Note 8. Stock Compensation

The Compensation Committee of our Board of Directors approved the grant of RSUs, performance share units (PSUs) and Dana Transformation Awards shown in the table below during the six months ended June 30, 2026. 

* Weighted-average per share

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. 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. RSUs, PSUs and the Dana Transformation Awards accrue dividends, which are subject to the same vesting and forfeiture conditions as the original award. The fair value of RSUs is based on the closing market price of our common stock at the date of grant.

The number of PSUs granted in 2026 that ultimately vest is contingent upon achieving predetermined financial performance targets. The payout is further subject to a relative total shareholder return (“TSR”) modifier which is based on specified total shareholder return targets relative to peer companies. We estimated the grant date fair value of the PSUs using various assumptions as part of a Monte Carlo simulation. The risk-free interest rate of 3.56% was based on U.S. Treasury rate as of the grant date. The estimated volatility of 44.0% was based on the historical volatility of daily stock returns for a 2.9-year period preceding the grant date. 

The Company also granted a special award tied to stock price performance (the Dana Transformation Awards). The payout is contingent upon the achievement of specified average stock price performance goals, measured over any 20 consecutive trading-days throughout a 4-year performance period. We estimated the grant date fair value of the Dana Transformation Awards using various assumptions as part of a Monte Carlo simulation. The risk-free interest rates of 3.64% and 3.66% were based on U.S. Treasury rates as of the January and February 2026 grant dates. The estimated volatility of 48.29% and 47.11% were based on the historical volatility of daily stock returns for a 4-year period preceding each respective grant date. 

During the six months ended June 30, 2026, we paid $1.0 and $1.8 of cash to settle RSUs and PSUs and issued 0.7 and 0.8 million shares of common stock based on the vesting of RSUs and PSUs, respectively. We recognized stock compensation expense of $8 and $10 in the second quarters of 2026 and 2025 and expense of $19 and $23 during the respective year-to-date periods. At June 30, 2026, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $64. This cost is expected to be recognized over a weighted-average period of 3.0 years. The breakout of the unrecognized compensation cost for the RSUs, PSUs, and Dana Transformation Awards is $18, $7, and $39, respectively. The weighted-average period in years for the RSUs, PSUs, and Dana Transformation Awards is 1.7, 1.3, and 4.0 years, respectively.