ | 171.94 | $ | 147.18 | $ | 92.97 | |||||
External based metrics
The external-based metric PSUs vest after a three-year period. Outstanding grants issued in or after 2018 until 2022 were based on the Company’s total stockholder return relative to the performance of the Dow Jones U.S. Construction & Materials Index. Outstanding grants issued in or after 2023 are based on the Company’s total stockholder return relative to a peer group. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on the relative stockholder return performance. The fair value of external-based metric PSUs has been estimated at the grant date using a Monte Carlo simulation that uses various assumptions.
The following table provides a summary of the assumptions for PSUs granted in 2025, 2024 and 2023:
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Expected volatility | 32.78% | 33.88% | 44.66% | ||||||||
| Risk free interest rate | 4.14% | 3.94% | 3.75% | ||||||||
| Expected term (in years) | 2.90 | 2.91 | 2.91 | ||||||||
| Grant date fair value of units granted | $221.54 | $195.95 | $119.33 | ||||||||
The risk-free interest rate was based on zero-coupon United States Treasury STRIPS at the grant date. The expected term represents the period from the grant date to the end of the three-year performance period.
PSU Summary
As of December 31, 2025, there was $15 million total unrecognized compensation cost related to PSUs. That cost is expected to be recognized over a weighted-average period of 1.71 years. The total grant date fair value of shares vested during the years ended December 31, 2025, 2024 and 2023, was $14 million, $21 million and $21 million, respectively.
The following table shows a summary of the Company's PSU activity:
| Number of PSUs | Weighted-Average Grant Date Fair Value | |||||||
| Balance at December 31, 2024 | 219,075 | $ | 117.23 | |||||
| Granted | 149,669 | 171.32 | ||||||
| Vested | (140,795) | 101.59 | ||||||
| Forfeited | (55,338) | 155.49 | ||||||
| Balance at December 31, 2025 | 172,611 | $ | 177.12 | |||||
Employee Stock Purchase Plan
The Owens Corning Employee Stock Purchase Plan (“ESPP”) is a tax-qualified plan under Section 423 of the Internal Revenue Code. The purchase price of shares purchased under the ESPP is equal to 85% of the lower of the fair market value of shares of Owens Corning common stock at the beginning or ending of the offering period, which is a six month period ending on May 31 and November 30 of each year. On April 16, 2020, the Company's stockholders approved the Amended and Restated Owens Corning Employee Stock Purchase Plan which increased the number of shares available for issuance under the plan by 4.2 million shares. As of December 31, 2025, 2.8 million shares remain available for purchase.
Included in total stock-based compensation expense is $9 million, $8 million and $7 million of expense related to the Company's ESPP for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, the Company had $4 million of total unrecognized compensation costs related to the ESPP.
The following table shows a summary of employee purchase activity under the ESPP:
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Total shares purchased by employees | 286,222 | 211,607 | 287,732 | ||||||||
| Average purchase price | $ | 105.71 | $ | 132.88 | $ | 83.51 | |||||
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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.