Stock-Based Compensation

6 Months Ended

Jul. 01, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

Stock Options

A summary of activity under Nucor’s stock option plans for the first six months of 2023 is as follows (shares and aggregate intrinsic value in thousands):

				Weighted-		Weighted-
				Average		Average	Aggregate
				Exercise		Remaining	Intrinsic
	Shares			Price		Contractual Life	Value
Number of shares under stock options:
Outstanding at beginning of year		837		$	66.76
Granted		91		$	133.03
Exercised		(131	)	$	54.49		$	15,539
Canceled		-		$	-
Outstanding at July 1, 2023		797		$	76.32	7.5 years	$	69,890
Stock options exercisable at July 1, 2023		512		$	49.84	6.7 years	$	58,494

For the 2023 stock option grant, the grant date fair value of $49.62 per share was calculated using the Black-Scholes options pricing model with the following assumptions:

Exercise price	$	133.03
Expected dividend yield		1.53	%
Expected stock price volatility		37.55	%
Risk-free interest rate		3.66	%
Expected life (in years)		6.5

Compensation expense for stock options was $3.4 million and $3.9 million in the second quarter of 2023 and 2022, respectively, and $3.9 million and $4.4 million in the first six months of 2023 and 2022, respectively. As of July 1, 2023, unrecognized compensation expense related to stock options was $2.8 million, which we expect to recognize over a weighted-average period of 2.2 years.

Restricted Stock Units

A summary of Nucor’s restricted stock unit (“RSU”) activity for the first six months of 2023 is as follows (shares in thousands):

	Shares			Grant Date Fair Value Per Share
Restricted stock units:
Unvested at beginning of year		1,003		$	98.66
Granted		831		$	133.03
Vested		(863	)	$	102.49
Canceled		(10	)	$	96.92
Unvested at July 1, 2023		961		$	124.96

Compensation expense for RSUs was $48.5 million and $41.9 million in the second quarter of 2023 and 2022, respectively, and $60.7 million and $50.9 million in the first six months of 2023 and 2022, respectively. As of July 1, 2023, unrecognized compensation expense related to unvested RSUs was $111.9 million, which we expect to recognize over a weighted-average period of 1.8 years.

Restricted Stock Awards

A summary of Nucor’s restricted stock activity under the Nucor Corporation Senior Officers Annual Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “AIP”) and the Nucor Corporation Senior Officers Long-Term Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “LTIP”) for the first six months of 2023 is as follows (shares in thousands):

				Grant Date
	Shares			Fair Value Per Share
Restricted stock units and restricted stock awards:
Unvested at beginning of year		209		$	108.55
Granted		414		$	171.38
Vested		(406	)	$	152.68
Canceled		(7	)	$	171.38
Unvested at July 1, 2023		210		$	144.98

Compensation expense for common stock and common stock units awarded under the AIP and the LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $11.7 million and $1.8 million in the second quarter of 2023 and 2022, respectively, and $19.4 million and $18.8 million in the first six months of 2023 and 2022, respectively. As of July 1, 2023, unrecognized compensation expense related to unvested restricted stock awards was $10.7 million, which we expect to recognize over a weighted-average period of 2.0 years.