Note 11 - Stock Compensation

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 11.  Stock Compensation

2021 Omnibus Incentive Plan

The 2021 Omnibus Incentive Plan (the Plan) authorizes the grant of stock options, stock appreciation rights (SARs), RSUs and performance share units (PSUs) through April 2031. Cash-settled awards do not count against the number of shares available for award under the Plan. At  December 31, 2023, there were 4.1 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.

Award activity — (shares in millions)

	Options					RSUs					PSUs
									Grant-Date					Grant-Date
	Shares			Exercise Price*		Shares			Fair Value*		Shares			Fair Value*
December 31, 2022		0.2		$	16.19		2.3		$	18.95		0.4		$	25.52
Granted							1.2			18.37		0.6			19.56
Exercised or vested		(0.2	)		16.19		(1.5	)		18.46		(0.3	)		23.12
Forfeited or expired							(0.1	)		19.61
December 31, 2023		—					1.9			20.05		0.7			21.70

* Weighted-average per share

	2023		2022		2021
Total stock compensation expense	$	26	$	19	$	17
Total grant-date fair value of awards vested		33		19		15
Cash received from exercise of stock options		3				5
Cash paid to settle SARs and RSUs		5		4		2
Intrinsic value of stock options and SARs exercised		1				2
Intrinsic value of RSUs and PSUs vested		30		21		14

Compensation expense is generally measured based on the fair value at the date of grant and is recognized on a straight-line basis over the vesting period. For options and SARs, we use an option-pricing model to estimate fair value. For RSUs and PSUs, the fair value is based on the closing market price of our common stock at the date of grant. Awards that are settled in cash are subject to liability accounting. Accordingly, the fair value of such awards is remeasured at the end of each reporting period until settled or expired. We had accrued $2 and $4 for cash-settled awards at  December 31, 2023 and 2022. During 2023 we issued 1.3 million and de minimis shares of common stock based on vesting of RSUs and PSUs, respectively. At  December 31, 2023, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $26. This cost is expected to be recognized over a weighted-average period of 1.8 years.

Stock options and stock appreciation rights — The exercise price of each option or SAR equals the closing market price of our common stock on the date of grant. Options and SARs generally vest over three years and their maximum term is ten years. Shares issued upon the exercise of options are recorded as common stock and additional paid-in capital at the option price. SARs are settled in cash for the difference between the market price on the date of exercise and the exercise price. We have not granted stock options or SARs since 2013. All outstanding awards are fully vested and exercisable. At  December 31, 2023, there were no outstanding awards as they have all been exercised or expired.

Restricted stock units and performance shares units — Each RSU or PSU granted represents the right to receive one share of Dana common stock or, at the election of Dana (for units awarded to board members) or for employees located outside the U.S. (for employee awarded units), cash equal to the market value per share. All RSUs contain dividend equivalent rights. RSUs granted to non-employee directors vest on the first anniversary date of the grant and those granted to employees generally cliff vest fully after three years for older awards and pro-rata vest for newer awards over three years. PSUs granted to employees vest if specified performance goals are achieved during the respective performance period, generally three years.

Under the 2023, 2022, and 2021 stock compensation award programs, 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 portions of the awards based on financial metrics, we estimated the fair value 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. The estimated grant date value is accrued over the performance period and adjusted as appropriate based on performance relative to the target. For the portion of the PSU award based on shareholder returns, we estimated the fair value 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 performance period. The risk-free interest rate was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield for the 2023 and 2022 award was calculated using our historical approach calculated by dividing the expected annual dividend by the average stock price over the prior year. The estimated volatility was based on observed historical volatility of daily stock returns for the 3-year period preceding the grant date.

	PSUs
	2023			2022
Expect term (in years)		3.0			3.0
Risk-free interest rate		4.28	%		1.78	%
Dividend yield		2.50	%		1.67	%
Expected volatility		67.0	%		63.9	%

Cash incentive awards — Our 2021 Omnibus Incentive Plan provides for cash incentive awards. We make awards annually to certain eligible employees designated by Dana, including certain executive officers. Awards under the plan are primarily based on achieving certain financial performance goals. The financial performance goals of the plan are established annually by the Board of Directors.

Under the 2023 and 2022 annual incentive programs, participants were eligible to receive cash awards based on achieving earnings, cash flow and electrification sales performance goals. Under the 2021 annual incentive program, participants were eligible to receive cash awards based on achieving earnings and cash flow performance goals. We accrued $98, $37 and $8 of expense in 2023, 2022 and 2021 for the expected cash payments under these programs.