Share-based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 19 "Capital Structure", and in connection with the IPO, non-qualified stock options to purchase shares of Class A Common Stock were granted, each of which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the date of grant.

The following table summarizes activity related to stock options for the years ended December 31, 2020, 2019 and 2018:


	Options Outstanding				Options Exercisable
	Number of Options	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Number of Options	Weighted Average Exercise Price Per Share
At December 31, 2017	7,738,000	$	19.00	7.29	3,869,000	$	19.00
Granted	—	—		—	—	—
Exercised	(4,168,100)	19.00		—	—	19.00
Forfeited or expired	(83,750)	—		—	—	—
At December 31, 2018	3,486,150	$	19.00	6.30	1,660,400	$	19.00
Granted	156,129	13.60		4.37	156,129	13.60
Exercised	(353,500)	19.00		—	(353,500)	19.00
Forfeited or expired	(55,000)	—		—	—	—
At December 31, 2019	3,233,779	$	18.74	5.24	3,248,779	$	18.74


Granted	—	—		—	—	—
Exercised	(909,627)	18.07		—	(909,627)	18.07
Forfeited or expired	—	—		—	—	—
At December 31, 2020	2,324,152	$	19.00	4.24	2,324,152	$	19.00

The expected life was determined based on an average of vesting and contractual period. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined based on historical volatilities of comparable companies. The expected dividend yield was determined based on estimated future dividend payments divided by the IPO stock price.

The Company recognized $1.4 million and $5.8 million for the years ended December 31, 2019 and 2018, respectively, of compensation expense in relation to the stock options issued and outstanding. The stock options to purchase shares of Class A Common Stock were fully vested in 2019, and as such there was no compensation expense recognized in relation to stock options for the year ended December 31, 2020.

Amended and Restated Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007 Equity Plan and the Assumed Awards. The Assumed Awards are subject to the same terms and conditions that were applicable to them under the Amended and Restated ITG 2007 Equity Plan, except that (i) the Assumed Awards relate to shares of the Company’s Class A Common Stock, (ii) the number of shares of Class A Common Stock subject to the Assumed Awards was the result of an adjustment based upon an Exchange Ratio (as defined in the ITG Merger Agreement) and (iii) the performance share unit awards were converted into service-based vesting restricted stock unit awards that were no longer subject to any performance based vesting conditions. As of the ITG Closing Date, the aggregate number of shares of Class A Common Stock subject to such Assumed Awards was 2,497,028 and the aggregate number of shares of Class A Common Stock that remained issuable pursuant to the Amended and Restated ITG 2007 Equity Plan was 1,230,406. The Company filed a Registration Statement on Form S-8 on the ITG Closing Date to register such shares of Class A Common Stock.

Class A Common Stock, Restricted Stock Units and Restricted Stock Awards

Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 19 "Capital Structure", subsequent to the IPO, shares of immediately vested Class A Common Stock, RSUs and RSAs were granted, with RSUs and RSAs vesting over a period of up to 4 years. The fair value of the Class A Common Stock and RSUs was determined based on a volume weighted average price and the expense is recognized on a straight-line basis over the vesting period. The fair value of the RSAs was determined based on the closing price as of the date of grant and the expense is recognized from the date that achievement of the performance target becomes probable through the remainder of the vesting period. Performance targets are based on the Company's adjusted EBITDA for certain future periods. For the years ended December 31, 2020, 2019 and 2018, respectively, there were 967,526, 441,920 and 594,536 shares of immediately vested Class A Common Stock granted as part of year-end compensation. In addition, the Company accrued compensation expense of $25.2 million, of which $2.1 million was related to accelerated vesting of awards for retirement eligible employees, $12.6 million and $11.2 million for the years ended December 31, 2020, 2019 and 2018, respectively, related to immediately vested Class A Common Stock expected to be awarded as part of year-end incentive compensation, which was included in Employee compensation and payroll taxes on the Consolidated Statements of Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

The following table summarizes activity related to the RSUs (including the Assumed Awards) and RSAs:


	Number of RSUs and RSAs	Weighted Average Fair Value
At December 31, 2017	853,047	$	17.94
Granted	1,265,899	20.89
Forfeited	(127,493)	18.30
Vested	(612,531)	18.76
At December 31, 2018	1,378,922	$	20.03
Granted	4,063,541	25.07
Forfeited	(643,709)	21.58
Vested	(1,805,265)	24.08


At December 31, 2019	2,993,489	$	24.10
Granted (1)	3,318,169	17.49
Forfeited	(430,961)	17.45
Vested	(2,487,613)	20.17
At December 31, 2020	3,393,084	$	21.35
(1) Excluded in the number of RSUs and RSAs are 400,000 participating RSAs where the grant date has not been achieved because the performance conditions have not been met.

The Company recognized $37.4 million, of which $3.7 million was related to accelerated vesting of awards for retirement eligible employees, $66.1 million and $17.9 million for the years ended December 31, 2020, 2019 and 2018, respectively, of compensation expense in relation to the RSUs. As of December 31, 2020 and December 31, 2019, total unrecognized share-based compensation expense related to unvested RSUs was $37.1 million and $43.4 million, respectively, and this amount is to be recognized over a weighted average period of 1.03 and 2.0 years, respectively. Awards in which the specific performance conditions have not been met are not included in unrecognized share-based compensation expense.

On November 13, 2020, the Company adopted the Virtu Financial, Inc. Deferred Compensation Plan (the "DCP"). The DCP permits eligible executive officers and other employees to defer cash or equity based compensation beginning in the calendar year ending December 31, 2021, subject to certain limitations and restrictions. Deferrals may also be directed to notional investments in certain of the employee investment opportunities. No amounts have been recognized as compensation cost under the DCP as of December 31, 2020.