awards that will be paid in stock over the vesting period based on the fair value on the grant date. FirstEnergy accounts for forfeitures as they occur. FirstEnergy adjusts the compensation costs for stock-based compensation awards that will be paid in cash based on changes in the fair value of the award as of each reporting date. FirstEnergy records the actual tax benefit realized from tax deductions when awards are exercised or settled. Actual income tax benefits realized during the years ended December 31, 2022, 2021 and 2020, were $8 million, $10 million and $20 million, respectively. The income tax effects of awards are recognized in the income statement when the awards vest, are settled or are forfeited. Stock-based compensation costs and the amount of stock-based compensation costs capitalized related to FirstEnergy plans for the years ended December 31, 2022, 2021 and 2020, are included in the following tables: For the Years Ended December 31, Stock-based Compensation Plan 2022 2021 2020 (In millions) Restricted stock units $ 55 $ 40 $ 22 Restricted stock 3 2 1 401(k) savings plan 36 35 33 EDCP & DCPD 7 13 (5) Total $ 101 $ 90 $ 51 Stock-based compensation costs, net of amounts capitalized $ 54 $ 43 $ 25 Income tax benefits associated with stock-based compensation plan expense were $8 million, $5 million and $3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Restricted Stock Units Two-thirds of each performance-based restricted stock unit award will be paid in stock and one-third will be paid in cash. Restricted stock units payable in stock provide the participant the right to receive, at the end of the period of restriction, a number of shares of common stock equal to the number of stock units set forth in the agreement, subject to adjustment based on FirstEnergy's performance relative to financial and operational performance targets applicable to each award. The grant date fair market value of the stock portion of the restricted stock unit award is measured based on the average of the high and low prices of FE common stock on the date of grant. Beginning with awards granted in 2018, restricted stock units include a performance metric consisting of a relative total shareholder return modifier utilizing the S&P 500 Utility Index as a comparator group. The estimated grant date fair value for these awards is calculated using the Monte Carlo simulation method. Beginning with awards granted in 2022, restricted stock units include a relative total shareholder return as a performance metric, utilizing the S&P 500 Utility Index as a comparator group. The estimated grant date fair value for these awards is also calculated using the Monte Carlo simulation method. In addition, outstanding awards are subject to an absolute total shareholder return, if FirstEnergy's is negative for the three-year cumulative performance period, restricted stock unit awards will be capped at a of payout 100%. Restricted stock units payable in cash provide the participant the right to receive cash based on the number of stock units set forth in the agreement and value of the equivalent number of shares of FE common stock as of the vesting date. The cash portion of the restricted stock unit award is considered a liability award, which is remeasured each period based on FE's stock price and projected performance adjustments. The liability recorded for the portion of performance-based restricted stock units payable in cash in the future as of December 31, 2022, was $20 million. During 2022, approximately $9 million was paid in relation to the cash portion of restricted stock unit obligations that vested in 2022. The vesting period for the performance-based restricted stock unit awards granted in 2020, 2021 and 2022, were each three years. Dividend equivalents are received on the restricted stock units and are reinvested in additional restricted stock units and subject to the same performance conditions as the underlying award. Restricted stock unit activity for the year ended December 31, 2022, was as follows: Restricted Stock Unit Activity Shares (in millions) Weighted-Average Grant Date Fair Value (per share) Nonvested as of January 1, 2022 1.8 $ 41.89 Granted in 2022 1.0 41.19 Forfeited in 2022 (0.3) 39.58 Vested in 2022(1) (0.6) 41.57 Nonvested as of December 31, 2022 1.9 $ 41.57 (1) Excludes dividend equivalents of approximately 80 thousand shares earned during vesting period. 96
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