Sylvamo CorpSLVM
Sylvamo Corp Stock Compensation Disclosure
INCENTIVE PLANS
The Company has adopted the Sylvamo 2021 Incentive Compensation Plan, which includes shares under its long-term incentive plan (“LTIP”) that grants certain employees, consultants, or non-employee directors of the Company different forms of awards, including time-based and performance-based restricted stock units.
The equity and incentive plan has a maximum shares reserve for the grant of 4,410,725 shares. As of December 31, 2025, 2,202,119 shares remain available for future grants.
The following sets forth restricted stock units and performance-based restricted stock units at 100% of target amounts at December 31, 2025, 2024 and 2023:
| Restricted Stock Units | Performance-Based Restricted Stock Units | |||||||||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
| Outstanding as of December 31, 2022 | 650,729 | $ | 32.55 | 304,596 | $ | 41.47 | ||||||||||||||||||||
Granted | 287,796 | 47.36 | 211,791 | 51.00 | ||||||||||||||||||||||
Shares issued | (300,594) | 31.87 | — | — | ||||||||||||||||||||||
Forfeited | (10,625) | 42.94 | (8,700) | 45.76 | ||||||||||||||||||||||
Outstanding as of December 31, 2023 | 627,306 | 39.50 | 507,687 | 45.37 | ||||||||||||||||||||||
Granted | 240,392 | 60.99 | 189,734 | 66.46 | ||||||||||||||||||||||
Shares issued | (385,720) | 36.06 | — | — | ||||||||||||||||||||||
Forfeited | (45,471) | 52.57 | (44,853) | 54.83 | ||||||||||||||||||||||
Outstanding as of December 31, 2024 | 436,507 | 53.00 | 652,568 | 50.85 | ||||||||||||||||||||||
Granted | 273,205 | 63.40 | 326,130 | 62.47 | ||||||||||||||||||||||
Shares issued | (221,808) | 50.14 | (424,861) | 42.39 | ||||||||||||||||||||||
Forfeited | (23,263) | 64.17 | (33,779) | 57.38 | ||||||||||||||||||||||
Outstanding as of December 31, 2025 | 464,641 | $ | 59.92 | 520,058 | $ | 64.62 | ||||||||||||||||||||
The aggregate fair value of awards vested for the years ended December 31, 2025, 2024, and 2023 was $45 million, $24 million, and $15 million, respectively.
Restricted stock units generally vest over a period of three years with one-third of the awarded units vesting annually. The grant date fair value of restricted stock units is valued at the closing stock price on the day prior to the grant date. The expense for restricted stock unit awards is recorded, net of forfeitures, over the vesting period.
Performance-based restricted stock units cliff vest at the end of a three-year service period based upon the achievement of two defined performance conditions, Return on Invested Capital (“ROIC”), measured against our internal benchmark, and Total Shareholder Return (“TSR”), compared to a peer group of companies. Expense for performance-based units is recognized, net of forfeitures, over the three-year vesting period. As the ROIC measure contains a performance condition, compensation cost for this component is based upon the grant date fair value of the award and the number of units expected to vest based on performance. As the relative TSR component is a market condition, we utilize a Monte Carlo simulation to determine the grant date fair value and resulting expense to recognize for the units. The Monte Carlo simulation calculates the fair value of the awards on grant date based on the expected term of the award, expected dividends, the risk-free rate and the expected volatility for the Company and its competitors.
The expected term is based on the roughly three-year vesting period of the awards, and the expected dividend yield used is zero as the Company pays dividend equivalent units throughout the performance period. The risk-free rate is based upon the yield of term-matched, zero-coupon securities using the Treasury Constant Maturities yield curve. As Sylvamo did not have sufficient stock price history, the volatility estimate was calculated as a simple average of similar peers and the correlation with the index was calculated as the average index correlation of the peer group.
The Monte Carlo simulation to value the relative TSR share units used the following assumptions:
| 2025 | 2024 | 2023 | ||||||||||||||||||
Expected volatility | 41.40 | % | 47.07 | % | 50.03 | % | ||||||||||||||
Risk-free interest rate | 3.91 | % | 4.36 | % | 4.42 | % | ||||||||||||||
Total stock-based compensation cost and the associated income tax benefits recognized by the Company in the consolidated statements of operations were as follows:
In millions | 2025 | 2024 | 2023 | |||||||||||||||||
Total stock-based compensation expense (included in selling and administrative expense) | $ | 18 | $ | 23 | $ | 23 | ||||||||||||||
Income tax benefit related to stock-based compensation | $ | 10 | $ | 8 | $ | 7 | ||||||||||||||
As of December 31, 2025, $16 million of compensation cost, net of estimated forfeitures, related to all stock-based compensation arrangements for Company employees had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.5 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
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.