Stock Incentive Plans

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Accounting

GCP grants restricted stock units ("RSUs"), as well as stock options and performance-based units ("PBUs") with or without market conditions which vest upon the satisfaction of a performance condition and/or a service condition. Please refer to Note 17, "Stock Incentive Plans" to the Company's Consolidated Financial Statements included in the 2020 Annual Report in the Form 10-K for further information on these awards. Total stock-based compensation expense included in "Income from continuing operations before income taxes" in the accompanying unaudited Consolidated Statements of Operations was $1.7 million and $0.8 million, respectively, during the three months ended March 31, 2021 and 2020. During the three months ended March 31, 2021, $0.7 million of the stock-based compensation expense is included in "Restructuring expenses and asset write offs" related to accelerated vesting of stock options and RSUs and PBUs, as described in Note 12, "Restructuring and Repositioning Expenses, Asset Write Offs".

The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs and PBUs. GCP withholds and retains shares issued to certain holders of GCP awards in order to fulfill statutory tax withholding requirements for the employees. During the three months ended March 31, 2021 and 2020, GCP withheld and retained approximately 29,800 shares and 15,800 shares, respectively, in a non-cash transaction with a cost of $0.7 million and $0.3 million, respectively, which were reflected as "Share Repurchases" in the accompanying unaudited Consolidated Statements of Stockholders' Equity. During the three months ended March 31, 2021 and 2020, cash payments for such tax withholding obligations were $0.7 million and $0.3 million, respectively.

As of March 31, 2021, total unrecognized compensation expense of $1.7 million was related to stock options with market conditions and $8.1 million to the RSU and PBU awards. Such expense is expected to be recognized over the remaining weighted-average service period of approximately 2.5 years for stock options with market conditions and 2.0 years for RSU and PBU awards.

Stock Options

Approximately 122,000 options were exercised during the three months ended March 31, 2021 with a weighted average exercise price of $17.25. Total intrinsic value of these options was approximately $1.0 million.

Restricted Stock Units

The following table sets forth the RSU activity for the three months ended March 31, 2021:


RSU Activity	Number Of Shares (in thousands)	Weighted Average Grant Date Fair Value
Outstanding, December 31, 2020	305	$	22.14
RSUs settled	88	23.97
RSUs forfeited	2	24.37
RSUs granted	90	26.10
RSUs outstanding, March 31, 2021	305	$	22.79
Expected to vest as of March 31, 2021	301	$	22.78

The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2021 and 2020 was $26.10 and $21.11 per share, respectively. During the three months ended March 31, 2021 and 2020, GCP distributed 88,000 shares and 43,000 shares, respectively, to settle RSUs upon vesting. The fair value of RSUs vested during the three months ended March 31, 2021 and 2020 was $2.2 million and $0.9 million, respectively.

PBUs

PBUs are performance-based units which are granted by the Company either with or without market conditions and recorded at fair value on the grant date. The performance criteria for PBUs granted in 2021 includes the following metrics: (i) a 2-year cumulative free cash flow target metric for approximately 33.3% of awards; (ii) a 2-year cumulative adjusted earnings before interest, tax, depreciation and amortization metric for approximately 33.3% of awards; (iii) the Company’s 2-year total shareholder return (“TSR”) relative to the performance of the Russell 3000 Specialty Building Materials Index and the peer group approved by the Board’s Compensation Committee. The number of shares that ultimately vest, if any, is based on Company performance against these metrics, and can range from 0% to 200% of the target number of shares granted to employees. The awards will become vested, if at all, two years from the grant date once actual performance is certified by the Board's Compensation Committee. Vesting is also subject to the employees' continued employment through the vesting date.

The grant date fair value of PBUs without market conditions is determined based on the closing market price of the Company’s common stock on the date of grant. The grant date fair value of PBUs with market conditions based on relative TSR is determined using a Monte Carlo simulation.

The following table summarizes the assumptions used in the Monte Carlo simulations for estimating the grant date fair values of PBUs granted during the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
Assumptions used to calculate expense for PBUs:	2021	2020
Expected Term (Remaining Performance Period)	1.81	2.85
Expected volatility	51.48%	29.85%
Risk-free interest rate	0.14%	1.21%
Expected dividends	—	—

Median correlation coefficient of constituents	54.00%	54.01%

The following table sets forth the PBU activity for the three months ended March 31, 2021:


PBU Activity	Number Of Shares (in thousands)	Weighted Average Grant Date Fair Value
Outstanding, December 31, 2020	343	$	28.10

PBU's forfeited	136	32.08
PBU's granted	80	27.29
Outstanding, March 31, 2021	287	$	25.96

The weighted average grant date fair value of PBUs granted during the three months ended March 31, 2021 and 2020 was $27.29 and $22.41 per share, respectively. GCP expects to settle in stock all future PBU vestings.