Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Our share-based compensation is measured at fair value and expensed over the service period (generally the vesting period). The amount of compensation expense to be recognized is adjusted for an estimated forfeiture rate which is based on historical data. For the years ended December 31, 2019, 2018 and 2017, we recognized share-based compensation attributable to stock options and restricted shares of $6.9 million, $5.0 million and $5.1 million, respectively, primarily in selling, general and administrative expenses. The corresponding deferred income tax benefits for stock options or restricted shares is $1.3 million, $1.0 million and $2.4 million for 2019, 2018 and 2017 respectively.

Equity Incentive Plan

Second Amended and Restated 2007 Equity Incentive Plan. The Second Amended and Restated 2007 Equity Incentive Plan, (the “2007 Plan”) provides for the grant of the following types of incentive awards: (i) stock options, (ii) restricted stock, (iii) restricted stock units, (iv) stock appreciation rights, (v) performance units and performance shares and (vi) other stock or cash awards. Those eligible for awards include employees, directors and consultants who provide services to Amkor and its subsidiaries. The 2007 Plan is effective through 2027 and can be terminated at the discretion of the Board of Directors. There were originally 17.0 million shares of our common stock reserved for issuance under the 2007 Plan and at December 31, 2019 there were 5.2 million shares available for grant.

Stock options

Stock options are generally granted with an exercise price equal to the market price of the stock at the date of grant. Substantially all of the options granted are exercisable pursuant to a one to four year vesting schedule and the term of the options granted is no longer than ten years. Upon option exercise, we may issue new shares of common or treasury stock.

In order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. Expected volatilities are based on historical performance of our stock. We also use historical data to estimate the timing and amount of option exercises and forfeitures within the valuation model. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following table summarizes our stock option activity for the year ended December 31, 2019:



	Number of Shares (In thousands)	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2018	4,743	$	8.79
Granted	3,100	9.10
Exercised	(1,442)	7.91
Forfeited or expired	(556)	9.39
Outstanding at December 31, 2019	5,845	$	9.11	7.74	$	22,738
Fully vested at December 31, 2019 and expected to vest thereafter	5,718	$	9.11	7.71	$	22,256
Exercisable at December 31, 2019	2,140	$	8.87	6.04	$	8,829

The following assumptions were used to calculate the weighted-average fair values of the options granted:



	For the Year Ended December 31,
	2019			2018			2017
Expected life (in years)	6.0			6.0			5.7
Risk-free interest rate	2.5		%	2.7		%	1.9		%
Volatility	43		%	42		%	43		%
Dividend yield	—			—			—
Weighted-average grant date fair value per option granted	$	4.06		$	4.17		$	4.24

Total unrecognized compensation expense from stock options was $11.8 million as of December 31, 2019, which is expected to be recognized over a weighted-average period of approximately 2.6 years beginning January 1, 2020.

Restricted Shares

We grant restricted shares to directors and employees under the 2007 Plan. Restricted shares granted to directors vest on the earlier of the one year anniversary of the grant date or the date of the next annual meeting of stockholders. All other restricted shares vest ratably over four years, with 6.25% of the shares vesting in equal quarterly installments such that 100% of the shares will become vested on the fourth anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting dates. In addition, provided that the restricted shares have not been forfeited earlier, for certain grants, the restricted shares will vest upon the recipient’s death or disability, or upon a change in control of Amkor. The value of the restricted shares is determined based on the fair market value of the underlying shares on the date of the

grant and is recognized ratably over the vesting period. Upon vesting of restricted stock awards, we may issue new shares of common or treasury stock.

The following table summarizes our restricted share activity for the year ended December 31, 2019:



	Number of Shares (In thousands)		Weighted- average Grant Date Fair Value (Per Share)
Non-vested at December 31, 2018	147		$	9.63
Awards granted	82		7.29
Awards vested	(83	)	9.32
Awards forfeited	—		—
Non-vested at December 31, 2019	146		8.48

Total unrecognized compensation cost from restricted shares was $0.8 million as of December 31, 2019, which is expected to be recognized over a weighted-average period of approximately 0.7 years beginning January 1, 2020.