Owens Corning

17. 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, 2023, the number of shares remaining available under the 2023 Stock Plan for all stock awards was 3.4 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 Earnings is as follows (in millions):

Stock Options

The Company has granted stock options under its stockholder approved stock plans. The Company calculates a weighted-average grant-date fair value using a Black-Scholes valuation model for options granted. Compensation expense for options is measured based on the fair market value of the option on the date of grant, and is recognized on a straight-line basis over afour-year vesting period. In general, the exercise price of each option awarded was equal to the closing market price of the Company’s common stock on the date of grant and an option’s maximum term is 10 years. The volatility assumption was based on a benchmark study of our peers prior to 2014. Starting with the options granted in 2014, the volatility was based on the Company’s historic volatility.

The Company has not granted stock options since the year ended December 31, 2014. As of December 31, 2023, there wasno unrecognized compensation cost related to stock options and the exercise prices on outstanding stock options was $37.65.

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The following table summarizes the Company’s stock option activity in 2023:

The total cash received from the exercise of stock options and the resulting tax benefits received were as follows (in millions):

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 three orfour years. The Stock Plan allows alternate vesting schedules for death, disability and retirement.

The weighted average grant date fair value of RSUs granted in 2023, 2022 and 2021 was $104.27, $90.41 and $84.03, respectively.

The following table shows a summary of the Company’s RSUs:

As of December 31, 2023, there was $40 million of total unrecognized compensation cost related to RSUs. That cost is expected to be recognized over a weighted-average period of 2.42 years. The total grant date fair value of stock vested during the years ended December 31, 2023, 2022 and 2021 was $27 million, $22 million and $26 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 2023, 2022 and 2021 grants is contingent on meeting internal company-based metrics or an external-based stock performance metric.

In 2023, 2022 and 2021, the Company granted both internal company-based and external-based metric PSUs.

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Internal Company-based metrics

The internal Company-based metric PSUs are based on various Company metrics and typically vest after athree-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 thethree-year period.

The following table provides a summary of the grant date fair values of the internal Company-based metric PSUs:

External based metrics

The external-based metric PSUs vest after athree-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 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 2023, 2022 and 2021:

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 thethree-year performance period.

PSU Summary

As of December 31, 2023, there was $17 million total unrecognized compensation cost related to PSUs. That cost is expected to be recognized over a weighted-average period of 1.64 years. The total grant date fair value of shares vested during the years ended December 31, 2023, 2022 and 2021, was $21 million, $9 million and $8 million, respectively.

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The following table shows a summary of the Company's PSUs:

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 asix 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, 2023,3.2 million shares remain available for purchase.

Included in total stock-based compensation expense is $7 million, $6 million and $6 million of expense related to the Company's ESPP for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the Company had $3 million of total unrecognized compensation costs related to the ESPP. Under the outstanding ESPP as of February 9, 2024, employees have contributed $5 million to purchase shares for the current purchase period ending May 31, 2024.

The following table shows a summary of employee purchase activity under the ESPP: