The Company provides stock-based compensation in the form of the Employee Stock Purchase Plan, which grants eligible employees the right to purchase shares of the Company's common stock at a discounted price. The Company also grants stock-based compensation to employees and non-employee directors under stock incentive plans, in the form of stock options, stock appreciation rights, PSUs and RSUs.

The total stock-based compensation expense included in the consolidated statements of income was $212 million, $211 million and $276 million in 2023, 2022 and 2021, respectively. The income tax benefits related to stock-based compensation arrangements were $47 million, $47 million and $62 million in 2023, 2022 and 2021, respectively.

The Company grants stock-based compensation awards that vest over a specified period or upon employees meeting certain performance and/or retirement eligibility criteria. The fair value of equity instruments issued to employees is measured on the grant date. The fair value of liability instruments (granted to executive employees subject to stock ownership requirements, that provide the recipient the option to elect to receive a cash payment equal to the value of the stock award on the date of delivery) is measured at the end of each quarter. The fair value of equity and liability instruments is expensed over the vesting period or, in the case of retirement, from the grant date to the date on which retirement eligibility provisions have been met and additional service is no longer required. The Company estimates expected forfeitures based on historical activity.


Weighted-Average Assumptions	2023		2022		2021
Dividend yield	4.74	%	4.59	%	4.86	%
Expected volatility	30.30	%	30.20	%	33.40	%
Risk-free interest rate	3.83	%	2.00	%	0.68	%
Expected life of stock options granted during period (years)	6.00		6.25		6.25

The dividend yield assumption was equal to the dividend yield on the grant date, which reflected the Company's quarterly dividend payments of $0.70 per share in 2023, 2022 and 2021 on Dow Inc. common stock. The expected volatility assumptions for the 2023, 2022 and 2021 stock options were based on an equal weighting of the historical daily volatility for the expected term of the awards and current implied volatility from exchange-traded options. The expected volatility assumption for the market portion of the 2023, 2022 and 2021 PSU awards were based on historical daily volatility for the term of the award. The risk-free interest rate was based on the U.S. Treasury strip rates over the expected life of the 2023, 2022 and 2021 options. The expected life of stock options granted was based on an analysis of historical exercise patterns.

The Company has historically granted equity awards under various plans (the "Prior Plans"). On February 9, 2012, the TDCC Board of Directors authorized The Dow Chemical Company 2012 Stock Incentive Plan (the "2012 Plan"), which was approved by stockholders at TDCC's annual meeting on May 10, 2012 ("2012 Plan Effective Date"), and became effective on that date. On February 13, 2014, the TDCC Board of Directors adopted The Dow Chemical Company Amended and Restated 2012 Stock Incentive Plan (the "2012 Restated Plan"). The 2012 Restated Plan was approved by stockholders at TDCC's annual meeting on May 15, 2014, and became effective on that date. The Prior Plans were superseded by the 2012 Plan and the 2012 Restated Plan (collectively, the "2012 Plan"). Under the 2012 Plan, the Company granted options, RSUs, PSUs, restricted stock, stock appreciation rights and stock units to employees and non-employee directors, subject to an aggregate limit and annual individual limits. The terms of the grants were fixed at the grant date. TDCC's stock based compensation programs were assumed by DowDuPont and continued in place with the ability to grant and issue DowDuPont common stock until separation.

On April 1, 2019 ("Original Effective Date"), in connection with the separation, the Company adopted the 2019 Stock Incentive Plan (the "2019 Plan"). Under the 2019 Plan, the Company may grant stock options, RSUs, PSUs, stock appreciation rights and stock units to employees and non-employee directors until the tenth anniversary of the Original Effective Date, subject to an aggregate limit and annual individual limits. The terms of the grants are fixed at the grant date. At December 31, 2023, there were approximately 46 million shares of common stock available for grant under the 2019 Plan.

The Company grants stock options to certain employees, subject to certain annual and individual limits, with terms of the grants fixed at the grant date. The exercise price of each stock option equals the market price of the common stock on the grant date. Options vest from one year to three years and have a maximum term of ten years. The following table summarizes stock option activity for 2023:


Stock Options	2023
Shares in thousands	Shares		Exercise Price 1
Outstanding at Jan 1, 2023	14,425		$	53.84
Granted	1,137		$	59.08
Exercised	(2,156)		$	38.15
Forfeited/Expired	(103)		$	58.64
Outstanding at Dec 31, 2023	13,303		$	56.79
Remaining contractual life in years			4.72
Aggregate intrinsic value in millions	$	34
Exercisable at Dec 31, 2023	11,030		$	56.24
Remaining contractual life in years			3.96
Aggregate intrinsic value in millions	$	34


Additional Information about Stock Options
In millions, except per share amounts	2023		2022		2021
Weighted-average fair value per share of options granted	$	12.13	$	11.08	$	10.37
Total compensation expense for stock option plans	$	13	$	13	$	14
Related tax benefit	$	3	$	3	$	3
Total amount of cash received from the exercise of options	$	77	$	109	$	217
Total intrinsic value of options exercised 1	$	40	$	73	$	121
Related tax benefit	$	9	$	16	$	27

The Company grants RSUs to certain employees and non-employee directors. The grants vest after a designated period of time, generally three years for employees and two years for non-employee directors. The following table shows changes in nonvested RSUs:


Additional Information about RSUs
In millions, except per share amounts	2023		2022		2021
Weighted-average fair value per share of RSUs granted	$	58.39	$	58.60	$	57.96
Total fair value of RSUs vested 1	$	117	$	102	$	33
Related tax benefit	$	26	$	23	$	7
Total compensation expense for RSU awards	$	103	$	99	$	95
Related tax benefit	$	23	$	22	$	21

Total unrecognized compensation cost related to RSU awards of $89 million at December 31, 2023 is expected to be recognized over a weighted-average period of 1.83 years. At December 31, 2023, approximately 1.7 million RSUs with a grant date weighted-average fair value per share of $58.76 had previously vested, but were not issued. These shares are scheduled to be issued to employees within six months to three years or to non-employee directors upon retirement.

The Company grants PSUs to certain employees. The grants vest when the Company attains specified performance targets, such as return on capital, cumulative cash from operations, environmental, social and governance metrics, and relative total shareholder return, over a predetermined period, generally one year to three years. Performance and payouts are determined independently for each metric. Compensation expense related to PSU awards is recognized over the lesser of the service or performance period. Changes in the fair value of liability instruments are recognized as compensation expense each quarter.


PSU Awards		Target Shares Granted 1	Grant Date Fair Value 2
Shares in thousands
Year	Performance Period
2023	Dec 18, 2023 – Dec 18, 2026	13	$	54.25
2023	Jan 1, 2023 – Dec 31, 2025	1,233	$	64.04
2022	Jan 1, 2022 – Dec 31, 2024	1,157	$	65.83
2021	Jan 1, 2021 – Dec 31, 2023	1,223	$	61.48

1.At the end of the performance period, the actual number of shares issued can range from zero to 200 percent of target shares granted for the Jan 1 - Dec 31, 2023, 2022 and 2021 awards, and zero to 100 percent of target shares granted for the Dec 18, 2023 - Dec 18, 2026 awards.


Additional Information about PSUs
In millions, except share amounts	2023		2022		2021
Total fair value of PSUs vested and delivered 1	$	77	$	51	$	—
Related tax benefit	$	17	$	11	$	—
Total compensation expense for PSU awards	$	67	$	70	$	138
Related tax benefit	$	15	$	16	$	31
Shares of PSUs settled in cash (in thousands) 2	369		162		—
Total cash paid to settle PSUs 3	$	21	$	10	$	—

The Board unanimously approved the Dow Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which was approved by the Company's stockholders at the 2021 Annual Meeting of Stockholders held on April 15, 2021. Under the 2023 ESPP offering, most employees were eligible to purchase shares of common stock of Dow Inc. valued at up to 10 percent of their annual total base salary or wages. The number of shares purchased was determined using the amount contributed by the employee divided by the plan price. The plan price of the stock was equal to 85 percent of the fair market value (closing price) of the common stock at May 1, 2023 (beginning) or November 3, 2023 (ending) of the offering period, whichever was lower.

In 2023, employees subscribed to the right to purchase approximately 2.6 million shares at a weighted-average price of $42.27 per share. The plan price was fixed upon the close of the offering period. The shares were delivered to employees in the fourth quarter of 2023.

In 2022, employees subscribed to the right to purchase approximately 2.7 million shares at a weighted-average price of $37.75 per share. The plan price was fixed upon the close of the offering period. The shares were delivered to employees in the fourth quarter of 2022.


Additional Information about Employee Stock Purchase Plan
In millions, except per share amounts	2023		2022
Weighted-average fair value per share of purchase rights granted	$	11.75	$	14.28
Total compensation expense for ESPP	$	29	$	29
Related tax benefit	$	6	$	7
Total amount of cash received from the exercise of purchase rights	$	111	$	103
Total intrinsic value of purchase rights exercised 1	$	20	$	18
Related tax benefit	$	4	$	4