Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

We recognized share-based compensation expense of $169 million, $162 million and $193 million during the years ended December 31, 2023, 2022 and 2021, respectively, which included amounts reimbursed by hotel owners, and the related tax benefit recognized was $48 million, $48 million and $54 million, respectively. In December 2020, we modified our then-outstanding performance shares in response to the COVID-19 pandemic to reward for results achieved prior to the pandemic and incentivize our recovery efforts, with a portion of the awards modified to vest based on continued service and the remaining portion of the awards to vest based on new performance measures. As a result of this modification, our share-based compensation expense for the years ended December 31, 2022 and 2021 includes incremental share-based compensation expense of $25 million and $70 million, respectively.

As of December 31, 2023, unrecognized compensation costs for unvested awards under the 2017 Plan were approximately $123 million, which are expected to be recognized over a weighted average period of 1.7 years on a straight-line basis. As of December 31, 2023, there were 10.4 million remaining shares authorized for awards under the 2017 Plan, including any shares subject to awards outstanding under the 2013 Omnibus Incentive Plan that will become available for issuance under the 2017 Plan if such outstanding awards expire or are terminated or are canceled or forfeited.

RSUs

The following table provides information about our RSU grants:


	Year Ended December 31,
	2023		2022		2021
Number of shares granted (in thousands)	604		507		589
Weighted average grant date fair value per share	$	146.19	$	150.58	$	123.13
Aggregate intrinsic value of shares vested (in millions)	$	84	$	97	$	94

The following table summarizes the activity of our RSUs during the year ended December 31, 2023:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
	(in thousands)
Outstanding as of December 31, 2022	1,013	$	130.68
Granted	604	146.19
Vested	(567)	121.86
Forfeited	(38)	141.16
Outstanding as of December 31, 2023	1,012	144.49

Options

The following table provides information about our option grants:


	Year Ended December 31,
	2023		2022		2021
Number of options granted (in thousands)	341		318		361
Weighted average exercise price per share	$	146.18	$	150.67	$	123.13
Weighted average grant date fair value per share	$	52.27	$	51.15	$	41.15

The weighted average grant date fair value per share of the option grants for each year was determined using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:


	Year Ended December 31,
	2023		2022		2021
Expected volatility(1)	30.16	%	33.28	%	33.13	%
Dividend yield(2)	0.43	%	0.41	%	—	%
Risk-free rate(3)	4.00	%	1.93	%	0.92	%
Expected term (in years)(4)	6.0		6.0		6.0

____________

(1)Estimated using a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a period that corresponds to the expected terms of the options.

(2)At the time of grant for the 2021 options, the declaration and payment of dividends was suspended and we could not estimate when the payment of dividends would resume. For the options granted during the years ended December 31, 2023 and 2022, dividend yield was estimated based on the expected quarterly dividend and the three month average stock price at the dates of grant.

(3)Based on the yields of U.S. Department of Treasury instruments with similar expected terms of the options at the dates of grant.

(4)Estimated using the midpoint of the vesting periods and the contractual terms of the options as we do not have sufficient historical share option exercise data to estimate the term of our option grants.

The following table summarizes the activity of our options during the year ended December 31, 2023:


	Number of Shares	Weighted Average Exercise Price per Share
	(in thousands)
Outstanding as of December 31, 2022	3,021	$	87.61
Granted	341	146.18
Exercised	(252)	80.34
Forfeited or expired	(8)	143.97
Outstanding as of December 31, 2023(1)	3,102	94.50
Exercisable as of December 31, 2023(2)	2,437	81.12

____________

(1)The aggregate intrinsic value was $272 million and the weighted average remaining contractual term was 5.4 years.

(2)The aggregate intrinsic value was $246 million and the weighted average remaining contractual term was 4.6 years.

Performance Shares

As of December 31, 2023, we determined that all of the performance measures for the outstanding performance shares were probable of achievement, with the average of the applicable achievement factors estimated to be at the maximum achievement percentage for the 2021 performance shares and between the target and maximum achievement percentages for the 2022 and 2023 performance shares.

The following table provides information about our performance share grants for the last three years:


	Year Ended December 31,
	2023		2022		2021
Number of shares granted (in thousands)	244		216		241
Weighted average grant date fair value per share	$	146.18	$	150.67	$	123.13
Aggregate intrinsic value of shares vested (in millions)	$	42	$	42	$	36

The following table summarizes the activity of our performance shares in aggregate for all of our performance measures during the year ended December 31, 2023, with the performance shares reflected at the target achievement percentage until completion of the performance period:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
	(in thousands)
Outstanding as of December 31, 2022	730	$	119.87
Granted	244	146.18
Performance achievement share adjustments(1)	207	93.33
Vested	(493)	93.44
Forfeited	(9)	128.03
Outstanding as of December 31, 2023	679	139.74

____________

(1)Reflects the number of shares achieved above target, based on actual performance as determined at the completion of the respective three-year performance period.