Stock Incentive Plan

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

Stock Incentive Plan

The Veoneer, Inc. 2018 and 2021 Stock Incentive Plan was established and effective on June 29, 2018 and May 10, 2021, respectively, to govern the Company’s stock-based awards that will be granted in the future. The Veoneer, Inc. 2018 and 2021 Stock Incentive Plan authorizes the grant of 3 million and 13 million shares, respectively, of Veoneer common stock for future equity awards to Veoneer employees and non-employee directors and authorizes up to 1.5 million additional shares to be used for the conversion of outstanding Autoliv stock awards in connection with the spin-off of the Company by Autoliv, Inc. on June 29, 2018 (the “Spin-Off”). Approximately 1 million shares were used for the conversion of the outstanding grants. As of May 10, 2021, all future awards will be granted under the 2021 Stock Incentive Awards and no further awards may be granted under the 2018 Stock Incentive Plan.

During the six months ended June 30, 2021 under the Company’s 2018 long-term incentive (LTI) program, certain employees received restricted stock units (RSUs) without dividend equivalent rights and performance shares (PSs) without dividend equivalent rights. The allocation between RSUs and PSs was 203,439 RSUs and 182,272 PSs at 100% target.

During the six months ended June 30, 2021 under the Company’s 2021 LTI program, certain non-employee directors received restricted stock units (RSUs) with dividend equivalent rights of 36,841.

The majority of the RSUs granted will vest on the third anniversary of the grant date, subject to the grantee’s continued employment with the Company on the vesting date and acceleration of vesting in certain circumstances. The fair value of RSUs and PSs granted in 2021 were calculated by using the closing stock price on the grant dates. The grant date fair value for the RSUs and PSs, granted in 2021 was $14 million.

PSs granted in 2021 may be earned during the first quarter of 2024, upon the Compensation Committee’s certification of achievement of the applicable performance goals. The grantee may earn 0%-200% of the target number of PSs based on the Company’s achievement of specified targets related to the Company’s gross margin for the applicable performance period. Each PS represents a promise to transfer a share of the Company’s common stock to the employee following completion of the performance period, provided that the performance goals mentioned above are met and provided, further, that the grantee remains employed through the performance period, subject to certain limited exceptions.

Veoneer recognized total stock (RSUs, PS and Stock Options) compensation cost of $3 million and $5 million for the three and six month periods ended June 30, 2021, respectively. During the three and six month periods ended June 30, 2020, the Company recorded $2 million and $4 million, respectively.