LyondellBasell Industries NV

15. Incentive and Share-Based Compensation

We are authorized to grant RSUs, PSUs, stock options, and other cash and stock awards under our Long-Term Incentive Plan (“LTIP”). The Compensation and Talent Development Committee oversees our equity award grants, the type of awards, the required performance measures and the timing and duration of each grant. The maximum number of shares of our common stock reserved for issuance under the LTIP is 30,000,000 shares. After taking into consideration outstanding stock-settled awards and assuming a maximum payout for our PSU awards, there were 6,245,410 shares available for issuance as of December 31, 2024.

Total share-based compensation expense and the associated tax benefits are as follows:

Restricted Stock Unit Awards—RSUs entitle the recipient to be paid out an equal number of ordinary shares upon vesting. Effective in 2024, RSU’s will generally have athree-year vesting period and ratably vest in equal increments on the first, second and third anniversary of the grant date. Historically RSUs generally cliff vested on the third anniversary of the grant date.

The fair value of RSUs is based on the market price of the underlying stock on the date of grant. The weighted average grant date fair value for RSUs granted during the years ended December 31, 2024, 2023 and 2022 was $95.78, $93.93 and $96.14, respectively. The total fair value of RSUs vested and issued was $45 million, $30 million and $20 million during 2024, 2023 and 2022, respectively.

The following table summarizes RSU activity for the year:

As of December 31, 2024, the unrecognized compensation cost related to RSUs was $51 million, which is expected to be recognized over a weighted average period of 1.28 years.

Stock Option Awards—Stock options allow employees the opportunity to purchase ordinary shares of stock in the future at an exercise price equal to the market price at the date of grant. No stock option awards were granted in 2024. Previous awards generally have athree-year vesting period that vests in equal increments on the first, second and third anniversary of the grant date and have a contractual term often years. None of the Stock options are designed to qualify as Incentive Stock Options as defined in Section 422 of the Internal Revenue Code.

The fair value of each Stock option is estimated on the date of grant using the Black-Scholes option valuation model. The principal assumptions utilized in valuing Stock options include the expected stock price volatility (based on our historical stock price volatility over the expected term); the expected dividend yield; and the risk-free interest rate (an estimate based on the yield of a United States Treasury zero coupon bond with a maturity equal to the expected term of the option).

The expected term of Stock options granted is estimated based on the weighted average of historical exercise patterns and the midpoint of the remaining expected life.

In 2022, our board of directors declared a special dividend of $5.20 per share to all shareholders as of June 6, 2022. Pursuant to the anti-dilutive provisions under the award agreement, the Compensation Committee authorized the reduction of the exercise price for all outstanding stock options in an amount equal to the special dividends per share. The reduction in exercise price of $5.20 per share for all outstanding stock options was intended to provide an equitable and proportionate adjustment to holders of stock options as a result of the Company’s payment of the special dividend. These adjustments did not result in incremental expense.

The weighted average fair value of Stock options granted and the assumptions used in estimating those fair values are as follows:

The following table summarizes Stock option activity:

The aggregate intrinsic value of Stock options exercised during the years ended December 31, 2024, 2023 and 2022 was $10 million, $8 million and $6 million, respectively.

As of December 31, 2024, the unrecognized compensation cost related to Stock options was $2 million, which is expected to be recognized over a weighted average period of 1.0 year. During 2024, cash received from the exercise of Stock options was $52 million and the tax benefit associated with these exercises was $2 million.

Performance Share Units Awards—A target number of PSUs is granted to participants at the beginning of athree-year performance period. Final payout of awards, which can range from 0% to 200% of target shares granted, is determined and paid after the performance period. These awards are settled in shares of common stock, and each unit is equivalent toone share of our common stock.

The payout for PSUs granted will be equally based on Total Shareholder Return (“TSR”) relative to our peers and a performance metric. The fair value of the portion of the award that vests based on TSR is estimated using a Monte-Carlo simulation. For the other portion of the award, the fair value is determined at the end of each reporting period based on our stock price and the number of shares expected to vest.

The weighted average fair value and the assumptions used in estimating those fair value using a Monte-Carlo simulation are as follows:

The following table summarizes PSU activity:

The total fair value of PSUs vested during 2024 was $43 million paid out at 200% of target shares. As of December 31, 2024, the unrecognized compensation cost related to PSUs was $38 million, which is expected to be recognized over a weighted average period of 1.8 years.