Share-Based Compensation and Employee Ownership Plans

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation and Employee Ownership Plans

Share-Based Payments, Deferred Compensation and Employee Ownership Plans

The Company has issued share-based compensation under the 2010 and 2020 Equity and Incentive Plan (the "Equity Plans"). The Equity Plans permits the grant of options, restricted shares, restricted stock units, and other equity-based awards to the Company's employees and directors. Stock options granted generally vest over two-to-five-year periods and expire seven years from the date of grant. Restricted shares and restricted share units issued, both of which are eligible to accrue dividend equivalents, may be immediately vested or may generally vest over a two-to five-year period. Awards are subject to the risk of forfeiture. As of September 30, 2020, there were 2.5 million shares available for future issuance under the Equity Plans.

Under the Equity Plan, the Company awarded $0.1 million and $50.3 million of deferred cash awards to its employees during the three and nine months ended September 30, 2020. These awards vest over a four-year period and accrue interest at 0.70% per year. As of September 30, 2020, the Company had unrecognized compensation expense related to the Equity Plan's deferred cash awards of $79.4 million.

The Company measures compensation cost for share-based awards according to the equity method. In accordance with the expense recognition provisions of those standards, the Company amortizes unearned compensation associated with share-based awards on a straight-line basis over the vesting period of the option or award, net of estimated forfeitures. In relation to awards under the Equity Plan, the Company recognized compensation expense of $11.6 million and $10.0 million for the three months ended September 30, 2020 and 2019 and $35.2 million and $27.2 million for the nine months ended September 30, 2020 and 2019, respectively. The income tax effect recognized for the Equity Plans was a benefit of $3.1 million and $2.6 million for the three months ended September 30, 2020 and 2019 and $8.4 million and $6.8 million for the nine months ended September 30, 2020 and 2019, respectively.

Restricted Stock Units Granted to Employees

Restricted shares and restricted stock units are referred to collectively as restricted stock. The following table summarizes the Company's restricted share and restricted stock unit activity for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units	Weighted-Average Grant Date Fair Value		Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units	Weighted-Average Grant Date Fair Value
Beginning balance outstanding	5,364,486	$	16.67	5,962,295	$	15.73
Granted	2,638,544	17.14		2,322,996	16.62
Vested	(1,320,318)	15.20		(1,545,850)	16.26
Canceled	(87,348)	14.80		(584,333)	11.49
Forfeited	(111,212)	15.55		(156,528)	13.97
Ending balance outstanding	6,484,152	$	17.20	5,998,580	$	16.40

Included in the restricted share and restricted stock unit activity are performance-linked restricted stock units of 1,366,666 which were awarded in March 2016, April 2019 and July 2020. Of the awards granted, 145,986 have vested and 320,681 have been canceled, as they did not meet the performance criteria, through September 30, 2020. The remaining awards, included in the outstanding balance as of September 30, 2020, vest between December 2020 and December 2022 and will be earned only to the extent that the Company attains specified market conditions relating to its volume-weighted average share price and total shareholder return in relation to certain benchmark indices and performance goals relating to aggregate net income and average return on shareholder equity. The actual number of RSUs ultimately earned could vary from zero, if performance goals are not met, to as much as 200% of the targeted award. Each RSU is equal to the one share of the Company's Class A common stock. Compensation expense is recognized to the extent that it is probable that the Company will attain the performance goals.

The fair value of restricted stock (excluding certain performance-linked units which are valued using the Monte Carlo valuation model) is determined based on the number of shares granted and the quoted price of the Company's common stock on the date of grant.

As of September 30, 2020, there was $81.8 million of unrecognized compensation expense related to the Company's grant of nonvested restricted shares and restricted stock units to employees. Unrecognized compensation expense related to nonvested restricted shares and restricted stock units granted to employees is expected to be recognized over a weighted-average period of 2.24 years.

Restricted Shares and Restricted Stock Units Granted to Non-Employee Board Members

There were 90,645 restricted stock units awarded and 48,021 delivered to non-employee board members during the three and nine months ended September 30, 2020. As of September 30, 2020 there were 259,536 restricted stock units outstanding for non-employee board members. There were no restricted stock units awarded during the three and nine months ended September 30, 2019, and 120,430 were delivered. As of December 31, 2019 there were 216,912 restricted stock units outstanding.