STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Stock-Based Compensation Plans—The Company maintains equity incentive plans that provide for the grant of stock-based awards to its directors, officers and employees. The 2007 Equity Incentive Plan, as amended (the “2007 Plan”), provides for the grant of non-qualified and incentive stock options, as well as restricted stock units, restricted stock and other stock-based awards. Exercise prices for non-qualified and incentive stock options are not less than the fair value of the underlying common stock on the date of grant. Equity awards typically vest ratably, generally over four years for time-based restricted stock units (“RSUs”) and stock options and three years for performance-based restricted stock units (“PSUs”). Stock options generally expire ten years from the date of grant. As of September 30, 2020, the Company had the ability to grant stock-based awards with respect to an aggregate of 6.5 million shares of common stock under the 2007 Plan. In addition, the Company maintains an employee stock purchase plan (the “ESPP”) pursuant to which eligible employees may purchase shares of the Company’s common stock on the last day of each bi-annual offering period at a 15% discount from the lower of the closing market value on the first or last day of such offering period. The offering periods run from June 1 through November 30 and from December 1 through May 31 of each year.

During the three and nine months ended September 30, 2020 and 2019, the Company recorded and capitalized the following stock-based compensation expense:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock-based compensation expense Property	$	0.4	$	0.4	$	1.4	$	1.4
Stock-based compensation expense Services	0.3		0.2		0.9		0.7
Stock-based compensation expense SG&A	23.4		22.9		96.7		85.8
Total stock-based compensation expense	$	24.1	$	23.5	$	99.0	$	87.9

Stock-based compensation expense capitalized as property and equipment	$	0.4	$	0.3	$	1.3	$	1.2

Stock Options—As of September 30, 2020, total unrecognized compensation expense related to unvested stock options was less than $0.1 million, which is expected to be recognized over a weighted average period of less than one year.

The Company’s option activity for the nine months ended September 30, 2020 was as follows (shares disclosed in full amounts):


						Number of Options
Outstanding as of January 1, 2020						3,060,242

Exercised						(943,165)
Forfeited						—
Expired						—
Outstanding as of September 30, 2020						2,117,077

Restricted Stock Units—As of September 30, 2020, total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan was $146.9 million and is expected to be recognized over a weighted average period of approximately two years. Vesting of RSUs is subject generally to the employee’s continued employment or death, disability or qualified retirement (each as defined in the applicable RSU award agreement).

Performance-Based Restricted Stock Units—During the nine months ended September 30, 2020, 2019 and 2018, the Company’s Compensation Committee granted an aggregate of 110,925 PSUs (the “2020 PSUs”), 114,823 PSUs (the “2019 PSUs”) and 131,311 PSUs (the “2018 PSUs”), respectively, to its executive officers and established the performance metrics for these awards. Threshold, target and maximum parameters were established for the metrics for a three-year performance period with respect to each of the 2020 PSUs, the 2019 PSUs and the 2018 PSUs and will be used to calculate the number of shares that will be issuable when each award vests, which may range from zero to 200% of the target amounts. At the end of each three-year performance period, the number of shares that vest will depend on the degree of achievement against the pre-established performance goals. PSUs will be paid out in common stock at the end of each performance period, subject generally to the executive’s continued employment or death, disability or qualified retirement (each as defined in the applicable PSU award agreement). PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect of shares that actually vest.

Restricted Stock Units and Performance-Based Restricted Stock Units—The Company’s RSU and PSU activity for the nine months ended September 30, 2020 was as follows (shares disclosed in full amounts):


	RSUs	PSUs
Outstanding as of January 1, 2020 (1)	1,454,350	528,908
Granted (2)	452,301	110,925
Vested and Released (3)	(609,079)	(282,774)
Forfeited (4)	(34,728)	(76,965)
Outstanding as of September 30, 2020	1,262,844	280,094
Vested and deferred as of September 30, 2020 (5)	58,204	—

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(1)PSUs consist of the target number of shares issuable at the end of the three-year performance period for the 2019 PSUs and the 2018 PSUs, or 114,823 and 131,311 shares, respectively, and the shares issuable at the end of the three-year performance period for the PSUs granted in 2017 (the “2017 PSUs”) based on achievement against the performance metrics for the three-year performance period, or 282,774 shares.

(2)PSUs consist of the target number of shares issuable at the end of the three-year performance period for the 2020 PSUs, or 110,925 shares, which includes 17,593 shares granted during the three months ended June 30, 2020 to the Company’s newly appointed Chief Executive Officer (“CEO”)

and Chief Financial Officer and also includes 40,186 shares granted to the Company’s former CEO during the three months ended March 31, 2020 which were subsequently forfeited upon his retirement.

(3)PSUs consist of shares vested pursuant to the 2017 PSUs. There are no additional shares to be earned related to the 2017 PSUs.

(4)PSUs consist of shares forfeited in connection with the retirement of the Company’s former CEO, which includes the target number of shares issuable at the end of the three-year performance period for the 2020 PSUs and the pro-rated target numbers of shares issuable at the end of the three-year performance periods for the 2019 PSUs and the 2018 PSUs as calculated pursuant to the award agreements related to the 2019 PSUs and the 2018 PSUs.

(5)Vested and deferred RSUs are related to deferred compensation for certain former employees.

On April 11, 2020, the Company’s Compensation Committee changed the terms of the PSU award agreements as to the vesting applicable in the event of a PSU participant’s death, disability or qualified retirement (as defined in the award agreement) to be the same for all PSU participants, including the participant serving as CEO. The change in vesting terms is applicable for new PSU grants awarded to the CEO beginning on April 11, 2020 and does not change the vesting terms applicable to PSU grants awarded to the Company’s newly appointed CEO or former CEO prior to April 11, 2020.

During the three and nine months ended September 30, 2020, the Company recorded $2.7 million and $19.1 million, respectively, in stock-based compensation expense for equity awards in which the performance goals have been established and were probable of being achieved. The remaining unrecognized compensation expense related to these awards at September 30, 2020 was $5.9 million based on the Company’s current assessment of the probability of achieving the performance goals. The weighted average period over which the cost will be recognized is approximately two years.