Prudential Financial, Inc.’s Omnibus Incentive Plan provides stock-based awards including stock options, stock appreciation rights, restricted stock shares, restricted stock units, stock settled performance shares, and cash settled performance units. Dividend equivalents are generally provided on restricted stock shares and restricted stock units outstanding as of the record date. Dividend equivalents are generally accrued on target performance shares and units outstanding as of the record date. These dividend equivalents are paid only on the performance shares and units released up to a maximum of the target number of shares and units awarded. Generally, the requisite service period is the vesting period. There were 9,906,113 authorized shares available for grant under the Omnibus Incentive Plan as of December 31, 2020.

The Company acquired Assurance IQ on October 10, 2019. The terms of the Acquisition included compensation awards that involved share-based payment arrangements that are linked to retention and therefore fall under the reporting requirements of ASC 718, Stock Compensation. These compensation awards include stock options, restricted stock units and performance shares.

Compensation cost for employee stock options is based on the fair values estimated on the grant date. Under the Omnibus Incentive Plan, the fair value of each stock option award is estimated using a binomial option pricing model on the date of grant for stock options issued to employees. For the Acquisition related awards, the fair value of each stock option award is based on its intrinsic value on the date of grant.

Expected volatilities are based on historical volatility of Prudential Financial’s Common Stock and implied volatilities from traded options on Prudential Financial’s Common Stock. The Company uses historical data and expectations of future exercise patterns to estimate option exercises and employee terminations within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods associated with the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.


	2020				2019				2018
Omnibus Incentive Plan:	Total Compensation Cost Recognized (1)		Income Tax Benefit		Total Compensation Cost Recognized (1)		Income Tax Benefit		Total Compensation Cost Recognized (1)		Income Tax Benefit
	(in millions)
Employee stock options	$	11	$	3	$	11	$	3	$	13	$	3
Employee restricted stock units	162		38		149		35		139		32
Employee performance shares and performance units	53		12		71		17		3		1
Total	$	226	$	53	$	231	$	55	$	155	$	36


	2020				2019
Assurance IQ Acquisition:	Total Compensation Cost Recognized		Income Tax Benefit		Total Compensation Cost Recognized		Income Tax Benefit
	(in millions)
Employee stock options	$	14	$	4	$	4	$	1
Employee restricted stock units	2		1		1		0
Employee performance shares	0		0		0		0
Total	$	16	$	5	$	5	$	1

Each stock option granted under the Omnibus Incentive Plan has an exercise price at the fair market value of Prudential Financial’s Common Stock on the date of grant and has a maximum term of 10 years. Generally, one third of the option grant vests in each of the first three years. Options granted related to the Acquisition have an exercise price based on the original strike price of the Assurance IQ options that they replaced and have a maximum term of 10 years from the date the Assurance IQ options were originally granted. Options granted related to the Acquisition generally vest quarterly over three years.


	Employee Stock Options
	Omnibus Incentive Plan			Assurance IQ Acquisition
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at December 31, 2019	4,610,997	$	76.26	547,192	$	1.38
Granted	610,027	95.87		0	0.00
Exercised	(647,313)	59.82		(142,638)	0.51
Forfeited	0	0.00		(10,288)	5.10
Expired	(9,859)	78.45		0	0.00
Outstanding at December 31, 2020	4,563,852	$	81.21	394,266	$	1.60
Exercisable at December 31, 2020	3,427,197	$	76.25	57,791	$	4.02

The weighted average grant date fair value of employee stock options granted under the Omnibus Incentive Plan during the years ended December 31, 2020, 2019 and 2018 was $18.00, $20.02 and $27.11, respectively. For the Acquisition related awards, the weighted average grant date fair value of employee stock options granted during the year ended December 31, 2019 was $86.31. No Acquisition related options were granted in 2020.

The total intrinsic value (i.e., market price of the stock less the option exercise price) of employee stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $13 million, $21 million, and $28 million, respectively. For the Acquisition related awards, the total intrinsic value of employee stock options exercised during the years ended December 31, 2020 and 2019 were $10 million and $3 million, respectively.


	Employee Stock Options
	Omnibus Incentive Plan			Assurance IQ Acquisition
	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in years)	(in millions)		(in years)	(in millions)
Outstanding	4.47	$	32	7.44	$	30
Exercisable	3.46	$	32	7.39	$	4

A restricted stock unit is an unfunded, unsecured right to receive a share of Prudential Financial’s Common Stock at the end of a specified period of time, which is subject to forfeiture and transfer restrictions. Generally, the restrictions will lapse on the third anniversary of the date of grant. Performance shares and performance units are awards denominated in Prudential Financial’s Common Stock. The number of units is determined over the performance period and may be adjusted based on the satisfaction of certain performance goals for the Company. Performance share awards are payable in Prudential Financial’s Common Stock. Performance unit awards are payable in cash. Effective October 2019, the Company modified certain provisions of its long term compensation plan to settle the performance units component in Prudential Financial Common Stock. As a result, outstanding performance units were converted to performance shares except for certain employee directed deferrals in the deferred compensation plan which remain as performance units for the full life of the grant. Beginning in 2020, the Company no longer grants performance unit awards.


	Restricted Stock Units	Weighted Average Grant Date Fair Value		Performance Share and Performance Unit Awards(1)	Weighted Average Grant Date Fair Value
Restricted at December 31, 2019(2)	4,471,189	$	102.25	1,822,886	$	90.03
Granted(2)	1,922,202	93.88		671,994	95.42
Forfeited	(197,399)	95.86		(16,118)	65.17
Performance adjustment(3)				49,485	95.43
Released	(1,437,753)	109.73		(622,607)	90.23
Restricted at December 31, 2020(2)	4,758,239	$	96.87	1,905,640	$	92.07

(1)Performance share and performance unit awards reflect the target units awarded, reduced for forfeitures and releases to date. The actual number of units to be awarded at the end of each performance period will range between 0% and 125% of the target number of units granted, based upon a measure of the reported performance for the Company relative to stated goals. Performance awards granted to senior management in 2018 include a stated goal related to diversity & inclusion that can modify the performance result by +/- 10%.

(2)Effective October 1, 2019, the Company modified existing performance share and performance unit awards to remove features of the grants that prevent having a mutual understanding of the key terms and conditions of the award between the employee and employer until the grants vested. Consequently, the weighted average grant date fair value as of December 31, 2020 is the closing stock price of Prudential Financial’s common stock as of September 30, 2019. The weighted average grant date fair value as of December 31, 2018 is the closing stock price of Prudential Financial’s common stock as of December 31, 2019.


	Restricted Stock Units	Weighted Average Grant Date Fair Value		Performance Share Awards(1)	Weighted Average Grant Date Fair Value
Restricted at December 31, 2019	125,788	$	87.67	1,982,708	$	89.81
Granted	0	0.00		112,949	63.30
Forfeited	(20,222)	87.67		(29,662)	85.30
Performance adjustment(2)	0	0.00		0	0.00
Released	(32,869)	87.67		0	0.00
Restricted at December 31, 2020	72,697	$	87.67	2,065,995	$	88.43

(1)Performance share awards related to the Assurance IQ acquisition reflect the maximum number of units that have been awarded under the terms of the acquisition. The actual number of units that will be awarded at the end of the performance period will range between 0% and 100% of the number of units granted, based upon a predetermined formula of achieving Variable Profits between $900 million and $1,300 million.

The fair market value of restricted stock units, performance shares and performance units released under the Omnibus Incentive Plan for the years ended December 31, 2020, 2019 and 2018 was $191 million, $255 million and $238 million, respectively. The fair market value of restricted stock units for the Acquisition related awards under the Omnibus Incentive Plan for the year ended December 31, 2020 was $2 million. There were no vested restricted stock units or performance shares related to the Acquisition for the year ended December 31, 2019.

The weighted average grant date fair value for restricted stock units granted under the Omnibus Incentive Plan during the years ended December 31, 2020, 2019 and 2018 was $93.88, $93.35 and $106.32, respectively. The weighted average grant date fair value for performance shares and performance units granted under the Omnibus Incentive Plan during the years ended December 31, 2020, 2019 and 2018 was $95.42, $90.68 and $81.55, respectively. The weighted average grant date fair value for restricted stock units granted for the Acquisition during the year ended December 31, 2019 was $87.67. No restricted units were granted in 2020. The weighted average grant date fair value for performance shares granted for the Acquisition during the years ended December 31, 2020 and 2019 were $63.30 and $89.81 respectively .

Unrecognized compensation cost for stock options under the Omnibus Incentive Plan as of December 31, 2020 was $3 million with a weighted average recognition period of 1.57 years. Unrecognized compensation cost for restricted stock units, performance shares and performance units under the Omnibus Incentive Plan as of December 31, 2020 was $153 million with a weighted average recognition period of 1.68 years. Unrecognized compensation cost for stock options related to the Acquisition as of December 31, 2020 was $30 million with a weighted average recognition period of 2.16 years. Unrecognized

The Company’s tax benefit realized for exercises of stock options under the Omnibus Incentive Plan during the years ended December 31, 2020, 2019 and 2018 was $3 million, $5 million and $7 million, respectively. The tax benefit realized for exercises of stock options related to the Acquisition during the years ended December 31, 2020 and 2019 were $3 million and $2 million, respectively.

The Company’s tax benefit realized upon vesting of restricted stock units, performance shares and performance units under the Omnibus Incentive Plan for the years ended December 31, 2020, 2019 and 2018 was $44 million, $52 million and $49 million, respectively. The tax benefit realized upon vesting of restricted stock units and performance shares related to the Acquisition during the year ended December 31, 2020 was $1 million. There were no vested restricted stock units or performance shares related to the Acquisition for the year ended December 31, 2019.

The Company’s policy is to issue shares from Common Stock held in treasury upon exercise of stock options, the release of restricted stock units and performance shares. The Company uses cash to settle performance units. The amount of cash used to settle performance units during the years ended December 31, 2020, 2019 and 2018 was $2 million, $32 million and $29 million, respectively.