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Retirement and Share-based Compensation Plans
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Retirement and Share-based Compensation Plans Retirement and Share-based Compensation Plans
We have adopted a contributory defined contribution plan which is qualified under Section 401(k) of the Internal Revenue Code. The plan covers substantially all of our full-time employees subject to minimum eligibility requirements. Employees can contribute a percentage of their annual salary (up to a maximum annual contribution of $19,500 in 2021, $19,500 in 2020 and $19,000 in 2019) to the plan. We contribute an additional amount, subject to limitations, based on the voluntary contribution of the employee. Further, the plan provides for additional employer contributions based on the discretion of the Board of Directors. Plan contributions charged to expense were $2.7 million, $2.4 million and $1.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.
The following table summarizes compensation expense recognized for employees and directors as a result of share-based compensation:
Year Ended December 31,
202120202019
(Dollars in thousands)
ESOP$3,377 $2,908 $2,547 
Employee Incentive Plans22,886 7,855 6,559 
Director Equity Plans1,262 1,056 922 
$27,525 $11,819 $10,028 
The principal purpose of the American Equity Investment Employee Stock Ownership Plan ("ESOP") is to provide each eligible employee with an equity interest in us. Employees become eligible once they have completed a minimum of six months of service. Employees become 100% vested after two years of service. Our contribution to the ESOP is determined by the Board of Directors.
During 2020, the 2016 Employee Incentive Plan ("2016 Plan") was amended and renamed the American Equity Investment Life Holding Company Amended and Restated Equity Incentive Plan ("Amended Plan"). The Amended Plan increased the number of shares of Common stock reserved for issuance by 3,000,000 shares to 5,500,000 shares of our Common stock which may be issued in the form of grants of options, stock appreciation rights, restricted stock awards and restricted stock units. In addition, the Amended Plan allows for awards to be granted to members of the Board of Directors of the Company.
At December 31, 2021, we had 1,924,101 shares of common stock available for future grant under the Amended Plan.
We have a long-term performance incentive plan under which certain members of our management team are granted performance-based restricted stock units pursuant to the Amended Plan or the 2016 Plan. During 2021, 2020 and 2019, we granted 186,091, 217,781 and 152,678 restricted stock units under these plans, respectively. For the 2021 grant, vesting is tied to threshold, target and maximum performance goals for the three year period ending December 31, 2023. Fifty percent of the restricted stock units will vest if we meet threshold goals, 100% of the restricted stock units will vest if we meet target performance goals and 200% of the restricted stock units will vest if we meet maximum performance goals. For the 2020 and 2019 grants, vesting is tied to threshold, target and maximum performance goals for the three year periods ending December 31, 2022 and December 31, 2021, respectively. Fifty percent of the restricted stock units will vest if we meet threshold goals, 100% of the restricted stock units will vest if we meet target performance goals and 150% of the restricted stock units will vest if we meet maximum performance goals. Compensation expense is recognized over the three year vesting period based on the likelihood of meeting threshold, target and maximum goals. Restricted stock units that ultimately vest are payable in an equal number of shares of our common stock. Restricted stock units are accounted for as equity awards and the estimated fair value of restricted stock units is based upon the closing price of our common stock on the date of grant.
During 2021, 2020 and 2019 we granted 199,597, 133,429 and 72,696, respectively, time-based restricted stock units to employees under the Amended Plan or the 2016 Plan. These grants vest one to three years following the grant date provided the participant remains employed with us. Shares will vest early upon an employee reaching 65 years of age with 10 years of service with us. Compensation expense is recognized over the vesting period. Restricted stock units that ultimately vest are payable in an equal number of shares of our common stock. Restricted stock units are accounted for as equity awards and the estimated fair value of restricted stock units is based upon the closing price of our common stock on the date of grant.
During 2021 and 2020, we granted 391,553 and 105,809 options to employees under the Amended Plan or the 2016 Plan at an exercise price equal to the fair market value of our common stock on the date of grant. These options vest over a period of one to five years and expire 10 years after the grant date. Compensation expense is recognized over the vesting period.
During 2021 and 2020, we granted 855,052 and 709,958 performance-based options ("Performance Options") to employees under the Amended Plan at an exercise price equal to the fair market value of our common stock on the date of grant. These Performance Options vest based upon the timing of meeting the market condition of a 30-day volume weighted average common stock price of $37.00 per common share. Fifty percent of the Performance Options granted vest upon the later of: (i) the market condition noted above being met; and (ii) the one year anniversary of the Grant Date. The remaining fifty percent of the Performance Options granted vest on the one year anniversary of the vesting of the initial fifty percent of the Performance Options. The market condition for these performance options was met on January 4, 2022. Compensation expense for the Performance Options is recognized over the requisite service period.
During 2021 and 2020, we issued 39,273 and 51,450 shares of common stock under the Amended Plan to our Directors, all of which are restricted stock, and which vest on the earlier of the next annual meeting date or one year from the grant date provided the individual remains a Director during that time period.
The 2013 Director Equity and Incentive Plan authorized the grant of options, stock appreciation rights, restricted stock awards and restricted stock units convertible into or based upon our common stock of up to 250,000 shares to our Directors. During 2019, we issued 32,000 shares of common stock, respectively, all of which are restricted stock, and which vested on the earlier of the next annual meeting date or one year from the grant date provided the individual remains a Director during that time period. At December 31, 2021, there were no shares of common stock available for future grant under the 2013 Director and Equity Incentive Plan.
During 2014, we established the 2014 Independent Insurance Agent Restricted Stock and Restricted Stock Unit Plan, which was amended during 2016. Under the amended plan, agents of American Equity Life received grants of restricted stock and restricted stock units based upon their individual sales. The plan authorized grants of up to 1,800,000 shares of our common stock. At December 31, 2021, there were no shares of common stock available for future grant under the amended 2014 Independent Insurance Agent Restricted Stock and Restricted Stock Unit Plan. We recognized commission expense and an increase to additional paid-in capital as share-based compensation equal to the fair value of the restricted stock and restricted stock units as they were earned.
In January 2017, American Equity Life's agents were granted 363,624 restricted stock units based on their production during 2016. In January 2020, agents vested in 58,617 restricted stock units granted in January 2017 based on their continued service as an independent agent and their 2019 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $1.4 million in 2019. In January 2021, agents vested in 41,735 restricted stock units granted in January 2017 based on their continued service as an independent agent and their 2020 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.9 million in 2020. In January 2022, agents vested in 3,568 restricted stock units granted in January 2017 based on their continued service as an independent agent and their 2021 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.2 million in 2021.
In January 2016, American Equity Life's agents were granted 650,683 restricted stock units based on their production during 2015. In January 2020, agents vested in 89,382 restricted stock units granted in January 2016 based on their continued service as an independent agent and their 2019 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $2.2 million in 2019. In January 2021, agents vested in 4,042 restricted stock units granted in January 2016 based on their continued service as an independent agent and their 2020 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.1 million in 2020.
For the restricted stock units granted to agents in January of 2017 and 2016, 20% of the restricted stock units vested one year from the grant date if the agent was in good standing with American Equity Life at that date. The remaining 80% of the restricted stock units granted to retirement eligible individuals vest over a three year period if the agent remains in good standing with American Equity Life. The remaining 80% of the restricted stock units granted to non-retirement eligible individuals vest based on the agent's individual sales and continued service as an independent agent over a period of time not to exceed five years.
Our 2000 Director Stock Option Plan, 2009 Employee Incentive Plan and 2011 Director Stock Option Plan authorized grants of options to officers, directors and employees for an aggregate of up to 2,975,000 shares of our common stock. All options granted under these plans have ten year terms and a six month or three year vesting period after which they become fully exercisable immediately. As of December 31, 2021, there were no options available for grant under these plans.
During 2007, 2010 and 2012 we established Independent Insurance Agent Stock Option plans. Under these plans, agents of American Equity Life received grants of options to acquire shares of our common stock based upon their individual sales. The plans authorized grants of options to agents for an aggregate of up to 8,000,000 shares of our common stock. As of December 31, 2021, there were no options available for future grant under these plans. We recognized commission expense and an increase to additional paid-in capital as share-based compensation equal to the fair value of the options as they were earned.
Changes in the number of stock options granted to employees and agents outstanding during the years ended December 31, 2021, 2020 and 2019 are as follows:
Number of
Shares		Weighted-Average
Exercise Price
per Share		Total
Exercise
Price
(Dollars in thousands, except per share data)
Outstanding at January 1, 20191,221,865 $17.41 $21,273 
Granted— — — 
Canceled(22,600)18.14 (410)
Exercised(370,352)11.76 (4,357)
Outstanding at December 31, 2019828,913 19.91 16,506 
Granted815,767 26.70 21,778 
Canceled(31,200)21.50 (670)
Exercised(355,563)16.98 (6,038)
Outstanding at December 31, 20201,257,917 25.10 31,576 
Granted1,246,605 29.15 36,336 
Canceled(146,803)25.44 (3,735)
Exercised(295,000)22.88 (6,749)
Outstanding at December 31, 20212,062,719 27.84 $57,428 
The following table summarizes information about stock options outstanding at December 31, 2021:
Stock Options OutstandingStock Options Vested
Range of Exercise PricesNumber of
Awards		Remaining
Life (yrs)		Weighted-Average
Exercise Price
Per Share		Number of
Awards		Remaining
Life (yrs)		Weighted-Average
Exercise Price
Per Share
$10.52
42,000 0.43$10.52 42,000 0.43$10.52 
$21.89 - $26.72
398,320 8.8426.11 — 0.00— 
$27.05 - $32.58
1,622,399 9.1028.71 — 0.00— 
$10.52 - $32.58
2,062,719 8.8727.84 42,000 0.4310.52 
The aggregate intrinsic value for stock options outstanding and vested awards was $22.9 million and $1.2 million, respectively, at December 31, 2021. For the years ended December 31, 2021, 2020 and 2019, the total intrinsic value of options exercised by officers, directors and employees was $1.2 million, $2.2 million and $3.4 million, respectively. Intrinsic value for stock options is calculated as the difference between the exercise price of the underlying awards and the price of our common stock as of the reporting date. Cash received from stock options exercised for the years ended December 31, 2021, 2020 and 2019 was $6.7 million, $6.0 million and $4.4 million, respectively.
We have deferred compensation arrangements with certain officers, directors, and consultants, whereby these individuals agreed to take our common stock at a future date in lieu of cash payments at the time of service. The common stock is to be issued in conjunction with a "trigger event," as that term is defined in the individual agreements. At both December 31, 2021 and 2020, these individuals have earned, and we have reserved for future issuance, 4,500 shares of common stock pursuant to these arrangements. No equity-based deferred compensation arrangements were in effect during 2021, 2020 or 2019.
We have deferred compensation agreements with certain former officers whereby these individuals have deferred certain salary and bonus compensation which is deposited into the American Equity Officer Rabbi Trust (Officer Rabbi Trust). The assets of the Officer Rabbi Trust are included in our assets and a corresponding deferred compensation liability is recorded. The deferred compensation liability is recorded at the fair market value of the assets in the Officer Rabbi Trust with the change in fair value included as a component of compensation expense. The deferred compensation liability related to these agreements was $1.0 million and $0.8 million at December 31, 2021 and 2020, respectively. The Officer Rabbi Trust held 26,011 shares and 27,661 shares of our common stock at December 31, 2021 and 2020, respectively, which are treated as treasury shares.