At the Company’s annual meeting of shareholders in June 2020, the shareholders approved the Visteon Corporation 2020 Incentive Plan (the “2020 Incentive Plan”), replacing the 2010 stock incentive plan and providing for an additional grant of up to 1.5 million shares. Pursuant to the 2020 Incentive Plan, the Company may grant shares of common stock for restricted stock awards (“RSAs”), restricted stock units (“RSUs”), non-qualified stock options ("Stock Options"), stock appreciation rights (“SARs”), performance-based share units ("PSUs"), and other stock based awards. The Company's stock-based compensation instruments are accounted for as equity awards or liability awards based on settlement intention as follows:

•For equity settled stock-based compensation instruments, compensation cost is measured based on grant date fair value of the award and is recognized over the applicable service period. For equity settled stock-based compensation instruments, the delivery of Company shares may be on a gross settlement basis or a net settlement basis. The Company's policy is to deliver such shares using treasury shares or issuing new shares.

•Cash settled stock-based compensation instruments are subject to liability accounting. At the end of each reporting period, the vested portion of the obligation for cash settled stock-based compensation instruments is adjusted to fair value based on the period-ending market prices of the Company's common stock. Related compensation expense is recognized based on changes to the fair value over the applicable service period.

Generally, the Company's stock-based compensation instruments are subject to graded vesting and recognized on an accelerated basis. The settlement intention of the awards is at the discretion of the Organization and Compensation Committee of the Company's Board of Directors. These stock-based compensation awards generally provide for accelerated vesting upon a change-in-control, as defined in the 2020 Incentive Plan, which requires a double-trigger. Accordingly, the Company may be required to accelerate recognition of related expenses in future periods in connection with the change-in-control events and subsequent changes in employee responsibilities, if any.


	Year Ended December 31,						Unrecognized Stock-Based Compensation Expense
(In millions)	2022		2021		2020		December 31, 2022
Performance based share units	$	7	$	5	$	6	$	9
Restricted stock units	20		12		10		20
Stock options	—		1		2		—
Total stock-based compensation expense	$	27	$	18	$	18	$	29

The number of PSUs that will vest, ranging from 0% to 200% of the target award, is based on the Company's achievement of a pre-established relative total shareholder return goal compared to its peer group of companies over a three-year period.


A summary of PSU activity is provided below:	PSUs	Weighted Average Grant Date Fair Value

	(In thousands)
Non-vested as of December 31, 2019	170	$	118.77
Granted	94	84.20
Vested	(66)	116.35
Forfeited	(18)	100.51
Non-vested as of December 31, 2020	180	106.48
Granted	55	148.71
Vested	(52)	131.48
Forfeited	(15)	112.01
Non-vested as of December 31, 2021	168	112.24
Granted	98	164.24
Vested	(86)	115.70
Forfeited	(8)	141.76
Non-vested as of December 31, 2022	172	$	128.28

The grant date fair value for PSUs was determined using the Monte Carlo valuation model. Unrecognized compensation expense as of December 31, 2022 for PSUs to be settled in shares of the Company's common stock was $9 million and will be recognized over the remaining vesting period of approximately 1.8 years. The Company made cash settlement payments of less than $1 million for PSUs expected to be settled in cash during each of the years ended December 31, 2022 and 2021. Unrecognized compensation expense as of December 31, 2022 was less than $1 million for the non-vested portion of these awards and will be recognized over the remaining vesting period of approximately 1.8 years.

The Monte Carlo valuation model requires management to make various assumptions including the expected volatility, risk-free interest rate, and dividend yield. Volatility is based on the Company’s stock history using daily stock prices over a period commensurate with the expected life of the award. The risk-free rate was based on the U.S. Treasury yield curve in relation to the contractual life of the stock-based compensation instrument. The dividend yield was based on historical patterns and future expectations for Company dividends.

The grant date fair value of RSUs is measured as the market closing price of the Company's common stock on the date of grant. These awards generally vest in one-third increments on the grant date anniversary over a three-year vesting period.


	Share Settled RSUs for the Year Ended December 31,
	2022	2021	2020
Granted	276,000	110,000	223,000
Weighted average grant date fair value	$114.17	$116.71	$75.52

Unrecognized compensation expense as of December 31, 2022 was $18 million for non-vested RSUs and will be recognized over the remaining vesting period of approximately 1.6 years.

The Company made cash settlement payments of less than $1 million during the years ended December 31, 2022, 2021, and 2020. Unrecognized compensation expense as of December 31, 2022 was $2 million for non-vested RSUs and will be recognized on a weighted average basis over the remaining vesting period of approximately 1.8 years.


	RSUs	Weighted Average Grant Date Fair Value
	(In thousands)
Non-vested as of December 31, 2019	216	$	90.98
Granted	231	77.57
Vested	(84)	95.70
Forfeited	(46)	77.47
Non-vested as of December 31, 2020	317	82.31
Granted	117	124.34
Vested	(106)	84.80
Forfeited	(43)	88.64
Non-vested as of December 31, 2021	285	97.68
Granted	293	115.13
Vested	(171)	91.48
Forfeited	(52)	107.10
Non-vested as of December 31, 2022	355	$	113.41

Beginning in the third quarter 2020, non-employee director RSU awards were granted under the terms and conditions of the 2020 Incentive Plan, and these awards vest approximately one year from the date of grant. Activity related to non-employee director grants under the 2020 Incentive Plan is included in RSU table above.

Additionally, as of December 31, 2022, the Company has approximately 79,000 outstanding RSU's awarded at a weighted average grant date fair value of $98.47 under the Non-Employee Director Stock Unit Plan which vested immediately but are not settled until the participant terminates board service. Total RSU's outstanding as of December 31, 2022 is approximately 434,000 inclusive of the table above.

Stock Options and SARs are recorded with an exercise price equal to the average of the high and low market price of the Company's common stock on the date of grant. The grant date fair value of these awards is measured using the Black-Scholes option pricing model. Stock Options and SARs generally vest in one-third increments on the grant date anniversary over a three-year vesting period and have an expiration date 7 or 10 years from the date of grant.

The Company received payments of $2 million, $2 million, and $2 million related to the exercise of Stock Options with total intrinsic value of options exercised of $3 million, $1 million, and less than $1 million during the years ended December 31, 2022, 2021, and 2020, respectively. Unrecognized compensation expense for non-vested Stock Options as of December 31, 2022 was less than $1 million and is expected to be recognized in full by Q1 2023.

The Black-Scholes option pricing model requires management to make various assumptions including the expected term, risk-free interest rate, dividend yield, and expected volatility. The expected term represents the period of time that granted awards are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term, and anticipated employee exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of the stock-based compensation instrument. The dividend yield is based on historical patterns and future expectations for Company dividends. Volatility is based on the Company’s stock history using daily stock prices over a period commensurate with the expected life of the award.

No stock options or SARs were granted in 2022 or 2021. Weighted average assumptions used to estimate the fair value of awards granted during the year ended December 31, 2020 are as follows:


	Stock Options	Weighted Average Exercise Price		SARs	Weighted Average Exercise Price
	(In thousands)			(In thousands)
December 31, 2019	283	$	93.51	7	$	72.84
Granted	112	66.98		—	—
Exercised	(27)	84.98		(1)	56.59
Forfeited or expired	(20)	96.12		—	—
December 31, 2020	348	85.46		6	74.77
Exercised	(19)	80.74		(6)	74.77
Forfeited or expired	(17)	89.17		—	—
December 31, 2021	312	85.56		—	—
Exercised	(51)	75.05		—	—
December 31, 2022	261	$	87.62	—	$	—

Exercisable at December 31, 2022	227	$	90.70	—	$	—