Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

The 2013 Equity and Incentive Plan as amended (the "2013 Plan") authorizes the issuance of up to 7.8 million shares of the Company's common stock for use in paying incentive compensation awards in the form of stock options or other equity awards such as restricted stock, restricted stock units ("RSUs"), stock appreciation rights ("SARs") or performance share units ("PSUs"). Of the 7.8 million shares authorized, a maximum of 4.6 million shares may be issued for awards other than option rights or SARs, as defined in the 2013 Plan. The 2016 Non-Employee Directors' Long-Term Equity Compensation Plan (the "2016 Plan") authorizes the issuance of up to 400 thousand shares of the Company's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31, 2019, there were 2.6 million shares available for granting equity awards under the 2013 Plan, of which 1.5 million shares were available for awards other than option rights or SARs. At December 31, 2019, there were 158 thousand shares available for granting equity awards under the 2016 Plan.

Restricted Stock Units

The Company's Board approves the granting of performance-based RSUs as the long-term equity component of director, officer and certain key employee compensation. The RSUs require no payment from the recipient and compensation cost is measured based on the market price of the Company's common stock on the grant date and is generally recorded over the vesting period. RSUs granted to officers and certain key employees in 2017, 2018 and 2019 either vest on a pro-rata basis over three years or upon obtainment of specified retirement or years of service criteria. The vesting period for RSUs granted to non-employee directors is one year and each RSU is exchanged for an equal number of shares of the Company's common stock upon vesting for awards issued under the 2016 Plan and following the termination of the participant's service as a director under prior plans. RSUs do not have an option for cash payment.

The following table summarizes RSUs issued and the compensation expense recorded for the years ended December 31, 2019, 2018, and 2017:



	RSUs (a)	Weighted Average Fair Value		Expense
(Dollars in thousands, except per unit)	RSUs (a)	Weighted Average Fair Value		2019		2018		2017
Directors:
2016	109,998	$	7.00	$	—	$	—	$	257
2017	56,203	13.70		—		179		641
2018	43,821	20.54		280		511		—
2019	14,211	25.33		240		—		—
Employees:
2014	190,832	25.21		—		—		295
2015	239,679	16.53		—		193		498
2016	536,773	7.09		290		835		909
2017	286,251	13.70		832		910		1,325
2018	242,791	19.93		1,208		1,546		—
2019	270,864	22.25		1,620		—		—
Total				$	4,470	$	4,174	$	3,925


(a)	Represents number of awards originally issued.

RSU activity for the year ended December 31, 2019 was as follows:



	Number of Shares		Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2018	583,380		$	15.08
Granted	285,075		22.40
Vested	(348,572	)	13.38
Forfeited	(53,274	)	20.01
Non-vested at December 31, 2019	466,609		20.26

At December 31, 2019, the total unrecognized compensation expense related to non-vested RSUs was $5.4 million, which will be recognized over a weighted-average period of 1.9 years.

Stock Appreciation Rights

The Company's Board approves the granting of SARs to officers and certain key employees under the 2013 Plan. The SARs generally vest on a pro-rata three-year basis from the grant date or upon specified retirement or years of service criteria and expire no later than ten years after the grant date. The exercise price of the SARs is equal to the fair value of Harsco common stock on the grant date. Upon exercise, shares of the Company's common stock are issued based on the increase in the fair value of the Company's common stock over the exercise price of the SAR. SARs do not have an option for cash payment.

During 2017, the Company issued SARS covering 266,540 shares in March under the 2013 Plan. During 2018, the Company issued SARS covering 221,818 shares in March and 7,622 in July under the 2013 Plan. During 2019, the Company issued SARS covering 216,100 shares in March and 13,244 shares in July under the 2013 Plan.

The fair value of each SAR grant was estimated on the grant date using a Black-Scholes pricing model with the following assumptions:



	Risk-free Interest rate		Dividend Yield		Expected Life (Years)	Volatility		SAR Grant Price		Fair Value of SAR
March 2017 Grant	2.17	%	—	%	6.0	43.9	%	$	13.70	$	6.13
March 2018 Grant	2.69	%	—	%	6.0	44.6	%	19.80		9.16
July 2018 Grant	2.87	%	—	%	6.0	44.7	%	24.65		11.48
March 2019 Grant	2.52	%	—	%	6.0	46.2	%	22.51		10.62
July 2019 Grant	1.84	%	—	%	6.0	47.1	%	27.39		12.80

SARs activity for the year ended December 31, 2019 was as follows:



	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions) (b)
Outstanding, December 31, 2018	1,745,447		$	15.73	$	8.9
Granted	229,344		22.79
Exercised	(43,594	)	15.87
Forfeited/Expired	(22,977	)	26.94
Outstanding, December 31, 2019	1,908,220		16.44		13.0


(b)	Intrinsic value is defined as the difference between the current market value and the exercise price, for those SARs where the market price exceeds the exercise price.

The total intrinsic value of SARs exercised in 2019 and 2018 was $0.3 million and $0.5 million respectively.

The following table summarizes information concerning outstanding and exercisable SARs at December 31, 2019:



	SARs Outstanding					SARs Exercisable
Range of exercisable prices	Vested	Non-vested	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life in Years	Number Exercisable	Weighted-Average Exercise Price per Share
$7.00 - $13.70	624,693	83,654	$	9.42	6.65	624,693	$	8.85
$16.53 - $22.70	584,950	361,000	19.45		6.60	584,950	18.23
$23.03 - $26.92	248,841	5,082	24.78		4.45	248,841	24.79
	1,458,484	449,736	16.44		6.33	1,458,484	15.33

Total compensation expense related to SARs was $1.9 million, $1.8 million and $1.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, total unrecognized compensation expense related to non-vested SARs was $2.4 million, which will be recognized over a weighted average period of 1.8 years.

Weighted-average grant date fair value of non-vested SARs for the year ended December 31, 2019 was as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested shares, December 31, 2018	467,478		$	6.65
Granted	229,344		10.75
Vested	(233,842	)	5.17
Forfeited	(13,244	)	12.80
Non-vested shares, December 31, 2019	449,736		9.32

Performance Share Units

The Company's Board approves the granting of PSUs to officers and certain key employees that may be earned based on the Company's total shareholder return over the three-year performance period. PSUs are paid out at the end of each performance period based on the Company’s performance, which is measured by determining the percentile rank of the total shareholder return of the Company's common stock in relation to the total shareholder return of a specific peer group of companies. The peer group of companies utilized is the S&P 600 Industrial Index. The payment of PSUs following the performance period will be based in accordance with the scale set forth in the PSU agreements, and may range from 0% to 200% of the initial grant. PSUs do not have an option for cash payment.

During the year ended December 31, 2017, the Company granted 286,251 shares in March under the 2013 Plan. During the year ended December 31, 2018, the Company granted 233,266 shares in March and 6,742 shares in July under the 2013 Plan. During the year ended December 31, 2019, the Company granted 233,112 shares in March, 6,189 shares in July and 38,006 shares in August under the 2013 Plan. The fair value of PSUs granted was estimated on the grant date using a Monte Carlo pricing model with the following assumptions:



	Risk-free Interest rate		Dividend Yield		Expected Life (Years)	Volatility		Fair Value of PSU
March 2017 Grant	1.54	%	—	%	2.83	34.2	%	$	17.05
March 2018 Grant	2.36	%	—	%	2.83	34.7	%	29.56
July 2018 Grant	2.69	%	—	%	2.42	33.1	%	39.06
March 2019 Grant	2.48	%	—	%	2.82	33.8	%	29.04
July 2019 Grant	1.75	%	—	%	2.50	34.3	%	40.07
August 2019 Grant	1.57	%	—	%	2.41	34.9	%	23.38

Total compensation expense related to PSUs was $5.1 million, $4.3 million and $3.2 million for the years ended

December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, total unrecognized compensation expense related to non-vested PSUs was $6.5 million, which will be recognized over a weighted average period of 1.7 years.

A summary of the Company's non-vested PSU activity during the year ending December 31, 2019 was as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested shares, December 31, 2018	494,882		$	23.13
Granted	277,307		28.51
Forfeited	(70,391	)	26.23
Vested, not issued (c)	(236,214	)	17.05
Non-vested shares, December 31, 2019	465,584		28.95

(c) The measurement period for PSUs issued in 2017 ended on December 31, 2019 and these shares vested but will not be issued until the Board certifies the measurement period results in early 2020. A total of 472,428 shares are expected to be issued and have been included in the Company's calculation of diluted weighted average shares at the end of December 31, 2019.