Philip Morris International Inc.PM
Philip Morris International Inc. Stock Compensation Disclosure
Stock Plans:
In May 2022, PMI’s shareholders approved the Philip Morris International Inc. 2022 Performance Incentive Plan (the “2022 Plan”). Under the 2022 Plan, PMI may grant to eligible employees restricted shares and restricted share units, performance-based cash incentive awards and performance-based equity awards. Up to 25 million shares of PMI’s common stock may be issued under the 2022 Plan. At December 31, 2025, shares available for grant under the 2022 Plan were 16,951,135.
In May 2017, PMI’s shareholders approved the Philip Morris International Inc. 2017 Stock Compensation Plan for Non-Employee Directors (the “2017 Non-Employee Directors Plan”). A non-employee director is defined as a member of the PMI Board of Directors who is not a full-time employee of PMI or of any corporation in which PMI owns, directly or indirectly, stock possessing at least 50% of the total combined voting power of all classes of stock entitled to vote in the election of directors in such corporation. Up to 1 million shares of PMI common stock may be awarded under the 2017 Non-Employee Directors Plan. At December 31, 2025, shares available for grant under the plan were 845,900.
Restricted share unit (RSU) awards
PMI may grant RSU awards to eligible employees; recipients may not sell, assign, pledge or otherwise encumber such awards. Such awards are subject to forfeiture if certain employment conditions are not met. RSU awards do not carry voting rights, although they do earn dividend equivalents. RSU awards generally vest on the third anniversary of the grant date.
The fair value of the RSU awards is determined by using the closing market price of PMI’s stock on the date of the grant and is amortized to expense over the restriction period, typically three years after the date of the award, or upon death, disability or reaching the age of 58.
During the years ended December 31, 2025, 2024 and 2023, the recorded compensation expense related to RSU awards, and the respective tax benefit (charge) were as follows:
| (in millions) | Compensation Expense Related to RSU Awards | Tax Benefit/(Charge) Related to RSU Awards | |||||||||
| 2025 | $ | 175 | $ | 41 | |||||||
| 2024 | $ | 157 | $ | 29 | |||||||
| 2023 | $ | 153 | $ | 26 | |||||||
The expense was recorded primarily in marketing, administration and research costs.
During 2025, 2024 and 2023 the activity for RSU awards was as follows:
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | Total Grant Date Fair Value of RSU Awards (in millions) | Total Fair Value of RSU Awards that Vested (in millions) | ||||||||||||||||||||
| Balances, January 1, 2023 | 4,519,470 | $ | 91.26 | ||||||||||||||||||||
Granted | 1,756,750 | $ | 101.96 | $ | 179 | ||||||||||||||||||
Vested | (1,483,356) | $ | 87.30 | $ | (129) | $ | (148) | ||||||||||||||||
Forfeited | (189,543) | $ | 96.96 | $ | (18) | ||||||||||||||||||
| Balances, December 31, 2023 | 4,603,321 | $ | 96.38 | ||||||||||||||||||||
Granted | 2,013,350 | $ | 89.71 | $ | 181 | ||||||||||||||||||
Vested | (1,849,088) | $ | 85.57 | $ | (158) | $ | (171) | ||||||||||||||||
Forfeited | (224,929) | $ | 97.43 | $ | (22) | ||||||||||||||||||
| Balances, December 31, 2024 | 4,542,654 | $ | 97.78 | ||||||||||||||||||||
Granted | 1,526,970 | $ | 145.53 | $ | 222 | ||||||||||||||||||
Vested | (1,431,108) | $ | 104.85 | $ | (150) | $ | (216) | ||||||||||||||||
Forfeited | (177,756) | $ | 108.39 | $ | (19) | ||||||||||||||||||
| Balance at December 31, 2025 | 4,460,760 | $ | 111.43 | ||||||||||||||||||||
As of December 31, 2025, PMI had $180 million of total unrecognized compensation costs related to non-vested RSU awards. These costs are expected to be recognized over a weighted-average period of approximately seventeen months, or upon death, disability or reaching the age of 58.
Performance share unit (PSU) awards
PMI may grant PSU awards to certain executives; recipients may not sell, assign, pledge or otherwise encumber such awards. Such awards are subject to forfeiture if certain employment conditions are not met. The PSU awards require the achievement of certain performance metrics, which are predetermined at the time of grant, typically over a three-year performance cycle.
The performance metrics for such PSU's granted during 2025 consisted of PMI's Total Shareholder Return ("TSR") relative to a predetermined peer group and on an absolute basis (40% weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate (30% weight), and a Sustainability Index, which consists of two drivers:
•Product Sustainability (20% weight): aggregates key performance indicators pertaining to social and environmental impacts generated by PMI's products; measuring progress primarily on PMI's efforts to maximize the benefits of smoke-free products, purposefully phase out cigarettes, and reduce post-consumer waste; and
•Operational Sustainability (10% weight): aggregates key performance indicators pertaining to social and environmental impacts generated by PMI's business activities; measuring progress on PMI's efforts to benefit PMI and its stakeholders by tackling climate change, preserving nature, improving the quality of life of people in its supply chain, and fostering an empowered, and inclusive workplace.
The performance metrics, targets and relative weights for the PSU’s granted during 2025 were the same as the PSU’s granted during 2024, with the exception of the annual growth rate of adjusted diluted EPS metric goals, which was increased, and for changes to certain components of the Sustainability Index. In the Sustainability Index, certain KPIs were adjusted to reflect PMI’s developing sustainability strategy and the number of individual KPIs was reduced, both in acknowledgment of the maturity of certain programs measured by removed KPIs and to further focus management performance on the remaining Sustainability Index metrics.
The performance metrics, targets and relative weights for the PSU’s granted during 2024 were the same as the PSU’s granted during 2023, with the exception of adjustments made to certain components of the Sustainability Index intended to address PMI's developing sustainability strategy and reporting.
The PSU performance metrics may be adjusted if appropriate to reflect the impact of unusual or infrequently occurring events, including, to the extent significant, corporate transactions, accounting or tax law changes, asset write-downs, litigation or claim adjustments, foreign exchange gains and losses, unbudgeted capital expenditures and other such events.
The aggregate of the weighted performance factors for the three metrics in each such PSU award determines the percentage of PSUs that will vest at the end of the three-year performance cycle. The minimum percentage of such PSUs that can vest is zero, with a target percentage of 100 and a maximum percentage of 200. Each such vested PSU entitles the participant to one share of common stock. An aggregate weighted PSU performance factor of 100 will result in the targeted number of PSUs being vested. At the end of the performance cycle, participants are entitled to an amount equivalent to the accumulated dividends paid on common stock during the performance cycle for the number of shares earned. PSU awards do not carry voting rights.
The fair value of the PSU awards on the date of the grant, adjusted by performance metrics, is amortized to expense over the restriction period, typically three years after the date of the award, or upon death, disability or reaching the age of 58.
During the years ended December 31, 2025, 2024 and 2023, the recorded compensation expense related to PSU awards, and the respective tax benefit (charge) were as follows:
| (in millions) | Compensation Expense related to PSU Awards | Tax Benefit/(Charge) Related to PSU Awards | |||||||||
| 2025 | $ | 79 | $ | 20 | |||||||
| 2024 | $ | 70 | $ | 15 | |||||||
| 2023 | $ | 59 | $ | 13 | |||||||
The expense was recorded primarily in marketing, administration and research costs.
During 2025, 2024 and 2023, the activity for PSU awards was as follows:
| Number of Shares | Weighted- Average PSU Grant Date Fair Value Subject to Other Performance Factors (Per Share) | Weighted- Average PSU Grant Date Fair Value Subject to TSR Performance Factors (Per Share) | Total Grant Date Fair Value of PSU Awards (in millions) | Total Fair Value of PSU Awards that Vested (in millions) | |||||||||||||||||||||||||
| Balances, January 1, 2023 | 1,507,190 | $ | 90.31 | $ | 115.45 | ||||||||||||||||||||||||
Granted | 482,360 | $ | 102.02 | $ | 133.54 | $ | 55 | ||||||||||||||||||||||
Vested | (902,232) | $ | 85.99 | $ | 98.45 | $ | (83) | $ | (91) | ||||||||||||||||||||
| Adjustments for performance achievement | 400,992 | $ | 85.99 | $ | 98.45 | $ | 37 | ||||||||||||||||||||||
Forfeited | (61,030) | $ | 98.24 | $ | 131.39 | $ | (7) | ||||||||||||||||||||||
| Balances, December 31, 2023 | 1,427,280 | $ | 95.45 | $ | 126.86 | ||||||||||||||||||||||||
Granted | 543,560 | $ | 89.01 | $ | 85.72 | $ | 48 | ||||||||||||||||||||||
Vested | (916,452) | $ | 82.28 | $ | 107.69 | $ | (86) | $ | (83) | ||||||||||||||||||||
| Adjustments for performance achievement | 374,402 | $ | 82.17 | $ | 107.70 | $ | 36 | ||||||||||||||||||||||
Forfeited | (78,630) | $ | 97.42 | $ | 117.24 | $ | (8) | ||||||||||||||||||||||
| Balances, December 31, 2024 | 1,350,160 | $ | 98.00 | $ | 118.55 | ||||||||||||||||||||||||
Granted | 396,400 | $ | 145.35 | $ | 213.72 | $ | 68 | ||||||||||||||||||||||
Vested | (686,052) | $ | 104.97 | $ | 143.64 | $ | (84) | $ | (102) | ||||||||||||||||||||
| Adjustments for performance achievement | 282,492 | $ | 104.97 | $ | 143.64 | $ | 36 | ||||||||||||||||||||||
Forfeited | (38,620) | $ | 105.55 | $ | 127.27 | $ | (4) | ||||||||||||||||||||||
| Balance at December 31, 2025 | 1,304,380 | $ | 110.02 | $ | 139.46 | ||||||||||||||||||||||||
The grant date fair value of the PSU awards subject to the other performance factors was determined by using the closing market price of PMI’s stock on the date of the grant. The grant date fair value of the PSU market-based awards subject to the TSR performance factor was determined by using the Monte Carlo simulation model. The following assumptions were used to determine the grant date fair value of the PSU awards subject to the TSR performance factor for the years ended December 31, 2025, 2024 and 2023:
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Average risk-free interest rate (a) | 4.1 | % | 4.2 | % | 4.1 | % | |||||||||||
Average expected volatility (b) | 21.0 | % | 19.9 | % | 24.3 | % | |||||||||||
(a) Based on the U.S. Treasury yield curve.
(b) Determined using the observed historical volatility.
As of December 31, 2025, PMI had $40 million of total unrecognized compensation cost related to non-vested PSU awards. This cost is recognized over a weighted-average performance cycle period of approximately eighteen months, or upon death, disability or reaching the age of 58.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2019 | Feb 7, 2020 | |
| 2017 | Feb 13, 2018 | |
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.