We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units and nonqualified stock options (“Options”) to certain employees and directors. We recognized share-based compensation expense of $48 million, $15 million and $22 million during the years ended December 31, 2021, 2020 and 2019, respectively. The total tax benefit recognized related to this compensation was $4 million for the years ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, unrecognized compensation cost for unvested awards was approximately $27 million, which is expected to be recognized over a weighted average period of 1.7 years. As of December 31, 2021, there were 3,771,197 shares of common stock available for future issuance under this plan.

The following table provides information about our RSU grants for the last three fiscal years:


	Year Ended December 31,
	2021		2020		2019
Number of shares granted		588,930		672,123		500,925
Weighted average grant date fair value per share		38.50	$	25.14	$	33.07
Fair value of shares vested (in millions)		19	$	10	$	10

The following table summarizes the activity of our RSUs during the year ended December 31, 2021:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding, beginning of period		973,985			28.89
Granted		588,930			38.50
Vested		(465,949	)		30.39
Forfeited		(67,328	)		31.34
Outstanding, end of period		1,029,638			33.55

The following table provides information about our option grants for the last three fiscal years:


	Year Ended December 31,
	2021		2020		2019
Number of options granted		542,793		566,401		544,209
Weighted average exercise price per share	$	38.22	$	25.80	$	33.32
Weighted average grant date fair value per share	$	18.41	$	9.14	$	12.29

The weighted-average grant date fair value of each of these options was $18.41, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:


	Year Ended December 31,
	2021			2020			2019
Expected volatility(1)		50.5	%		35.4	%		33.1	%
Dividend yield(2)		—	%		—	%		—	%
Risk-free rate(3)		1.1	%		1.0	%		2.6	%
Expected term (in years)(4)		6.0			6.0			6.0

(1)

During the years ended December 31, 2020, and 2019 due to limited trading history for our common stock, we did not have sufficient information available on which to base a reasonable and supportable estimate of the expected volatility of its share price. As a result, we used an average historical volatility of our peer group over a time period consistent with its expected term assumption. Our peer group was determined based upon companies in our industry with similar business models and is consistent with those used to benchmark our executive compensation.

(2)

At the date of grant we had no plans to pay dividends during the expected term of these options.

(3)

Based on the yields of U.S. Department of Treasury instruments with similar expected lives.

(4)

Estimated using the average of the vesting periods and the contractual term of the options.

The following table summarizes the activity of our options during the year ended December 31, 2021:


	Number of Shares			Weighted Average Exercise Price Per Share
Outstanding, beginning of period		2,013,939		$	30.15
Granted		542,793			38.22
Exercised		(419,122	)		29.17
Forfeited, canceled or expired		(50,886	)		32.57
Outstanding, end of period		2,086,724			32.39
Exercisable, end of period		1,091,435			31.40

As of December 31, 2021, we had 1,091,435 Options outstanding that were exercisable with an aggregate intrinsic value of $23 million and weighted average remaining contractual term of approximately 7 years. The intrinsic value of all options exercised during the year was $7 million.

During the year ended December 31, 2021, we issued two separate tranches of Performance RSUs.

In March 2021, we issued 124,711 Performance RSUs with a grant date fair value of $38.22. The Performance RSUs are settled at the end of a two-year performance period, with 50 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 50 percent of the Performance RSUs issued are subject to the achievement of certain contract sales targets.

In August 2021, and in conjunction with the Diamond Acquisition, we issued 351,118 Performance RSUs with a grant date fair value of $40.27. The Performance RSUs are settled at the end of the performance period which is from the Acquisition Date through December 31, 2023, with 67 percent of the Performance RSUs subject to achievement based on certain run rate cost savings. The remaining 33 percent of the Performance RSUs issued are subject to the achievement of the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

During the fourth quarter of 2021, the Compensation Committee approved the modification of the performance conditions for the Performance RSUs issued in 2019, 2020, and March 2021 to reflect results of HGV and Diamond operations subsequent to the Acquisition Date. We estimate that the performance conditions for the 2019 and 2020 Performance RSU awards remain improbable of achievement under the modified performance conditions. As such, HGV continues to not accrue expenses related to the Performance RSUs granted in 2019 and 2020. In regards to the Performance RSUs granted in March 2021, we determined that under the modified performance conditions the awards issued are probable of achievement. We did not incur incremental compensation expense resulting from the modification which was applied to the Performance RSUs of 28 grantees. We also determined that the performance conditions for the awards issued in August 2021 are probable of achievement and recognized compensation expense based on the number of Performance RSUs we expect to vest during the year ended December 31, 2021.

The following table provides information about our Performance RSU grants, which is based on our Adjusted EBITDA metric described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K, further adjusted by sales of VOIs under construction for the last three fiscal years:


	Year Ended December 31,
	2021		2020		2019
Number of shares granted		178,224		117,975		93,566
Weighted average grant date fair value per share	$	39.55	$	25.69	$	33.32
Fair value of shares vested (in millions)		—		2		—

The following table provides information about our Performance RSU grants, which is based on contract sales as defined in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for the last three fiscal years:


	Year Ended December 31,
	2021		2020		2019
Number of shares granted		62,356		50,554		40,094
Weighted average grant date fair value per share	$	38.22	$	25.69	$	33.32
Fair value of shares vested (in millions)		—		1		—

The following table provides information about our Performance RSU grants, which is based on achieving certain run rate cost savings initiatives for the last three fiscal years:


	Year Ended December 31,
	2021		2020		2019
Number of shares granted		475,829		50,554		40,094
Weighted average grant date fair value per share	$	39.73	$	25.69	$	33.32
Fair value of shares vested (in millions)		—		1		—

The following table summarizes the activity of our Performance RSUs during the year ended December 31, 2021:


	Adjusted EBITDA(1)					Contract Sales					Run Rate Cost Savings
	Number of Shares			Weighted Average Grant Date Fair Value per Share		Number of Shares			Weighted Average Grant Date Fair Value per Share		Number of Shares		Weighted Average Grant Date Fair Value per Share
Outstanding, beginning of period		214,406		$	29.08		91,874		$	29.08		—	$	—
Granted		178,224			39.55		62,356			38.22		235,249		40.27
Vested		—			—		—			—		—		—
Forfeited, canceled or expired		(18,387	)		29.08		(7,878	)		29.08		—		—
Outstanding, end of period		374,243			34.07		146,352			32.98		235,249		40.27

(1)

Represents our Adjusted EBITDA metric described in Part 1 of this Form 10-K, further adjusted by net recognition and deferral activity from sales of VOIs under construction.

In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 percent of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. For the year ended December 31, 2021 and 2020, we issued 39,985 and 81,520 shares, respectively, and recognized less than $1 million of compensation expense in both periods related to this plan.