Stock Incentive Plan

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Veoneer maintains two Stock Incentive Plans. the Veoneer, Inc. 2018 Stock Incentive Plan (the “2018 Stock Incentive Plan”), which became effective on June 29, 2018 and the Veoneer, Inc. 2021 Stock Incentive Plan (the “2021 Stock Incentive Plan”), which became effective on May 10, 2021, to govern the Company’s stock-based awards that will be granted in the future. The2018 Stock Incentive Plan authorizes the grant of 3 million 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. Approximately 1 million shares were used for the conversion of the outstanding grants in the Spin-off. The 2021 Stock Incentive Plan authorizes the grant of 13 million shares of Veoneer common stock, plus any shares underlying awards outstanding under the 2018 Plan as of March 1, 2021 that are subsequently forfeited, for future equity awards to Veoneer employees and non-employee directors. 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 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 for the grants was 203,439 RSUs and 182,272 PSs at 100% target.

During 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 during 2021 will vest on the third anniversary of the grant date, subject to the grantee’s continued employment or service 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 during 2021 was $14 million. Each RSU represents a promise to transfer a share of the Company’s common stock to the employee following completion of the vesting period, provided that the grantee remains employed through the vesting period, subject to certain limited exceptions.

The PSs granted in 2019, 2020 and 2021 are comprised of three one-year performance periods with goals related to annual gross margin, with the number of shares ultimately earned subject to downward adjustment based on the Veoneer share price measured at the end of the three-year performance period (December 31, 2021, December 31, 2022, and December 31, 2023, respectively). The grantee may earn 0%-200% of the target number of PSs, subject to downward adjustment as described above, during the first quarter of 2022, 2023 and 2024, respectively, upon the Compensation Committee’s certification of achievement of the applicable performance goals. 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, PSs and SOs) compensation cost of $11 million, $6 million and $5 million, in the Consolidated Statements of Operations, for the years ended December 31, 2021, 2020 and 2019, respectively. Veoneer has unrecognized compensation cost for Veoneer employees of $6 million related to non-vested awards for RSUs and the weighted average period over which this cost is expected to be recognized is approximately 1.6 years. There was no compensation cost recognized for stock options during the years ended December 31, 2021, 2020 and 2019 because all outstanding stock options had vested prior to those periods.

A summary of RSUs activity is presented below:


			Number of RSUs
RSUs

Outstanding as of December 31, 2020			1,010,894
Granted			240,280
Shares issued			(371,541)
Cancelled/Forfeited/Expired			(317,678)
Outstanding as of December 31, 2021			561,955

The weighted average fair value per share at the grant date for RSUs during the years ended December 31, 2021, 2020 and 2019 was $29.24, $10.86 and $26.19, respectively. The grant date fair value for RSUs vested in 2021 was $8 million.

A summary of PSs activity is presented below:



			Number of PSs
PSs
Outstanding at December 31, 2020			490,444
Granted			182,272
Shares issued			(38,771)
Cancelled/Forfeited			(209,794)
Outstanding at December 31, 2021			424,151

The weighted average fair value per share at the grant date for PSs during the years ended December 31, 2021 and 2020 was $30.47 and $14.29, respectively.



			Number of Options
SOs1




Outstanding at December 31, 2020			232,026
Exercised			(53,125)
Cancelled/Forfeited/Expired			(10,715)
Outstanding as of December 31, 2021			168,186

1SOs presented in this table represent Veoneer awards, including those held by Autoliv employees.

The following summarizes information about stock options outstanding and exercisable as of December 31, 2021:


	Number Outstanding1	Remaining Contract life (in years)
EXERCISE PRICES
$20.25	13,397	0.15
$20.91	23,781	1.14

$28.67	51,823	2.14
$34.25	79,185	3.13

	168,186	2.31

1SOs presented in this table represent Veoneer awards, including those held by Autoliv employees.

The total aggregate intrinsic value, which is the difference between the exercise price and $35.48 (closing price per share as of December 31, 2021), for all “in the money” stock options outstanding as of December 31, 2021, was $1 million.