Share-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-Based Compensation

Share-Based Compensation

13.         Share-Based Compensation

The Company’s Stock Incentive Plan, as amended and restated (the “SI Plan”) allows us to grant equity-based compensation awards, including nonvested stock, as part of our overall compensation program to attract and retain key

personnel and encourage a greater personal financial investment in the Company, thereby promoting the long-term growth of the Company. A maximum of 40.4 million shares of common stock are authorized for issuance under the SI Plan and as of December 31, 2020, 5,255,495 shares of common stock were available for issuance under the SI Plan.  In addition, we may make incentive payments under the Company’s Executive Incentive Plan, as amended and restated (the “EIP”) in the form of cash, equity-based awards or a combination thereof. Incentive awards paid under the EIP in the form of equity-based awards are issued out of shares reserved for issuance under the SI Plan. Generally, shares of common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or is terminated will again be available for awards under the SI Plan.  Due to the terms of the Merger Agreement that restrict the Company’s ability to grant shares of common stock, the SI Plan was amended in December 2020 to allow the Company to grant restricted stock units that can be settled in shares of common stock or cash at the sole discretion of the Company, except that they will be settled in cash upon a change of control.  As of December 31, 2020, no restricted stock units had been awarded pursuant to the SIP.

Nonvested stock awards are valued on the date of grant and have no purchase price.  These awards vest in 25% increments beginning on the first anniversary of the grant date. The Company has issued nonvested stock awards to non-employee directors. These awards generally have the same terms as awards issued to employees, except awards vest on the first anniversary of the grant date.

Beginning in 2017, the Company established the RSU Plan, which allows the Company to grant cash-settled RSUs to attract and retain key personnel and enable them to participate in the long-term growth of the Company. Unvested cash-settled RSUs have no purchase price and vest in 25% increments over four years, beginning on the first anniversary of the grant date.  On the vesting date, cash-settled RSU holders receive a lump sum cash payment equal to the fair market value of one share of the Company’s common stock, par value $0.01, for each cash-settled RSU that has vested, subject to applicable tax withholdings. We treat cash-settled RSUs as liability-classified awards and, therefore, account for them at fair value based on the closing price of our common stock on the reporting date, which results in variable compensation expense over the vesting period.    

Nonvested shares and nonvested cash-settled RSU’s are forfeited upon the termination of employment with or service to the Company, as applicable, or service on the Board of Directors, dependent upon the circumstances of termination. Except for restrictions placed on the transferability of nonvested shares, holders of nonvested shares have full stockholders’ rights during the term of restriction, including voting rights and the rights to receive cash dividends.  Since nonvested cash-settled RSUs are not shares of Company stock, holders of nonvested cash-settled RSUs are not entitled to voting rights but are entitled to dividend equivalent payments for each RSU equal to the dividend paid on one share of our common stock. Under the terms of the Merger Agreement, vesting of nonvested shares and nonvested cash-settled RSUs accelerate upon consummation of the merger.

A summary of nonvested share activity and related fair value for the year ended December 31, 2020 follows:

		Weighted
		Average
	Nonvested	Grant Date
	Stock Shares	Fair Value
Nonvested at December 31, 2019	3,641,985	$	19.60
Granted	1,659,004		13.01
Vested	(1,649,155)		20.31
Forfeited	(111,478)		17.64
Nonvested at December 31, 2020	3,540,356	$	16.24

A summary of nonvested cash-settled RSU activity for the year ended December 31, 2020 follows:

	Nonvested
	Cash-Settled Units
Nonvested at December 31, 2019	2,375,600
Granted	2,251,698
Vested	(772,384)
Forfeited	(124,828)
Nonvested at December 31, 2020	3,730,086

For the years ended December 31, 2020, 2019 and 2018, compensation expense related to nonvested shares and nonvested cash-settled RSUs totaled $56.8 million, $46.6 million and $51.6 million, respectively.

The deferred income tax benefit from the compensation expense related to nonvested stock and nonvested cash-settled RSUs was $13.8 million, $11.1 million and $11.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. These benefits will be recognized upon vesting and may increase or decrease depending on the fair value of the shares on the date of vesting. As of December 31, 2020, the remaining unamortized expense related to nonvested stock of $38.3 million is expected to be recognized over a weighted average period of 2.3 years.

The total fair value of shares vested (at vest date) during the years ended December 31, 2020, 2019 and 2018, was $26.2 million, $29.1 million and $41.0 million, respectively. The Company withholds a portion of each employee’s vested shares to satisfy income tax withholding obligations of the Company with respect to vesting of the shares.