Accounting for stock-based compensation requires that the cost resulting from all stock-based payments be recognized in the financial statements based on the grant-date fair value of the award. Our stock-based compensation consists of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs).

We recognized pretax stock-based compensation expense of $81 million and $227 million for the three and nine months ended September 30, 2026, respectively, and $71 million and $202 million for the three and nine months ended September 30, 2025, respectively.

The following table illustrates the type and fair value of the stock-based compensation awards granted during the nine months ended September 30, 2026 and 2025:



	Nine Months Ended September 30, 2026			Nine Months Ended September 30, 2025
	Shares Granted	Weighted-Average Fair Value Per Share		Shares Granted	Weighted-Average Fair Value Per Share
Stock options	126,660	$	270.41	299,523	$	106.04
RSUs	246,112	$	764.57	477,750	$	338.61
PRSUs	86,960	$	925.49	201,934	$	345.60

The fair value of our stock options was estimated using the Black-Scholes option-pricing model. The following table provides the assumptions used in determining the fair value of the stock options granted during the nine months ended September 30, 2026 and 2025:



	Grant Year
	2026	2025
Weighted-average dividend yield	1.82%	2.13%
Weighted-average volatility	36.1%	30.5%
Range of volatilities	29.5% - 40.3%	26.6% - 32.6%
Range of risk-free interest rates	3.43% - 4.03%	4.13% - 4.40%
Weighted-average expected lives	7 years	7 years

The PRSUs granted in 2026 and 2025 contain a market condition, and a Monte Carlo simulation was utilized to estimate the fair value of the awards. The following table provides the assumptions used in determining the fair value of the PRSUs granted during the nine months ended September 30, 2026 and 2025, respectively:



	Grant Year
	2026	2025
Expected volatility of the Company's stock	36.7%	29.5%
Risk-free interest rate	3.46%	3.90%