Equity-Based Incentive Plans

12 Months Ended

Dec. 31, 2021

Equity-Based Incentive Plans

Equity-Based Incentive Plans

Note 6. Equity-Based Incentive Plans

Amended and Restated 2015 Equity Incentive Plan (2015 Plan)

The 2015 Plan is designed to attract, motivate and retain qualified persons that are able to make important contributions to the company’s success. To accomplish these objectives, the 2015 Plan provides for awards of equity-based incentives through granting of restricted stock units (RSUs), deferred stock units (DSUs), restricted stock awards, stock options (of which there are none), unrestricted stock awards (of which there are none), stock appreciation rights (SARs), and performance awards, such as long-term incentive compensation program (LTIP). The company’s shareholders approved the 2015 Plan in May 2015, and 12.5 million shares of common stock were reserved for issuance upon exercise of equity grants through December 31, 2025. In May 2019, the 2015 Plan was amended and restated with an additional 8.0 million shares of common stock reserved for issuance upon exercise of equity grants. The 2015 Plan uses a fungible share concept under which any awards that are not a full-value award, such as stock options and stock-settled SARs, will be counted against the share limit as one share for each share of common stock, and awards that are full-value awards, such as RSUs, DSUs, restricted and unrestricted stock awards, and performance awards, will be counted against the share limit as 2.09 shares for each share of common stock. The SARs the company has granted to date can only be settled in cash, and thus do not count against the share reserve. At December 31, 2021, there were 4.2 million shares still available for issuance.

Substantially all of the company’s full-time, non-union, U.S. team members receive RSUs, which are granted annually in November at no cost to employees, vest 100% over the shorter of two years from grant date or upon the recipient reaching retirement eligible age (59½ years), and the stock is issued to employees upon vesting. The company satisfies RSUs with newly issued shares, and satisfies restricted stock awards, DSUs, and performance awards with treasury shares. In addition to the RSUs and LTIP awards granted during the three-year period ended December 31, 2021, presented below, the company awarded 25,000, 52,000 and 54,000 DSUs in 2021, 2020 and 2019, respectively; and 171,200, 325,500 and 300,000 SARs in 2021, 2020 and 2019, respectively. The 447,100 SAR awards outstanding at December 31, 2021, for which no shares of common stock can be issued because the awards must be cash-settled upon exercise, have a weighted-average exercise price of $35.52.

Note 6. Equity-Based Incentive Plans (Continued)

Restricted Stock Units

A summary of the company’s RSU activity and outstanding RSUs as of December 31, 2021, are presented below (dollars in thousands except grant date fair value):

		Weighted		Aggregate
	Number	Average Grant		Intrinsic		Unrecognized
	of RSUs	Date Fair Value		Value		Compensation
Outstanding RSUs as of January 1, 2019	1,348,066	$	36.32	$	40,496	$	31,996
Granted	1,038,812		29.87
Vested	(769,291)		35.32
Forfeited	(59,593)		36.03
As of December 31, 2019	1,557,994	$	32.53	$	53,034	$	33,581
Granted	1,017,518		33.54
Vested	(811,317)		36.09
Forfeited	(65,616)		32.20
As of December 31, 2020	1,698,579	$	31.44	$	62,627	$	35,821
Granted	627,973		59.38
Vested	(895,706)		32.30
Forfeited	(82,588)		32.47
As of December 31, 2021 (nonvested)	1,348,258	$	43.82	$	83,686	$	39,657

The weighted average remaining life before vesting of the outstanding RSUs as of December 31, 2021, is 1.59 years. The fair value of RSUs vesting during 2021, 2020, and 2019 was $56.5 million, $29.9 million, and $26.2 million, respectively, and was net-share settled such that the company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld in 2021, 2020, and 2019 were approximately 290,000, 266,000, and 250,000 shares, respectively, and were based on the value of the RSUs on their vesting dates as determined by the company’s closing stock price.

Long-Term Incentive Compensation Program (LTIP)

The company maintains an LTIP performance-based program directed toward key senior leadership of the company, as determined at the discretion of the Compensation Committee of the Board of Directors. Awards are in shares of the company’s common stock using the stock price on the first day of the performance period to convert each key senior executive’s predetermined multiple of annual base salary. The performance period is generally three years; however, certain transition awards were issued in 2020, 2019, and 2017 with shorter performance periods. Performance is measured in terms of equal portions of four growth and profitability measures, as compared to the same measures, similarly treated, of a pre-established group of steel sector competitors. Awards earned can range from zero to 100% of the shares awarded. Beginning with 2018, award shares vest immediately once earned on the basis of performance. For awards prior to 2018, once earned on the basis of performance, one-third of the shares vest immediately, and the remaining shares vest in equal annual installments over an additional two-year service-based vesting period requirement.

Note 6. Equity-Based Incentive Plans (Continued)

The Compensation Committee granted the following three-year performance period awards, and two-year and one-year performance period transition awards, which have been earned and have or will be issued over the vesting period as follows:

	Maximum
	Shares That	Award
	Could Be Issued	Earned	Award Issued/Issuable
2016 LTIP Award:
Three-year performance period award	324,469	324,469	108,158	March 2019
			108,156	March 2020
			108,155	March 2021
2017 LTIP Award:
Three-year performance period award	182,274	164,047	54,683	March 2020
			54,682	March 2021
			54,682	March 2022
Two-year performance period transition award	16,779	15,101	5,034	March 2019
			5,034	March 2020
			5,033	March 2021
2018 LTIP Award:
Three-year performance period award	198,397	188,481	188,481	March 2021
2019 LTIP Award:
Three-year performance period award	422,008	379,811	379,811	March 2022
Two-year performance period transition award	15,600	14,040	14,040	March 2021
2020 LTIP Award:
Three-year performance period award	405,922	*	*
Two-year performance period transition award	9,764	8,300	8,300	March 2022
One-year performance period transition award	9,764	7,812	7,812	March 2021
2021 LTIP Award:
Three-year performance period award	400,468	*	*

* Not yet earned as performance period not complete.

2018 Executive Incentive Compensation Plan (2018 Executive Plan)

The company’s shareholders approved the 2018 Executive Plan in May 2018, and 2.0 million shares of company stock were reserved for issuance through February 28, 2028. Pursuant to the company’s 2018 Executive Plan, certain senior leadership of the company are eligible to receive cash bonuses based on predetermined formulas. In the event the bonus exceeds the predetermined maximum cash payout, the excess bonus up to a fixed percentage of base salary is distributed in shares of the company’s stock, of which one-third of the shares vest immediately and the remaining shares vest in equal annual installments over an additional two-year service-based vesting period requirement. At December 31, 2021, 2020, and 2019, 1.4 million, 1.5 million, and 1.7 million shares, respectively, under the 2018 Executive Plan remained available for issuance. Pursuant to the 2018 Executive Plan, 157,000, 148,000, and 149,000 shares were awarded with a market value of $8.7 million, $5.1 million, and $4.5 million for the 2021, 2020, and 2019 award years, respectively.