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Stock-Based Compensation (Tables)
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions
Each stock option has a weighted average exercise price of approximately $21.01 as of the Conversion Date. The fair value of each stock option is estimated using the Black-Scholes option valuation model. The assumptions used in calculating the fair value of the converted stock options were as follows:

AssumptionAugust 2023 Converted Stock Options
Expected volatility(1)
16.5% - 21.4%
Expected dividend yield(2)
3.2 %
Risk-free rate(3)
4.2% - 5.4%
Expected term(4)
0.5 years - 6.5 years
(1) Expected volatility is based on the historical volatility of a selected group of the Company’s peers and other factors.
(2) Expected dividend yield is calculated using the assumed dividend payout per common share as a percentage of the average Kenvue common share price for the prior three month period, which is then annualized.
(3) Risk-free rate is based on the U.S. Treasury yield curve in effect as of the Conversion Date
(4 ) Expected term is consistent with the historical experiences of J&J for awards similar to those in the Kenvue population.
The fair value of each stock option award is estimated using the Black-Scholes option valuation model. The weighted average assumptions used in calculating the fair value of stock options granted the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, were as follows:
YTD
Fiscal Twelve Months Ended
December 31, 2023January 1, 2023January 2, 2022
Expected volatility(1)
20.8 %18.0 %18.6 %
Expected dividend yield(2)
3.5 %2.7 %2.5 %
Risk-free rate(3)
4.5 %2.0 %0.8 %
Expected term(4)
6 years7 years7 years
(1) For awards granted under the Kenvue 2023 Plan, expected volatility is based on the historical volatility of a selected group of the Company’s peers and other factors. For awards granted under the J&J Plans, expected volatility was based on a blended rate of 10-year weekly historical overall volatility rate and a five-week average implied volatility rate based on at-the-money traded J&J stock options with a contractual term of two years.
(2) For awards granted under the Kenvue 2023 Plan, expected dividend yield is calculated using the assumed dividend payout per common share as a percentage of the average Kenvue common share price for the prior three month period, which is then annualized. For awards granted under the J&J Plans, expected dividend yield was calculated using the assumed dividend payout per common share as a percentage of the spot J&J common share price as of the grant date.
(3) Risk-free rate is based on the U.S. Treasury yield curve in effect as of the grant date for options granted under both the Kenvue 2023 Plan and the J&J Plans.
(4) For awards granted under the Kenvue 2023 Plan, expected term is consistent with the historical experiences of J&J for awards similar to those in the Kenvue population. For awards granted under the J&J plans, expected term was calculated based on J&J’s historical data.
Share-Based Payment Arrangement, Expensed and Capitalized, Amount
The components and classification of stock-based compensation expense directly attributable to those employees specifically identified as employees of the Company and allocations from J&J for the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, were as follows:

Fiscal Twelve Months Ended
(Dollars in Millions)December 31, 2023January 1, 2023January 2, 2022
Stock options$90 $43 $41 
RSUs76 74 73 
PSUs22 20 27 
Stock-based compensation expense$188 $137 $141 
Cost of sales$67 $30 $33 
Selling, general, and administrative expenses121 107 108 
Stock-based compensation expense$188 $137 $141 
The Company’s unrecognized compensation expense and the related remaining requisite service periods for stock options, RSUs, and PSUs outstanding for the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, were as follows:

(Dollars in Millions)
Stock Options
December 31, 2023January 1, 2023January 2, 2022
Unrecognized compensation expense
$107 $34 $28 
Weighted average remaining requisite service period
1.44 years1.21 years1.76 years
RSU
Unrecognized compensation expense
$148 $58 $49 
Weighted average remaining requisite service period
1.38 years1.27 years1.74 years
PSU
Unrecognized compensation expense
$31 $13 $13 
Weighted average remaining requisite service period
2.78 years1.28 years1.82 years
Share-Based Payment Arrangement, Option, Activity
A summary of stock option activity under the Kenvue 2023 Plan during the fiscal twelve months ended is presented below:

Aggregate Intrinsic Value
(Options in Thousands)
Options
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term
(Dollars in Millions)
Options outstanding of Kenvue common stock at January 1, 2023
— $— 
Awards converted from J&J Plans
56,958 $21.01 
Options granted8,433 $20.36 
Options exercised(478)$16.20 
Options canceled/forfeited/adjusted(1)
(725)$21.72 
Options outstanding at December 31, 2023
64,188 $20.60 7.2 years$83 
Options exercisable at December 31, 2023
20,303 $17.93 4.7 years$73 
(1) Includes employee transfers in and out.
Share-Based Payment Arrangement, Activity
A summary of unvested RSU and PSU activity under the Kenvue 2023 Plan during the fiscal twelve months ended December 31, 2023 is presented below:

(Shares in Thousands)
Outstanding Restricted Stock Units
Weighted-Average Grant Date Fair Value
Outstanding Performance Stock Units
Weighted-Average Grant Date Fair Value
Shares of Kenvue at January 1, 2023
— $— — $— 
Awards converted from J&J Plans
12,495 22.67 — — 
Granted1,044 20.37 1,665 23.57 
Issued
(36)23.34 — — 
Canceled/forfeited/adjusted
(205)22.37 (35)23.22 
Shares at December 31, 2023
13,298 $22.49 1,630 $23.58