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Stock-based Compensation
12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based compensation Stock-based Compensation
Compensatory Stock Plans
Before the 2017 Merger, Knight and Swift granted stock-based awards under their respective stock-based compensation plans, discussed below.
2014 Stock PlanCurrently, the 2014 Stock Plan, as amended and restated, is the Company’s only compensatory stock-based incentive plan. The previous 2014 stock plan replaced Swift's 2007 Omnibus Incentive Plan when it was adopted by Swift's board of directors in March 2014 and then approved by the Swift stockholders in May 2014. The previous 2014 stock plan was amended and restated to rename the plan and for other administrative changes relating to the 2017 Merger. The 2014 Stock Plan was again amended and restated in 2020 to increase the number of shares of common stock available for issuance and extended the term of the 2014 Stock Plan, as well as to amend certain provisions to comply with best practices. Other terms of the 2014 Stock Plan, as amended and restated, remain substantially the same as the previous 2014 stock plan and first amended and restated stock plan. The 2014 Stock Plan, as amended and restated, permits the payment of cash incentive compensation and authorizes the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and performance units, cash-based awards, and stock-based awards to the Company's employees and non-employee directors. As of December 31, 2021, the aggregate number of shares remaining available under the 2014 Stock Plan was approximately 4.7 million.
Legacy PlansIn connection with the 2017 Merger, the registered securities under the Knight Amended and Restated 2003 Stock Option Plan, the Knight 2012 Equity Compensation Plan, the Knight Amended and Restated 2015 Omnibus Incentive Plan, and the Swift 2007 Omnibus Incentive Plan (collectively, the "Legacy Plans") were deregistered. As such, no future awards may be granted under these Legacy Plans. Outstanding awards granted under the Legacy Plans were assumed by Knight-Swift and continue to be governed by such Legacy Plans until such awards have been exercised, forfeited, canceled, or have otherwise expired or terminated.
See Note 2 regarding the Company's accounting policy for stock-based compensation.
Stock-based Compensation Expense
Stock-based compensation expense, net of forfeitures, which is included in "Salaries, wages, and benefits" in the consolidated statements of comprehensive income is comprised of the following:
 202120202019
(In thousands)
Stock options$232 $567 $1,149 
Restricted stock units18,190 13,496 9,734 
Performance units15,073 5,576 2,492 
Stock-based compensation expense – equity awards$33,495 $19,639 $13,375 
Stock-based compensation (benefit) expense – liability awards 1
(5,364)6,955 2,663 
Total stock-based compensation expense, net of forfeitures$28,131 $26,594 $16,038 
Income tax benefit 2
$8,357 $4,949 $3,344 
1Includes awards granted to executive management in November 2019 that, per the original agreement, would ultimately settle in cash upon fulfilling a requisite service period (for restricted stock units) and fulfilling a requisite service period and achieving performance targets (for performance units). During 2021, the Company amended the agreements for outstanding awards to ultimately settle in shares after each requisite service period.
2The income tax benefit is calculated by applying the statutory tax rate to stock-based compensation expense for equity awards, as the expense associated with liability awards is not tax deductible.
Unrecognized Stock-based Compensation Expense
The following table presents the total unrecognized stock-based compensation expense and the expected weighted average period over which these expenses will be recognized:
December 31, 2021
ExpenseWeighted Average Period
(In thousands)(In years)
Equity awards – Restricted stock units49,704 2.2
Equity awards – Performance units14,306 2.4
Total unrecognized stock-based compensation expense$64,010 2.3
Stock Award Grants
 202120202019
Restricted stock units562,021 722,499 588,819 
Performance units112,690 146,036 102,776 
Equity awards granted674,711 868,535 691,595 
Liability awards granted 1 2
— — 80,927 
Total stock awards granted674,711 868,535 772,522 
1    Includes 48,556 performance units in 2019.
2    Includes 32,371 restricted stock units in 2019.
Stock Options
Stock options are the contingent right of award holders to purchase shares of the Company's common stock at a stated price for a limited time. The exercise price of options granted equals the fair value of the Company's common stock determined by the closing price of the Company's common stock quoted on the NYSE on the grant date. Most stock options granted by the Company cannot be exercised until at least one year after the grant date and have a five to ten-year contractual term. Stock options are generally forfeited upon termination of employment for reasons other than death, disability, or retirement.
A summary of 2021 stock option activity follows:
Stock options outstanding:Shares Under OptionWeighted Average Exercise PriceWeighted Average Remaining Contractual Term
Aggregate Intrinsic Value 1
 (In years)(In thousands)
Stock options outstanding at December 31, 2020302,976 $29.45 1.2$3,748 
Granted— — 
Exercised
(207,242)28.59 
Expired(7,419)23.80 
Forfeited(3,308)33.35 
Stock options outstanding at December 31, 202185,007 $31.95 0.6$2,464 
Aggregate number of stock options expected to vest at a future date as of December 31, 2021— $— 0.0$— 
Exercisable at December 31, 202185,007 $31.95 0.6$2,464 
1The aggregate intrinsic value was computed using the closing share price on December 31, 2021 of $60.94 and on December 31, 2020 of $41.82, as applicable.
The following table summarizes stock option exercise information for the years presented:
Stock option exercises202120202019
(In thousands, except share data)
Number of stock options exercised207,242 382,254 443,288 
Intrinsic value of stock options exercised$4,120 $4,929 $5,183 
Cash received upon exercise of stock options$5,924 $10,199 $10,478 
Income tax benefit$1,304 $1,029 $221 
The following table is a rollforward of the Company's unvested stock options:
Unvested stock options:SharesWeighted Average Fair Value
Unvested stock options at December 31, 202086,779 $6.78 
Vested(83,707)6.78 
Forfeited and canceled(3,072)6.78 
Unvested stock options at December 31, 2021— $— 
The total fair value of the shares vested during 2021, 2020, and 2019 was $0.6 million, $1.0 million, and $1.5 million, respectively.
Restricted Stock Units
A restricted stock unit represents a right to receive a common share of stock when the unit vests. Restricted stock unit recipients do not have voting rights with respect to the shares underlying unvested awards. Employees generally forfeit their units if their employment terminates before the vesting date, with the exception of death, disability or retirement.
The following table is a rollforward of unvested restricted stock units, including restricted stock units classified as equity and those classified as liabilities:
Unvested restricted stock units:Number of Awards
Weighted Average Fair Value 1
Unvested restricted stock units at December 31, 20201,723,838 $34.07 
Granted562,021 50.63 
Vested 2
(456,670)32.53 
Forfeited(119,428)39.97 
Unvested restricted stock units at December 31, 20211,709,761 $39.81 
1    The fair value of each restricted stock unit is based on the closing market price on the grant date.
2    Includes 170,280 shares withheld for taxes and 18,697 net units settled in cash which were excluded from the "Common stock issued to employees" activity within the consolidated statements of stockholders' equity.
Performance Units
The Company issues performance units to select key employees, that may be earned based on achieving performance targets approved by the compensation committee annually. The initial award is subject to an adjustment determined by the Company's performance achieved over a three-year performance period when compared to the objective performance standards adopted by the compensation committee. Furthermore, the performance units have additional service requirements subsequent to the achievement of the performance targets. Performance units do not earn dividend equivalents.
The following table is a rollforward of unvested performance units, including performance units classified as equity and those classified as liabilities:
Unvested performance units: Shares  Weighted Average Fair Value
Unvested performance units at December 31, 2020549,730 $39.50 
Granted112,690 $60.55 
Shares earned above target45,409 $37.89 
Vested 1
(136,225)$45.02 
Unvested performance units at December 31, 2021 2
571,604 $44.22 
1Includes 63,815 shares withheld for taxes and 39,225 net units settled in cash which were excluded from the "Common stock issued to employees" activity within the consolidated statements of stockholders' equity.
2The performance measurement period for performance units granted in 2018 is January 1, 2019 to December 31, 2021 (three full calendar years). The performance measurement period for performance units granted in 2019 is January 1, 2020 to December 31, 2022 (three full calendar years). The performance measurement period for performance units granted in 2020 is January 1, 2021 to December 31, 2023 (three full calendar years). The performance measurement period for units granted in 2021 is January 1, 2022 to December 31, 2024 (three full calendar years). All performance units will vest one month following the expiration of the performance measurement period.
The following table presents the weighted average assumptions used in the fair value computation for performance units, including performance units classified as equity and those classified as liabilities:
Performance unit fair value assumptions:202120202019
Dividend yield 1
0.67 %0.78 %0.66 %
Expected volatility 2
36.00 %37.99 %34.88 %
Average peer volatility 2
35.49 %35.62 %27.96 %
Average peer correlation coefficient 3
0.600.590.60
Risk-free interest rate 4
0.92 %0.20 %1.60 %
Expected term (in years) 5
3.13.13.1
Weighted-average fair value of performance units granted$60.55 $42.41 $37.24 
1The dividend yield, used to project stock price to the end of the performance period, is based on the Company's historical experience and future expectation of dividend payouts. Total stockholder return is determined assuming that dividends are reinvested in the issuing entity over the performance period, which is mathematically equivalent to utilizing a 0% dividend yield.
2Management (or peer company) estimated volatility using the Company's (or peer company's) historical share price performance over the remaining performance period as of the grant date.
3The correlation coefficients are used to model the way in which each entity tends to move in relation to each other; the correlation assumptions were developed using the same stock price data as the volatility assumptions.
4The risk-free interest rate assumption is based on US Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the performance award.
5Since the Monte Carlo Simulation valuation is an open form model that uses an expected life commensurate with the performance period, the expected life of the performance units was assumed to be the period from the grant date to the end of the performance period.
Non-compensatory Stock Plan: ESPP
The Company's 2012 ESPP is administered by the Company, is intended to qualify under Section 423 of the Internal Revenue Code, and is considered noncompensatory. Pursuant to the 2012 ESPP, the Company is authorized to issue up to 1.4 million shares of its common stock to eligible employees who participate in the plan. Employees are eligible to participate in the 2012 ESPP following at least 90 days of employment with the Company or any of its participating subsidiaries. Under the terms of the 2012 ESPP, eligible employees may elect to purchase common stock through payroll deductions, not to exceed 15% of their gross cash compensation. The purchase price of the common stock is 95% of the common stock's fair market value quoted on the NYSE on the last trading day of each offering period. There are four three-month offering periods corresponding to the calendar quarters. Each eligible employee is restricted to purchasing a maximum of $6,250 of common stock during an offering period, determined by the fair market value of the common stock as of the last day of the offering period, and $25,000 of common stock during a calendar year. Officers or employees who own 5% or more of the total voting power or value of common stock are restricted from participating in the 2012 ESPP.
The plan was amended effective January 1, 2019 to align with new federal tax legislation that lifted the restriction on contributing to the ESPP if the participant had a hardship withdrawal on the 401(k) plan.
In 2021, the Company issued approximately 63,000 shares under the 2012 ESPP at a weighted average discounted price per share of $44.12. As of December 31, 2021, the Company is authorized to issue an additional 1.0 million shares under the 2012 ESPP.