Share-Based Compensation |
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Share-Based Compensation | Share-Based Compensation 2018 Long Term Incentive Plan In May 2018, the Company’s shareholders approved the 2018 Long Term Incentive Plan. In May 2020 and May 2021, the Company's shareholders approved amendments to the 2018 Long Term Incentive Plan (as amended, the “2018 LTIP”) to increase the number of ordinary shares available for issuance under that Plan by 1,500,000 and 1,800,000 ordinary shares, respectively. Under the 2018 LTIP, the number of ordinary shares authorized for issuance under the 2018 LTIP is equal to the sum of (a) 5,100,000 ordinary shares, (b) 1,177,933 ordinary shares that were available for issuance under the 2012 LTIP as of the May 15, 2018, effective date of the 2018 LTIP, and (c) any ordinary shares subject to issued and outstanding awards under the 2012 Long Term Incentive Plan (the “2012 LTIP”) that expire, are cancelled or otherwise terminate following the effective date of the 2018 LTIP; provided, that no more than 2,500,000 ordinary shares may be issued pursuant to the exercise of ISOs. The 2018 LTIP provides for the grant of ISOs, NQSOs, SARs, restricted shares, RSUs, performance bonus awards, performance share units awards, dividend equivalents and other share or cash-based awards to eligible individuals. Options under the 2018 LTIP may be granted for periods up to ten years. All options granted to date under the 2018 LTIP, with the exception of options granted pursuant to the Option Exchange (as discussed below), have had a year life. Amended and Restated 2012 Long Term Incentive Plan Prior to the effective date of the 2018 LTIP, employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Company’s Board of Directors, received equity awards under the 2012 LTIP. All options under the 2012 LTIP were granted for periods of years. 2020 Employment Inducement Incentive Plan On February 25, 2020, the Company's Board of Directors approved the 2020 Employment Inducement Incentive Plan, and subsequently adopted a series of amendments to increase the ordinary shares available for issuance (as amended, the “2020 EIIP”). As of March 31, 2022, the number of ordinary shares authorized for issuance under the 2020 EIIP was 1,385,000 and zero ordinary shares remained available for future awards under the 2020 EIIP, although the Company's Board of Directors reserves the right to amend the 2020 EIIP to increase the number of ordinary shares available and to make additional awards to key new hires. The 2020 EIIP provides for the grant of NQSOs, SARs, restricted shares, RSUs, performance bonus awards, performance share units awards, or other share or cash-based awards to eligible individuals. Options under the 2020 EIIP may be granted for periods up to ten years. All options granted to date under the to the 2020 EIIP have had a year life. Shares Available for Grant The Company granted 1,741,936 and 2,550,977 options (1,372,587 of which were replacement options granted pursuant to the Option Exchange, as discussed below) during the three months ended March 31, 2022 and 2021, respectively, in aggregate under its equity plans. The Company’s option awards generally vest over four years. As of March 31, 2022, 1,407,681 ordinary shares remained available for grant under its equity plans and options to purchase 10,318,524 ordinary shares in aggregate under the Company's equity plans were outstanding with a weighted-average exercise price of approximately $21.49 per share. 2020 Option Exchange Program On May 19, 2020, the Company's shareholders approved a proposal to allow for a one-time option exchange program (the "Option Exchange") designed to give its employees, including our named executive officers, and non-employee directors of the Company, who are employed by or providing services to the Company through the completion of the Option Exchange, the opportunity to exchange eligible options for new replacement options with an exercise price equal to the fair market value of the Company’s ordinary shares on the date the replacement options are granted. Any new replacement options would be subject to a new initial one-year vesting period from the replacement option grant date and after such initial one-year vesting period would vest in substantially equal installments on the remaining original vesting dates of each exchanged option. Additionally, any new replacement options would have a term equal to the remaining term of the applicable exchanged option. On November 9, 2020, the Company commenced the Option Exchange which closed on February 12, 2021. Options to purchase approximately 2.1 million ordinary shares were exchanged for options to purchase approximately 1.4 million ordinary shares with an exercise price of $22.85 per share. Options were eligible to exchange if they had an exercise price equal to or greater than $17.63 per share, were granted prior to April 23, 2018, under the 2012 LTIP, and were held by an eligible participant. No incremental share-based compensation expense was recognized for the Option Exchange. Share-based Compensation Expense The Company estimates the fair value of share-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value share-based compensation, excluding RSUs, which the Company values using the fair market value of its ordinary shares on the date of grant. The Black-Scholes option-pricing model determines the fair value of share-based payment awards based on the share price on the date of grant and is affected by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the Company’s share price, volatility over the expected life of the awards and actual and projected employee stock option exercise behaviors. Since the Company does not have sufficient historical employee share option exercise data, the simplified method has been used to estimate the expected life of all options. The Company uses its historical volatility for the Company’s stock to estimate expected volatility starting January 1, 2018. Although the fair value of share options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer and seller market transaction. As share-based compensation expense recognized in the Condensed Consolidated Financial Statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. Forfeitures were estimated based on estimated future turnover and historical experience. Share-based compensation expense will continue to have an adverse impact on the Company’s results of operations, although it will have no impact on its overall financial position. The amount of unearned share-based compensation currently estimated to be expensed from now through the year 2026 related to unvested share-based payment awards at March 31, 2022, is $83.6 million. The weighted-average period over which the unearned share-based compensation is expected to be recognized is 2.90 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate and/or increase any remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards. Share-based compensation expense recorded in these Condensed Consolidated Financial Statements for the three months ended March 31, 2022, and 2021 was based on awards granted under the 2012 LTIP, the 2018 LTIP, and the 2020 EIIP. The following table summarizes share-based compensation expense for the periods presented (in thousands):
The Company recognized tax benefits from share-based awards of $1.4 million and $1.2 million for the three months ended March 31, 2022, and 2021, respectively. With the exception of options granted pursuant to the Option Exchange, the fair value of the options granted to employees and non-employee directors during the three months ended March 31, 2022, and 2021 respectively was estimated as of the grant date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following table:
The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period for each award. Each of the inputs discussed above is subjective and generally requires significant management judgment to determine. The following table summarizes the Company’s stock option activity during the three months ended March 31, 2022:
The total intrinsic value of options exercised was approximately $1.7 million and $2.5 million during the three months ended March 31, 2022, and 2021, respectively, determined as of the date of exercise.
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