•Time vested, restricted stock units (“RSU”) vest over time. RSU awards granted prior to October 2024 cliff vest, typically at the end of three years. RSU awards granted in October 2024 and beyond will vest in equal, annual installments over three years. The fair value of these awards is based on the closing share price on the date of grant.

•Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles. The number of shares issued will vary based upon the Company’s performance against pre-determined goals for adjusted EPS growth (diluted), return on capital employed (“ROCE”) and relative total shareholder return (“rTSR”). The fair value of awards vesting based upon EPS growth (diluted) and ROCE are equal to the closing share price on the date of grant and the fair value of rTSR awards are determined using a Monte-Carlo simulation. The assumptions used in the Monte Carlo simulations for the rTSR granted in 2026 were as follows:


	Three months ended
	March 31,
rTSR Fair value assumptions:	2026
Expected annualized volatility	29.48	%
Risk free interest rate	3.75	%
Simulation period	2.8 years
Grant date fair value of rTSR awards	$237.16


	Number of shares	Weighted average grant date fair value
Outstanding as of December 31, 2025	712,184	$191.67
RSU awards granted	234,808	219.73

PSU-EX granted	89,457	225.54

Share adjustments based on performance	(21,836)	255.62
Vested	(2,860)	169.26
Forfeited	(6,492)	198.34
Outstanding as of March 31, 2026	1,005,261	$199.74

Total unrecognized share-based compensation expense for all share-based payment plans was $152 million at March 31, 2026, which is expected to be recognized over a weighted average period of 2.4 years.

The Company grants stock option awards to certain members of management with an exercise price equal to the closing share price of the Company's common stock on the last trading day prior to the date of grant. These options vest and become exercisable over three years, in equal, annual installments beginning one year from the date of grant, and expire 10 years from the date of grant.

The fair value of the Company's stock options was estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options was estimated using the “simplified method” as permitted under Staff Accounting Bulletin 110. We consider the use of the simplified method appropriate due to the lack of sufficient historical data.


	Three months ended
	March 31,
Stock option fair value assumptions used:	2026
Expected annualized volatility	32.14	%
Dividend yield	1.54	%
Risk free interest rate	3.89	%
Expected term	6 years
Grant date fair value of stock option awards	$75.22


	Number of shares	Weighted average exercise price per share	Aggregate intrinsic value (in millions)	Weighted average remaining contractual life (years)
Outstanding as of December 31, 2025	83,316	$211.52
Granted	61,416	231.63


Outstanding as of March 31, 2026	144,732	$220.06	$2	9.3
Exercisable as of March 31, 2026	19,793	$201.38	$1	8.5