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Note 9 - Stock Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Text Block]

The Compensation Committee of our Board of Directors approved the grant of RSUs and performance share units (PSUs) shown in the table below during 2021.

	Granted		Grant Date
	(In millions)		Fair Value*
RSUs		0.8	$	23.47
PSUs		0.2	$	26.81

* Weighted-average per share

We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant. The number of PSUs that ultimately vest is contingent on achieving specified financial targets and specified total shareholder return targets relative to peer companies. For the portion of the award based on financial metrics, we estimated the fair value of the PSUs at grant date based on the closing market price of our common stock at the date of grant adjusted for the value of assumed dividends over the period because the awards are not dividend protected. For the portion of the award based on shareholder returns, we estimated the fair value of the PSUs at grant date using various assumptions as part of a Monte Carlo simulation. The expected term represents the period from the grant date to the end of the three-year performance period. The risk-free interest rate of 0.18% was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield of 2.27% was calculated using a blended approach of a historical average yield calculated by dividing the expected annual dividend by the average stock price over the prior year and the current yield calculated by dividing the expected annual dividend by the grant date stock price. The estimated volatility of 62.8% was based on observed historical volatility of daily stock returns for the 3-year period preceding the grant date.

During 2021, we received $5 of cash from the exercise of stock options related to 0.3 million shares, paid $2 of cash to settle RSUs and issued 0.5 million and 0.1 million shares of common stock based on the vesting of RSUs and PSUs, respectively. We recognized stock compensation expense of $6 and $2 during the third quarters of 2021 and 2020 and expense of $15 and $5 during the respective year-to-date periods. At September 30, 2021, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $29. This cost is expected to be recognized over a weighted-average period of 1.7 years.

On April 21, 2021, our stockholders approved the 2021 Omnibus Incentive Plan (the Plan), replacing the 2017 Omnibus Incentive Plan (the Prior Plan). The Plan authorizes the grant of stock options, stock appreciation rights (SARs), RSUs and PSUs through April 2031. The maximum aggregate number of shares of common stock that may be issued under the Plan is 3.5 million shares of common stock plus the number of shares that remained available for new grants under the Prior Plan. Cash-settled awards do not count against the number of shares available for award under the Plan. At September 30, 2021, there were 6.0 million shares available for future grants. Shares of common stock to be issued under the Plan are made available from authorized and unissued Dana common stock.