We have a long-term incentive plan whereby eligible employees may be granted restricted stock units (RSUs), performance share units (PSUs) and stock options (SOs). We grant stock-based compensation awards in order to continue to attract and retain qualified employees and to better align employees' interests with those of our shareholders. Each of these awards is subject to settlement with newly issued shares of Xerox Holdings Corporation's common stock. At December 31, 2023 and 2022, 6 million and 9 million shares, respectively, were available for grant of awards.


	Year Ended December 31,
	2023		2022		2021
Stock-based compensation expense, pre-tax(1)	$	54	$	75	$	54
Income tax benefit recognized in earnings	10		11		13

____________

(1)2022 includes $21 associated with the accelerated vesting of all outstanding equity awards, according to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO.

Compensation expense for RSUs is based upon the grant-date market price and is recognized on a straight-line basis over the vesting period, based on management's estimate of the number of shares expected to vest. RSUs granted in 2021 through 2023 vest on a graded schedule as follows: 33% after one year of service, 33% after two years of service, and 34% after three years of service from the date of grant.

PSU awards are comprised of performance-based components (Earnings per share, Revenue and Free cash flow) as well as market-based components (Relative Total Shareholder Return (RTSR) and Absolute Share Price). PSUs granted in 2023 are entirely market-based. PSUs granted in 2022 and 2021 are one-half performance-based and one-half market-based. The metrics and weightings are as follows:


	Award Year (Metric Weighting)
Performance Metric	2023		2022		2021
Earnings per share	—	%	50	%	—	%
Revenue	—	%	—	%	25	%
Free cash flow	—	%	—	%	25	%
Relative total shareholder return	100	%	—	%	—	%
Absolute share price	—	%	50	%	50	%
	100	%	100	%	100	%

The measures are independent of each other and depending on the achievement of these metrics, a recipient of a PSU award is entitled to receive a number of shares equal to a percentage, ranging from 0% to 200% of the PSU award granted. All PSUs granted have a three-year cliff vesting from the date of grant.

Performance-Based Component: This PSU component vests contingent upon meeting pre-determined cumulative performance metrics. The fair value of this PSU component is based upon the grant-date market price for the underlying stock. Compensation expense is recognized on a straight-line basis over the vesting period, based on management's estimate of the number of shares expected to vest and based on meeting the performance metrics. If the cumulative three-year actual results exceed the stated targets, all plan participants have the potential to earn additional shares of common stock up to a maximum over-achievement of 100% of the original grant. If the stated targets are not met, any recognized compensation cost would be reversed.

Market-Based Component: The RTSR metric, included as part of the 2023 PSU, is based on Xerox Holdings Corporation's stock price appreciation, inclusive of dividends paid, measured over three equally weighted performance periods (2023, 2023-2024, and 2023-2025). RTSR will be determined by ranking Xerox Holdings Corporation and the companies within two distinct market indices, as approved by the Compensation Committee of the Board, from highest to lowest according to their respective TSRs, for each of the three performance periods. Payout for this portion of the PSU will be determined based on the weighted average of Xerox Holdings Corporation's payout for each of the three performance periods. The Absolute Share Price metric, included as the

market-based component of the 2022 and 2021 PSU grant, is based on Xerox Holdings Corporation's average closing price for the last 20 trading days of the three-year performance period, inclusive of dividends during that period. Payout for these portions of the PSU metrics will be determined based on total return targets. Since these metrics represent market conditions, Monte Carlo simulations were used to determine their respective grant-date fair values.


	2023 Award			2022 Award			2021 Award
Term	3 years			3 years			3 years
Risk-free interest rate(1)	3.80		%	1.09		%	0.20		%

Volatility(2)	52.21		%	42.07		%	44.76		%
Weighted average fair value(3)	$	23.00		$	27.89		$	25.80

(1)The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period.


Payout as a Percent of Target	2023 Percentile Ranking Return Targets(1)	2022 Total Return Targets(1)		2021 Total Return Targets(1)
200%	75th and above	$30.00 and above		$33.00 and above
100%	50th	$	25.00	$	30.00
50%	25th	$	20.00	$	27.00
0%	Below 25th	Below $20.00		Below $27.00

Compensation expense for the market-based component of the PSU awards is recognized on a straight-line basis over the vesting period based on the fair value determined by the Monte Carlo simulation and, except in cases of employee forfeiture, cannot be reversed regardless of performance.

Note: With respect to all stock-based compensation programs, Management’s estimate of the number of shares expected to vest at the time of grant reflects an estimate for forfeitures based on our historical forfeiture rate to date. Should actual forfeitures differ from management’s estimate, the activity will be reflected in a subsequent period. In addition, RSUs, PSUs and SOs awarded to employees who are retirement-eligible at the date of grant, become retirement-eligible during the vesting period, or are terminated not-for-cause (e.g., as part of a restructuring initiative), vest based on service provided from the date of grant to the date of separation.


	2023			2022			2021
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Restricted Stock Units
Outstanding at January 1	3,221	$	23.16	3,161	$	25.26	3,187	$	26.48
Granted(1)	3,382	16.56		2,444	21.75		1,513	23.37
Vested(2)	(1,593)	23.73		(1,975)	24.56		(1,327)	26.07
Forfeited	(338)	19.27		(409)	24.20		(212)	25.06


Outstanding at December 31	4,672	18.46		3,221	23.16		3,161	25.26
Performance Shares
Outstanding at January 1	1,729	$	28.38	2,818	$	25.47	2,425	$	26.67
Granted(3)	940	22.97		977	25.72		1,195	24.67
Vested (2)	—	—		(644)	27.95		(672)	28.08
Forfeited/Expired (4)	(630)	33.86		(1,422)	20.98		(130)	26.92


Outstanding at December 31	2,039	24.18		1,729	28.38		2,818	25.47

(2)2022 includes approximately 469 RSUs and 644 PSUs associated with the accelerated vesting of all outstanding equity awards, according to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO. No other PSUs vested in 2022.

(4)2022 includes approximately 1,125 PSUs granted in 2019 that were adversely affected permanently by the impacts from the COVID-19 pandemic, and therefore no shares were earned.


Awards	Unrecognized Compensation		Remaining Weighted-Average Vesting Period (Years)
Restricted Stock Units	$	46	1.7
Performance Shares	17		1.8
Stock Options(1)	8		3.0
Total	$	71

____________


	December 31, 2023		December 31, 2022				December 31, 2021
Awards	Total Intrinsic Value		Tax Benefit		Total Intrinsic Value			Tax Benefit		Total Intrinsic Value		Tax Benefit
Restricted Stock Units	$	25	$	5	$	39		$	6	$	30	$	5
Performance Share Units	—		—		10			—		17		2