Under the 2010 Equity and Incentive Plan, as amended, HEI can issue shares of common stock as incentive compensation to selected employees in the form of stock options, stock appreciation rights (SARs), restricted shares, restricted stock units, performance shares and other share-based and cash-based awards. The 2010 Equity and Incentive Plan (original EIP) was amended and restated effective March 1, 2014 (EIP) and an additional 1.5 million shares were added to the shares available for issuance under these programs.

As of December 31, 2019, approximately 3.2 million shares remained available for future issuance under the terms of the EIP, assuming recycling of shares withheld to satisfy minimum statutory tax liabilities relating to EIP awards, including an estimated 0.7 million shares that could be issued upon the vesting of outstanding restricted stock units and the achievement of performance goals for awards outstanding under long-term incentive plans (assuming that such performance goals are achieved at maximum levels).

Restricted stock units awarded under the 2010 Equity and Incentive Plan in 2019, 2018, 2017 and 2016 will vest and be issued in unrestricted stock in four equal annual increments on the anniversaries of the grant date and are forfeited to the extent they have not become vested for terminations of employment during the vesting period, except that pro-rata vesting is provided for terminations due to death, disability and retirement. Restricted stock units expense has been recognized in accordance with the fair-value-based measurement method of accounting. Dividend equivalent rights are accrued quarterly and are paid at the end of the restriction period when the associated restricted stock units vest.

Stock performance awards granted under the 2019-2021, 2018-2020 and 2017-2019 long-term incentive plans (LTIP) entitle the grantee to shares of common stock with dividend equivalent rights once service conditions and performance conditions are satisfied at the end of the three-year performance period. LTIP awards are forfeited for terminations of employment during the performance period, except that pro-rata participation is provided for terminations due to death, disability and retirement based upon completed months of service after a minimum of 12 months of service in the performance period. Compensation expense for the stock performance awards portion of the LTIP has been recognized in accordance with the fair-value-based measurement method of accounting for performance shares.

Under the 2011 Nonemployee Director Stock Plan (2011 Director Plan), HEI can issue shares of common stock as compensation to nonemployee directors of HEI, Hawaiian Electric and ASB. On June 26, 2019, an additional 300,000 shares were made available for issuance under the 2011 Director Plan. As of December 31, 2019, there were 310,263 shares remaining available for future issuance under the 2011 Director Plan.



(in millions)	2019		2018		2017
HEI consolidated
Share-based compensation expense¹	$	10.0	$	7.8	$	5.4
Income tax benefit	1.4		1.1		1.9
Hawaiian Electric consolidated
Share-based compensation expense¹	3.2		2.7		1.9
Income tax benefit	0.6		0.5		0.7

The number of shares issued to each nonemployee director of HEI, Hawaiian Electric and ASB is determined based on the closing price of HEI common stock on the grant date.



	2019					2018					2017
	Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, January 1	200,358			$	33.05	197,047			$	31.53	220,683			$	29.57
Granted	96,565			37.82		93,853			34.12		97,873			33.47
Vested	(76,813		)	32.61		(75,683		)	30.56		(92,147		)	28.88
Forfeited	(12,469		)	34.20		(14,859		)	32.35		(29,362		)	31.57
Outstanding, December 31	207,641			$	35.36	200,358			$	33.05	197,047			$	31.53
Total weighted-average grant-date fair value of shares granted (in millions)	$	3.7				$	3.2				$	3.3

For 2019, 2018 and 2017, total restricted stock units and related dividends that vested had a fair value of $3.2 million, $2.7 million and $3.5 million, respectively, and the related tax benefits were $0.5 million, $0.4 million and $1.1 million, respectively.

As of December 31, 2019, there was $4.8 million of total unrecognized compensation cost related to the nonvested restricted stock units. The cost is expected to be recognized over a weighted-average period of 2.5 years.

Long-term incentive plan payable in stock. The 2017-2019, 2018-2020 and 2019-2021 LTIPs provide for performance awards under the EIP of shares of HEI common stock based on the satisfaction of performance goals, including a market condition goal. The number of shares of HEI common stock that may be awarded is fixed on the date the grants are made, subject to the achievement of specified performance levels and calculated dividend equivalents. The potential payout varies from 0% to 200% of the number of target shares, depending on the achievement of the goals. The market condition goal is

based on HEI’s total shareholder return (TSR) compared to the Edison Electric Institute Index over the relevant three-year period. The other performance condition goals relate to earnings per share (EPS) growth, return on average common equity (ROACE), Hawaiian Electric’s net income growth, ASB’s efficiency ratio, and Pacific Current’s EBITDA growth and return on average invested capital.



	2019					2018					2017
	Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, January 1	65,578			$	38.81	32,904			$	39.51	83,106			$	22.95
Granted	35,215			41.07		37,832			38.21		37,204			39.51
Vested (issued or unissued and cancelled)	—			—		—			—		(83,106		)	22.95
Forfeited	(4,391		)	39.19		(5,158		)	38.84		(4,300		)	39.51
Outstanding, December 31	96,402			$	39.62	65,578			$	38.81	32,904			$	39.51
Total weighted-average grant-date fair value of shares granted (in millions)	$	1.4				$	1.4				$	1.5

The grant date fair values of the shares were determined using a Monte Carlo simulation model utilizing actual information for the common shares of HEI and its peers for the period from the beginning of the performance period to the grant date and estimated future stock volatility and dividends of HEI and its peers over the remaining three-year performance period. The expected stock volatility assumptions for HEI and its peer group were based on the three-year historic stock volatility, and the annual dividend yield assumptions were based on dividend yields calculated on the basis of daily stock prices over the same three-year historical period.

The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:



	2019			2018			2017
Risk-free interest rate	2.48		%	2.29		%	1.46		%
Expected life in years	3			3			3
Expected volatility	15.8		%	17.0		%	20.1		%
Range of expected volatility for Peer Group	15.0% to 73.2%			15.1% to 26.2%			15.4% to 26.0%
Grant date fair value (per share)	$	41.07		$	38.20		$	39.51

For 2017, total vested LTIP awards linked to TSR and related dividends had a fair value of $1.9 million and the related tax benefits were $0.7 million. There were no share-based LTIP awards linked to TSR with a vesting date in 2018 or 2019.

As of December 31, 2019, there was $1.4 million of total unrecognized compensation cost related to the nonvested performance awards payable in shares linked to TSR. The cost is expected to be recognized over a weighted-average period of 1.5 years.

LTIP awards linked to other performance conditions. Information about HEI’s LTIP awards payable in shares linked to other performance conditions was as follows:



	2019					2018					2017
	Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, January 1	276,169			$	33.80	131,616			$	33.47	109,816			$	25.18
Granted	140,855			37.78		151,328			34.12		148,818			33.47
Vested	—			—		—			—		(109,816		)	25.18
Increase above target (cancelled)	4,314			33.53		13,858			33.49		—			—
Forfeited	(17,570		)	34.66		(20,633		)	33.80		(17,202		)	33.48
Outstanding, December 31	403,768			$	35.15	276,169			$	33.80	131,616			$	33.47
Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions)	$	5.3				$	5.2				$	5.0

For 2017, total vested LTIP awards linked to other performance conditions and related dividends had a fair value of $4.2 million and the related tax benefits were $1.6 million. There were no share-based LTIP awards linked to other performance conditions with a vesting date in 2018 or 2019.

As of December 31, 2019, there was $5.1 million of total unrecognized compensation cost related to the nonvested shares linked to performance conditions other than TSR. The cost is expected to be recognized over a weighted-average period of 1.5 years.