WEYERHAEUSER CO

NOTE 15: SHARE-BASED COMPENSATION

Share-based compensation expense was:

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OUR LONG-TERM INCENTIVE COMPENSATION PLAN

Our long-term incentive plan provides for share-based awards that include:

We may issue future grants of up to 20 million shares under the 2022 Plan. We also have the right to reissue forfeited and expired grants. The Compensation Committee of our board of directors annually establishes an overall pool of stock awards available for grants based on performance.

For stock-settled awards, we issue new stock into the marketplace and generally do not repurchase shares in connection with issuance of new awards.

Our common shares would increase by approximately 24 million shares if all share-based awards were exercised or vested. These include:

HOW WE ACCOUNT FOR SHARE-BASED AWARDS

We recognize the cost of share-based awards using a fair-value-based measurement in our Consolidated Statement of Operations over the required service period — generally the period from the date of the grant to the date when it is fully vested. Special situations include:

In these special situations, compensation expense from share-based awards is recognized over a period that is shorter than the stated vesting period. Forfeitures are recognized in compensation expense as they occur.

TAX BENEFITS OF SHARE-BASED AWARDS

Our total income tax benefit from share-based awards recognized in our Consolidated Statement of Operations for the last three years was:

Tax benefits from share-based awards are accrued as stock compensation expense and realized when restricted shares, performance shares, RSUs and PSUs vest.

TYPES OF SHARE-BASED COMPENSATION

Our share-based compensation is in the form of RSUs and PSUs.

RESTRICTED STOCK UNITS

Through the 2022 Plan, we award RSUs — grants that entitle the holder to shares of our stock as the award vests.

Our RSUs granted in 2025, 2024 and 2023 generally:

The fair value of our RSUs is the market price of our stock on the grant date of the awards.

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We generally record share-based compensation expense for RSUs over the four-year vesting period. Generally, for RSUs that continue to vest following the termination of employment, we record the share-based compensation expense over a required service period that is less than the stated vesting period.

The following table shows our RSU activity for 2025:

(1)

As of December 31, 2025, there were approximately 261 thousand RSUs that had met the requisite service period and will be released as identified in the grant terms.

The weighted average grant-date fair value for RSUs was:

The total grant-date fair value of RSUs vested was:

Nonvested RSUs accrue dividends that are paid out when RSUs vest. Any RSUs forfeited will not receive dividends.

As RSUs vest, a portion of the shares awarded is withheld to cover employee taxes. As a result, the number of stock units vested and the number of common shares issued will differ.

PERFORMANCE SHARE UNITS

Through the 2022 Plan, we award PSUs — grants that entitle the holder to shares of our stock as the award vests.

The final number of shares granted in 2025, 2024 and 2023 will vest between a range of 0 percent to 150 percent of each grant’s target, depending upon actual company total shareholder return (TSR) compared against the TSR of an industry peer group. TSR assumes full reinvestment of dividends.

The vesting provisions for PSUs granted in 2025, 2024 and 2023 were generally as follows:

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Since the awards contain a market condition, the effect of the market condition is reflected in the grant-date fair value which is estimated using a Monte Carlo simulation model. This model estimates the TSR ranking of the company over the performance period. Compensation expense is based on the estimated probable number of earned awards and recognized over the vesting period on an accelerated basis. Generally, compensation expense would not be reversed if the market condition is not achieved, provided the requisite service period has been completed.

Weighted Average Assumptions Used in Estimating the Value of PSUs

The following table shows our PSU activity for 2025:

(1)

As of December 31, 2025, there were approximately 181 thousand PSUs that had met the requisite service period and will be released as identified in the grant terms.

The weighted average grant-date fair value for PSUs was:

The total grant-date fair value of PSUs vested was:

Nonvested PSUs accrue dividends that are paid out when PSUs vest. Any PSUs forfeited will not receive dividends.

As PSUs vest, a portion of the shares awarded is withheld to cover participant taxes. As a result, the number of share units vested and the number of common shares issued will differ.

UNRECOGNIZED SHARE-BASED COMPENSATION

As of December 31, 2025, our unrecognized share-based compensation cost for all types of share-based awards included $54 million related to non-vested equity-classified share-based compensation arrangements. These are expected to be recognized over a weighted average period of approximately 2.3 years.

DEFERRED COMPENSATION STOCK EQUIVALENT UNITS

Certain employees and our board of directors may defer compensation into stock equivalent units.

Eligible employees:

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Our directors:

Employees and directors also choose when the deferrals will be paid out, although no deferrals may be paid until after the separation from service of the employee or director.

We settle all deferred compensation accounts in cash for our employees. Our directors receive shares of common stock as payment for stock equivalent units, except that any directors who are subject to federal or provincial taxation in Canada have the choice to receive a cash amount equal to the fair market value of the company’s common stock on the date of payment. In addition, we credit all stock equivalent accounts with dividend equivalents. The number of common shares to be issued in the future to directors is 484 thousand as of December 31, 2025.

Stock equivalent units are liability-classified awards and remeasured to fair value at every reporting date.

The fair value of a stock equivalent unit is equal to the market price of our stock.

The number of stock equivalent units outstanding in our deferred compensation accounts was:

NOTE 16: LEASES

The majority of our operating leases are related to our office and warehouse space, and our financing leases are related to vehicles and warehouse space. Our leases have remaining lease terms of approximately 1 year to 25 years. Options to renew, extend or terminate a lease are reflected in our lease terms when we believe it is reasonably certain we will exercise that option. When our leases do not provide an implicit or an explicit interest rate, we use our incremental borrowing rate in determining the present value of lease payments.

Lease Expense

Supplemental Cash Flow Information

(1)

Interest expense related to financing leases was immaterial during 2025, 2024 and 2023.

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Supplemental Balance Sheet Information Related to Leases

Weighted Average Remaining Lease Term

Weighted Average Discount Rate

Maturities of Lease Liabilities as of December 31,2025

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NOTE 17: OTHER OPERATING COSTS, NET

Other operating costs, net:

Income and Expense Items Included in Other Operating Costs, Net

ASSET IMPAIRMENT

During third quarter 2024, we recorded a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill. The loss was attributable to our Wood Products segment and was recorded within "Other operating costs, net" in our Consolidated Statement of Operations.

ENVIRONMENTAL REMEDIATION

During fourth quarter 2025, we recorded an$18 million noncash environmental remediation charge. This charge was attributable to our Unallocated segment and was recorded within "Other operating costs, net" in our Consolidated Statement of Operations.

During second quarter 2023, we recorded an $11 million noncash environmental remediation charge. This charge was attributable to our Unallocated segment and was recorded within "Other operating costs, net" in our Consolidated Statement of Operations.

INSURANCE RECOVERIES

During third quarter 2025, we received a $26 million insurance recovery. This recovery was attributable to our Unallocated segment and was recorded within "Other operating costs, net" in our Consolidated Statement of Operations.

During fourth quarter 2023, we received a $14 million insurance recovery related to property damage and business interruption for certain of our mills in the southern U.S. as a result of severe winter storm damage in first quarter 2021. This recovery was attributable to our Wood Products segment and was recorded within “Other operating costs, net” in our Consolidated Statement of Operations.

GAIN ON LUMBER MILL SALE

During third quarter 2025, we recorded a $29 million gain from the sale of our Princeton lumber mill. The gain was attributable to our Wood Products segment and was recorded within "Other operating costs, net" in our Consolidated Statement of Operations.

PRODUCT REMEDIATION RECOVERY

Refer to Note 13: Legal Proceedings, Commitments and Contingencies for further information.

NOTE 18: INCOME TAXES

This note provides details about income taxes applicable to our operations, including the following:

The Income Taxes section of Note 1: Summary of Significant Accounting Policies provides details about how we account for our income taxes.

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EARNINGS BEFORE INCOME TAXES

Domestic and Foreign Earnings Before Income Taxes

PROVISION FOR INCOME TAXES

EFFECTIVE INCOME TAX RATE

(1)

In 2025, state and local income taxes in Mississippi and Louisiana contributed to the majority of domestic state income taxes, net of federal effect. In 2024 and 2023, state and local income taxes in Oregon contributed to the majority of domestic state income taxes, net of federal effect.

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INCOME TAXES PAID

DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets and liabilities reflect the future tax effect created by differences between the timing of when income or deductions are recognized for pretax financial book reporting purposes versus income tax purposes. Deferred tax assets represent a future tax benefit (or reduction to income taxes in a future period), while deferred tax liabilities represent a future tax obligation (or increase to income taxes in a future period).

Balance Sheet Classification of Deferred Income Tax Assets (Liabilities)

Items Included in Our Deferred Income Tax Assets (Liabilities)

Net Operating Loss and Credit Carryforwards

Our gross federal, state and foreign net operating loss carryforwards as of December 31, 2025 totaled $1.5 billionas follows:

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Our gross state credit carryforwards as of December 31, 2025 totaled$60 million, which includes$10 million that expire from 2026 through 2037. Our U.S. TRSs have $8 million in foreign tax credit carryforwards that expire from 2027 through 2031.

Valuation Allowances

With the exception of the valuation allowance discussed below, we believe it is more likely than not that we will have sufficient future taxable income to realize our deferred tax assets.

Our valuation allowance on our deferred tax assets was$81 million as of December 31, 2025, which related to state credits, state net operating losses and foreign tax credits.

UNRECOGNIZED TAX BENEFITS

Unrecognized tax benefits represent potential future obligations to taxing authorities if uncertain tax positions we have taken on previously filed tax returns are not sustained. In accordance with our accounting policy, we accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense (see Note 1: Summary of Significant Accounting Policies). The total gross amount of unrecognized tax benefits as of December 31, 2025 and 2024, as well as the activity during those years, were immaterial.

As of December 31, 2025, none of our U.S. federal income tax returns are under examination, with tax years 2022 forward open to examination. We are undergoing examination in foreign jurisdictions for the 2022 tax year, with tax years 2018 forward open to examination. We are undergoing examinations in state jurisdictions for tax years 2020 through 2024, with tax years 2009 forward open to examination. We do not expect that the outcome of any examination will have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit settlements are subject to significant uncertainty.

TAX LEGISLATION

On July 4, 2025, H.R. 1, commonly known as the One Big, Beautiful Bill Act (the OBBBA), was enacted. The OBBBA contains significant changes to corporate taxation, including accelerated deductions for capital spending, expensing of research and development costs and increased deductibility of interest expense. Additionally, effective for taxable years beginning after December 31, 2025, the value of TRS securities that a REIT may hold will increase from 20 percent to 25 percent of the value of the REIT’s total assets. The enactment of the OBBBA did not materially impact our 2025 financial statements.

NOTE 19: GEOGRAPHIC AREAS

This note provides selected key financial data according to the geographical locations of our customers.

SALES

Our sales to unaffiliated customers outside the U.S. are primarily to customers in Canada, Japan, China and Korea. Our export sales from the U.S. are comprised primarily of logs, lumber and wood chips to customers in those same countries.

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Sales by Geographic Area

LONG-LIVED ASSETS

Our long-lived assets used in the generation of revenues in different geographical areas are nearly all in the U.S. and Canada. Our long-lived assets primarily include:

Long-Lived Assets by Geographic Area

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NOTE 20: PRINCETON LUMBER MILL DIVESTITURE

On September 2, 2025, we completed the sale of our Princeton lumber mill for approximately $85 million. The total purchase price is inclusive of mill assets, the associated timber licenses in British Columbia and the value of working capital as of the closing date. Pursuant to the transaction closing, a gain on the sale of $29 million was recognized within our Wood Products segment in "Other operating costs, net" in our Consolidated Statement of Operations. The transfer of all associated timber licenses in British Columbia remains subject to regulatory approval as of fourth quarter 2025, which we expect will follow in the ensuing months. A portion of the total purchase price is held in escrow as of the date of the sale and will be released in conjunction with the transfer of the associated timber licenses. We recorded this portion within "Receivables, net" and "Other assets, net" on our Consolidated Balance Sheet.