Under our share-based compensation plan, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards. Compensation expense included in net income for our share-based compensation plan is as follows:


	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Compensation expense	$	45	$	34
Income tax benefit	(11)		(8)
Total compensation expense included in net income	$	34	$	26

Compensation expense included stock option expense of $14 million and $12 million in the first quarter of 2023 and 2022, respectively. We typically grant stock appreciation rights to selected non-U.S. employees. At April 1, 2023, outstanding stock appreciation rights totaled 617,074 with a weighted-average exercise price of $54.62 and a weighted-average remaining contractual life of 6.4 years; these units had an intrinsic value of $10 million, compared to $14 million at April 2, 2022.

Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. Stock option compensation cost is calculated under the fair value approach using the Black-Scholes option-pricing model to determine the fair value of options granted on the date of grant. The expected volatility used in this model is based on historical volatilities and implied volatilities from traded options on our common stock. The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

We grant options annually on the first day of March. The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:


	March 1, 2023		March 1, 2022
Fair value of options at grant date	$	23.83	$	19.95
Dividend yield	0.1%		0.1%
Expected volatility	29.4%		29.2%
Risk-free interest rate	4.2%		1.9%
Expected term (in years)	4.8		4.8


(Options in thousands)	Number of Options	Weighted- Average Exercise Price
Outstanding at December 31, 2022	8,310	$	50.25
Granted	1,026	73.19
Exercised	(630)	(42.84)
Forfeited or expired	(60)	(58.90)
Outstanding at April 1, 2023	8,646	$	53.45
Exercisable at April 1, 2023	6,263	$	48.56

At April 1, 2023, our outstanding options had an aggregate intrinsic value of $152 million and a weighted-average remaining contractual life of 6.2 years. Our exercisable options had an aggregate intrinsic value of $138 million and a weighted-average remaining contractual life of 5.1 years at April 1, 2023. The total intrinsic value of options exercised during the first quarter of 2023 and 2022 was $19 million and $23 million, respectively.

We issue restricted stock units that include the right to receive dividend equivalents and are settled in both cash and stock. Beginning in 2020, new grants of restricted stock units will vest in full on the third anniversary of the grant date. Restricted stock units granted prior to 2020 vest one-third each in the third, fourth and fifth year following the year of the grant. Compensation cost is determined using the fair value of these units based on the trading price of our common stock. For units payable in stock, we use the trading price on the grant date, while units payable in cash are remeasured using the price at each reporting period date.


	Units Payable in Stock			Units Payable in Cash
(Shares/Units in thousands)	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	525	$	52.99	1,086	$	53.26
Granted	103	73.17		245	73.18
Vested	(218)	(46.66)		(463)	(45.92)
Forfeited	—	—		(32)	(56.94)
Outstanding at April 1, 2023, nonvested	410	$	61.41	836	$	63.02


(Units in thousands)	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	427	$	59.51
Granted	209	73.19
Outstanding at April 1, 2023, nonvested	636	$	64.01