Performance assumption change (USD per share)

THE HERSHEY COMPANYNOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(amounts in thousands, except share data or if otherwise indicated)  
We recognize the compensation expenses associated with PSUs ratably over the three-year term. Compensation expenses are based on the grant date fair value because the grants can only be settled in shares of our Common Stock. The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s Common Stock on the date of grant for performance-based components.During the nine months ended October 2, 2022 and October 3, 2021, we awarded RSUs to certain executive officers and other key employees under the EICP. We also awarded RSUs to non-employee directors.We recognize the compensation expenses associated with employee RSUs over a specified award vesting period based on the grant date fair value of our Common Stock. We recognize expense for employee RSUs based on the straight- line method. The compensation expenses associated with non-employee director RSUs is recognized ratably over the vesting period, net of estimated forfeitures.A summary of activity relating to grants of PSUs and RSUs for the period ended October 2, 2022 is as follows: 

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|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Performance Stock Units and Restricted Stock Units |  | Number of units |  | Weighted-average grant date fair value for equity awards (per unit) |
| Outstanding at beginning of year |  | 1,303,521  |  |  | $146.96 |
| Granted |  | 305,109  |  |  | $211.29 |
| Performance assumption change (1) |  | 105,143  |  |  | $245.93 |
| Vested |  | (505,135) |  |  | $130.07 |
| Forfeited |  | (27,016) |  |  | $163.35 |
| Outstanding as of October 2, 2022 |  | 1,181,622  |  |  | $182.34 |

(1)Reflects the net number of PSUs above and below target levels based on the performance metrics.The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.

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|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Nine Months Ended |
|  |  | October 2, 2022 |  | October 3, 2021 |
| Units granted |  | 305,109 |  | 392,419 |
| Weighted-average fair value at date of grant |  | $ | 211.29 |  | $ | 153.97 |
| Monte Carlo simulation assumptions: |  |  |  |  |
| Estimated values |  | $ | 100.41 |  | $ | 66.44 |
| Dividend yields |  | 1.8  | % |  | 2.2  | % |
| Expected volatility |  | 25.3  | % |  | 26.4  | % |

  
The fair value of shares vested totaled $103,081 and $50,361 for the periods ended October 2, 2022 and October 3, 2021, respectively. Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 265,359 units as of October 2, 2022. Each unit is equivalent to one share of the Company’s Common Stock.  
  


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| [Table of Contents](#i0bc28196a24d4084af1a4cbdf6bdf4bd_7) | The Hershey Company | Q3 2022 Form 10-Q | Page 27 | hsy-20221002_g2.jpg |

  

