Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

(a) Restricted Stock

Federated's long-term stock-incentive compensation is provided under the Stock Incentive Plan (the Plan), as amended and subsequently approved by shareholders from time to time. Share-based awards are granted to reward Federated's employees and non-management directors who have contributed to the success of Federated and to provide incentive to increase their efforts on behalf of Federated. Since the Plan's inception, a total of 30.6 million shares of Class B common stock have been authorized for granting share-based awards in the form of restricted stock, stock options or other share-based awards. As of December 31, 2019, 3.5 million shares are available under the Plan.

Share-based compensation expense was $25.1 million, $23.9 million and $22.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. The associated tax benefits recorded in connection with share-based compensation expense were $6.0 million, $5.6 million and $8.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, the maximum remaining unrecognized compensation expense related to share-based awards approximated $75 million which is expected to be recognized over a weighted-average period of approximately 6 years.

Federated's restricted stock awards represent shares of Federated Class B common stock that may be sold by the awardee only once the restrictions lapse, as dictated by the terms of the award. The awards are generally subject to graded vesting schedules that vary in length from three to 10 years with a portion of the award vesting each year, as dictated by the terms of the award. For an award with a ten-year vesting period, the restrictions on the vested portion of the award typically lapse on the award's fifth- and tenth-year anniversaries. Certain restricted stock awards granted pursuant to a key employee bonus program have a three-year graded vesting schedule with restrictions lapsing at each vesting date. During these restriction periods, the recipient receives dividends on all shares awarded, regardless of their vesting status.

The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2019:



	Restricted Shares		Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2019	3,960,560			$	25.59
Granted¹	928,324			30.10
Vested	(966,258	)		26.73
Forfeited	(141,431	)		23.91
Non-vested at December 31, 2019	3,781,195			$	26.47

During 2019, Federated awarded 498,324 shares of restricted Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2019, Federated awarded 430,000 shares of restricted Class B common stock to certain key employees. These restricted stock awards generally vest over a ten-year period.

Federated awarded 928,324 shares of restricted Class B common stock with a weighted-average grant-date fair value of $30.10 to employees during 2019; awarded 899,269 shares of restricted Class B common stock with a weighted-average grant-date fair value of $28.30 to employees during 2018; and awarded 946,570 shares of restricted Class B common stock with a weighted-average grant-date fair value of $27.20 to employees during 2017.

The total fair value of restricted stock vested during 2019, 2018 and 2017 was $28.4 million, $24.0 million and $23.9 million, respectively.

(b) Subsidiary Stock Plan

Effective July 2, 2018, Federated established a non-public subsidiary share-based compensation plan for certain employees of that subsidiary. These awards, which are subject to continued service vesting requirements, vest over a period of three to five years. At various predetermined dates, but no earlier than 9 months after vesting, award holders have a right to exercise a put option to sell shares to Federated at fair value and Federated has a right to exercise a call option to acquire shares at fair value. Federated recognized compensation expense for this plan of $7.9 million and $4.2 million in Compensation and Related expense on the Consolidated Statements of Income for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019, the remaining unrecognized compensation expense related to these plan awards approximated $30 million which is expected to be recognized over a weighted-average period of approximately 4 years.