The Avon Products, Inc. 2013 Stock Incentive Plan, as amended and restated (the "2013 Plan") and the Avon Products, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan"), which are shareholder-approved plans, provide for several types of share-based incentive compensation awards including stock options, restricted stock, restricted stock units and performance restricted stock units. Following shareholder approval of the 2016 Plan in May 2016, there were no further awards made under the 2013 Plan. The 2016 Plan was amended and restated (the “Amended and Restated 2016 Plan”) following shareholder approval in May 2019. Under the Amended and Restated 2016 Plan, the maximum number of shares was amended to 20,451,976 shares of common stock, which includes 5,000,000 additional shares and 15,451,976 unused shares under the 2016 Plan as of March 15, 2019, where the maximum number of shares are reduced as follows: (i) in the case of the grant of an award of an option or SAR, by each share subject to such an award and (ii) in the case of the grant of an award payable in shares other than an option or SAR by 1.35 multiplied by each share subject to such an award. Shares issued under share-based awards will be primarily funded with issuance of new shares.

We issued stock options and restricted stock under the 2016 Plan (including under the Amended and Restated 2016 Plan), and restricted stock units and performance restricted stock units under the 2013 Plan and the 2016 Plan (including under the Amended and Restated 2016 Plan). We also have outstanding stock options under our prior shareholder-approved plans. Stock option awards were granted with an exercise price generally at a premium to the closing market price of our stock at the date of grant. Stock options generally vest in thirds over the three-year period following each option grant date and have ten-year contractual terms. Restricted stock units granted to Associates generally vest and settle after three years. Restricted stock units awarded to non-management directors vest in approximately one year and settle upon a director's departure from the Board of

On January 3, 2020, upon the completion of the Transaction with Natura &Co, our share-based compensation awards were either cancelled in exchange for the right to receive an amount in cash or converted into an award denominated in Natura &Co shares. Subsequent to the Transaction, the 2013 Plan and the 2016 Plan (including under the Amended and Restated 2016 Plan) were replaced by the Natura &Co Stock-Based Compensation Plan.

Under the Natura &Co Stock-Based Compensation Plan, Natura has issued nominal cost options and performance share units ("performance shares" or "PSUs"). Nominal cost options were granted in exchange for Avon restricted stock units and performance restricted stock units and vest as a single tranche in line with the vesting date of the original Avon awards. Nominal cost options will automatically exercise on vest date. Performance share units generally vest after three years only upon the satisfaction of certain market and/or performance conditions.

During 2019 we granted premium-priced stock options, in which the exercise price was equal to a 25% premium from the closing market price of our stock price at the date of grant. The premium-priced stock options vest on a three-year graded vesting schedule. The fair value of each premium-priced stock option is estimated on the date of grant using a Monte-Carlo simulation. When estimating the fair value of each option, we used the following weighted-average assumptions for options granted during the year ended December 31, 2019:

On January 3, 2020, upon the completion of the Transaction with Natura &Co, each of the approximately 14.9 million outstanding stock options, whether or not then vested or exercisable, was automatically canceled in exchange for the right to receive an amount in cash, without interest, equal to the number of Avon Common Shares underlying such stock option immediately prior to the effective time of the Transaction multiplied by the excess, if any, of the per share cash-out price over the exercise price per share. The “per share cash out price” was the closing price of an Avon Common Share on the NYSE on the closing date of the Transaction. No amount was payable upon cancellation of stock option with an exercise price per share that is greater than the per share cash-out price.

In accordance with ASC 718, Stock-based compensation, we have accounted for the cash settlement as a repurchase of an equity instrument concurrent with the acceleration of vesting of the award. Options that were cancelled without compensation were treated as a repurchase of equity for no consideration. The cash settlement value of $20.5 was recognized through equity and $3.5 of unrecognized compensation expense of the unvested options was accelerated and recorded in SG&A expenses in our Consolidated Statements of Operations.

We recognized expense on stock options using a graded vesting method, which recognizes the associated expense based on the timing of option vesting dates. At December 31, 2021 and 2020, there were no outstanding stock options as they were cancelled as per above.

During 2019 we granted performance restricted stock units that would vest and settle after three years based on the relative total shareholder return of our common stock against companies included in the S&P 400 index as of the date of grant over a three year performance period ("2019 PRSUs"). The grant date fair value per share of these awards already reflects the estimated probability of achieving the market condition, and therefore we record the expense ratably over the performance period.

The fair value of the PRSUs was estimated on the date of grant using a Monte-Carlo simulation that estimates the fair value based on the Company's share price activity, expected term of the award, risk-free interest rate, expected dividends and the expected volatility of the stock of the Company. When estimating the fair value of the PRSUs, we used the following weighted-average assumptions:

(3)Expected average volatility was based on the weekly historical volatility of the stock prices of each member of companies included in the S&P 400 index as of the date of the grant, over a period similar to the three year performance period of the 2019 PRSUs.

On January 3, 2020, upon the completion of the Transaction with Natura &Co, each of the approximately 4.4 million outstanding Restricted Stock Units ("RSU") was converted into Natura &Co Holding nominal cost options equal to the number of Avon Common Shares subject to each RSU immediately prior to the Transaction multiplied by the Exchange Ratio of 0.30. In addition, each of the approximately 3.0 million outstanding PRSUs was converted into an award denominated in Natura &Co Holding Shares, that is subject only to time-based vesting, equal to the number of Avon Common Shares subject to each PRSU immediately prior to the Transaction, giving effect to market conditions that are deemed to be attained, multiplied by the Exchange Ratios of 0.30. The terms and conditions, including service conditions but excluding market conditions, applicable to each RSU and PRSU will continue in full force and effect with respect to the nominal cost options as described below.

In accordance with ASC 718, Stock-based compensation, we accounted for the modification as a Type I (probable-to-probable) modification and the incremental fair value of approximately $3.4 will be recognized over the remaining service period of the awards.

As discussed above, each outstanding Avon RSU and PRSU at the time of the Transaction was exchanged for Natura &Co Holding Nominal Cost Options. These nominal cost options vest in a single tranche in line with the original vesting schedule of three years and will automatically exercise on the vest date.

We accounted for the exchange as a Type I (probable-to-probable) modification where the cumulative amount of the compensation cost that should be recognized over the vesting period is the original grant-date fair value plus incremental fair value of $3.4 resulting from the modification.

During 2021, Natura &Co granted employees of the Company and its subsidiaries a further 1,660,941 nominal cost options with a weighted-average grant date fair value of $9.72 per unit. These 2021 nominal cost options normally vest in a single tranche in line with the original vesting schedule of three years and will automatically exercise on the vest date. For certain participants, vesting automatically occurs either 50% on both the 3rd and 4th anniversary of the grant date or 50% on both the 4th and 5th anniversary of the grant date.

We recognize expense over the requisite service period. At December 31, 2021, there was $11.4 of unrecognized compensation cost related to nominal cost options outstanding. That cost is expected to be recognized over a weighted-average period of 3.0 years.

On March 27, 2020, Natura &Co’s Board of Directors approved the new long-term stock-based incentive plan (the “Long-Term Incentive Plan”) for 2020. The Long-Term Incentive Plan consists of the granting of PSUs, the rights of participants in relation to the PSUs will only be fully acquired to the extent that (i) the participant remains continuously linked as an employee of the Company and its subsidiaries until the 3rd anniversary of the grant date; and (ii) performance conditions are met. For certain participants, there is a different condition for item (i) above, in which 50% of the PSUs granted will be acquired on the 3rd anniversary of the grant date and the remaining 50% will be acquired on the 4th anniversary of the grant date.

We recognize expense over the requisite service period to the extent that it is expected that the performance conditions are probable of being achieved. At December 31, 2021, there was $27.5 of unrecognized compensation cost related to the PSUs outstanding. That cost is expected to be recognized over a weighted-average period of 1.6 years.

In December 2019, 2,083,872 RSUs and 3,276,774 PRSUs were exchanged for 4,808,534 Restricted Stock. The exchange was done in advance of the Transaction with Natura &Co Holding. The Company accounted for the modification as a Type I (probable-to-probable) modification and the incremental fair value of approximately $1.5 will be recognized over the remaining service period of the awards. The Restricted Stock would vest and settle after three years from the grant date of the original award. The Company retained and cancelled 1,400,010 Restricted Stock to satisfy withholding tax obligations of the grantees. The cancellation resulted in the acceleration and recognition of $1.7 of compensation cost for the year ended December 31, 2019 and was included as part of the $44 of Transaction related costs.

On January 3, 2020, upon the completion of the Transaction with Natura & Co, the 3,408,524 Restricted Stock outstanding was converted at the exchange ratio of 0.30 into an award denominated in Natura &Co Holding equity. The terms and conditions, including service-based vesting conditions, continue in full force and effect with respect to such award of Natura &Co Holding Restricted Stock.

During January 2020, it was announced that the employment of certain senior officers of the Company would be terminated, in connection with the Transaction. As a result, Restricted Stock held by these senior officers immediately vested and we recognized approximately $10 relating to the acceleration of unamortized expense.

In March 2019 and March 2018, we granted 200,000 and 200,000 performance restricted stock units, respectively, that will be funded with treasury shares, outside of the 2016 Plan, in reliance upon the NYSE rules. These performance restricted stock units have a weighted-average grant-date fair value of $2.98 and $2.79 for the 2019 and 2018 grants respectively, and would vest and settle at the end of 2020 only upon the satisfaction of certain performance conditions over a one year performance period. During 2019 none of these performance restricted stock units vested, and 400,000 performance restricted stock units were outstanding at December 31, 2019. During 2019 we recognized compensation cost of $.5, for these performance restricted stock units.

In February 2018 we granted 600,000 restricted stock units that will be funded from treasury shares, outside of our shareholder-approved plans, in reliance upon the NYSE rules. The restricted stock units granted in February 2018 have a weighted-average grant-date fair value of $2.25 and vest and settle in full after three years. During 2019 none of these restricted stock units vested, and there were 600,000 restricted stock units outstanding at December 31, 2019. During 2019 we recognized compensation cost of $.4 for these restricted stock units.