XML 99 R26.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Shareholders' Equity
12 Months Ended
Dec. 31, 2019
Stockholders' Equity Note [Abstract]  
Shareholders' Equity Shareholders’ Equity
Preferred Stock

As of December 31, 2019, we had one class of preferred stock outstanding. Refer to Note 17 – Preferred Stock for further information. We are authorized to issue approximately 100 million shares of convertible preferred stock at $0.01 par value per share.

Common Stock

We have 1 billion authorized shares of common stock at $0.01 par value per share. At December 31, 2019, 17 million shares were reserved for issuance under our incentive compensation plans and 5.4 million shares were reserved for conversion of the Series A convertible preferred stock.

Stock Compensation Plans

Certain of our employees participate in a long-term incentive plan. Our long-term incentive plan authorizes the issuance of restricted stock units / shares (RSU), performance stock units / share (PSU) and non-qualified stock options to employees. All awards for these plans prior to 2017 were made in Xerox stock and therefore converted into Conduent stock effective upon the Separation. Using a formula designed to preserve the value of the award immediately prior to the Separation, all of these awards will be settled in Conduent's common stock and are reflected in the Company's Consolidated Statements of Shareholders' Equity. Stock-based compensation expense includes expense based on the awards and terms previously granted to the employees.

Stock-based compensation expense was as follows:

Year Ended December 31,
(in millions)201920182017
Stock-based compensation expense, pre-tax$24  $38  $42  
Income tax benefit recognized in earnings—   17  
Restricted Stock Units / Shares Compensation expense is based upon the grant date market price. The compensation expense is recorded over the vesting period, which is normally three years from the date of grant, based on management's estimate of the number of shares expected to vest.

Performance Stock Units / Shares: The Company granted PSUs that vest contingent upon its achievement of certain specified financial performance criteria over a three-year period. If the three-year actual results exceed the stated targets, then the plan participants have the potential to earn additional shares of common stock, which cannot exceed 100% of the original grant.

The fair value of PSUs is based upon the market price of Conduent's common stock on the date of the grant. Compensation expense is recognized over the vesting period, which is normally three years from the date of grant, based on management's estimate of the number of shares expected to vest. If the stated targets are not met, any recognized compensation cost would be reversed.

Employee Stock Options: Stock options were issued by a former parent company and were converted to Conduent's common stock upon the Separation. As of December 31, 2019, these options have expired. Conduent has not issued any new stock options.

Summary of Stock-based Compensation Activity

 201920182017
(shares in thousands)SharesWeighted
Average Grant
Date Fair
Value
SharesWeighted
Average Grant
Date Fair
Value
SharesWeighted
Average Grant
Date Fair
Value
Restricted Stock Units / Shares
Outstanding at January 12,399  $16.90  3,125  $16.29  1,961  $13.99  
Granted2,503  12.57  1,246  18.82  1,988  16.75  
Vested(2,135) 15.54  (1,501) 17.30  (215) 19.98  
Canceled(1,026) 15.68  (471) 16.62  (609) 15.88  
Outstanding at December 311,741  13.07  2,399  16.90  3,125  16.29  
Performance Stock Units / Shares
Outstanding at January 14,557  $16.76  5,429  $16.55  4,926  $13.99  
Granted1,229  13.35  730  18.64  3,933  16.76  
Vested(1,069) 15.64  (980) 17.12  (1,696) 19.67  
Canceled(1,120) 16.00  (622) 16.59  (1,734) 17.46  
Outstanding at December 313,597  16.17  4,557  16.76  5,429  16.55  

The Company issued 182 thousand Deferred Stock Units (DSU) to non-employee members of the Board of Directors. These DSUs are fully vested and will be issued when the directors leave the Board.

The total unrecognized compensation cost related to non-vested stock-based awards at December 31, 2019 was as follows (in millions):

AwardsUnrecognized CompensationRemaining Weighted-Average Vesting Period (Years)
Restricted Stock Units / Shares$15  1.9
Performance Stock Units / Shares 1.0
Total$16  
The aggregate intrinsic value of outstanding RSUs and PSUs awards were as follows (in millions):

AwardsDecember 31, 2019
Restricted Stock Units / Shares$11  
Performance Stock Units / Shares22  

The total intrinsic value and actual tax benefit realized for vested and exercised stock-based awards were as follows:

(in millions)December 31, 2019December 31, 2018December 31, 2017
AwardsTotal Intrinsic ValueCash ReceivedTax BenefitTotal Intrinsic ValueCash ReceivedTax BenefitTotal Intrinsic ValueCash ReceivedTax Benefit
Restricted Stock Units / Shares$17  $—  $ $20  $—  $ $ $—  $ 
Performance Stock Units / Shares11  —   18  —   25  —  10  
Stock Options—  —  —    —