Incentive Plans

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Note I – Incentive Plans

The costs resulting from all share-based and cash-based incentive plans are recognized as an expense in the Consolidated Statements of Operations using a fair value-based measurement method over the periods that the awards vest.

The 2017 Annual Incentive Plan (2017 Annual Plan) authorizes the Executive Compensation Committee (the Committee) to establish specific performance goals associated with annual cash awards that may be earned by officers, executives and certain other employees. Cash awards under the 2017 Annual Plan are determined based on the Company’s actual financial and operating results as measured against the performance goals established by the Committee.

In May 2020, the Company’s shareholders approved the replacement of the 2018 Long-Term Incentive Plan (2018 Long-Term Plan) with the 2020 Long-Term Incentive Plan (2020 Long-Term Plan). All awards on or after May 13, 2020, will be made under the 2020 Long-Term Plan.

The 2020 Long-Term Plan and the 2018 Long-Term Incentive Plan authorizes the Committee to make grants of the Company’s Common Stock to employees. These grants may be in the form of stock options (nonqualified or incentive), stock appreciation rights (SAR), restricted stock, restricted stock units (RSU), performance units, performance shares, dividend equivalents and other stock-based incentives. The 2020 Long-Term Plan expires in 2030. A total of 5 million shares are issuable during the life of the 2020 Long-Term Plan. Shares issued pursuant to awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. Share awards that have been canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under this Plan.

The Stock Plan for Non-Employee Directors (2018 NED Plan) that permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.

During the first three months of 2021, the Committee granted 1,156,800 performance-based RSUs and 385,600 time-based RSUs to certain employees under the 2020 Long-Term Plan. The fair value of the performance-based RSUs, using a Monte Carlo valuation model, was $16.03 per unit. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $12.30 per unit. Additionally, in February 2021, the Committee granted 1,022,700 cash-settled RSUs (CRSU) to certain employees. The CRSUs are to be settled in cash, net of applicable income

taxes, and are accounted for as liability-type awards. The initial fair value of the CRSUs granted in February 2021 was $12.30. Also, in February, the Committee granted 182,652 shares of time-based RSUs to the Company’s non-employee Directors under the 2018 Stock Plan for Non-Employee Directors. These units are scheduled to vest on the first anniversary of the date of grant. The estimated fair value of these awards was $13.14 per unit on date of grant.

All stock option exercises are non-cash transactions for the Company. The employee receives net shares, after applicable withholding obligations, upon each stock option exercise. The actual income tax benefit realized from the tax deductions related to stock option exercises of the share-based payment arrangements were immaterial for the three-month period ended March 31, 2021.

Amounts recognized in the financial statements with respect to share-based plans are shown in the following table:


	Three Months Ended March 31,
(Thousands of dollars)	2021		2020
Compensation charged against income before tax benefit	$	8,196	553
Related income tax (expense) benefit recognized in income	1,165		(592)

Certain incentive compensation granted to the Company’s named executive officers, to the extent their total compensation exceeds $1.0 million per executive per year, is not eligible for a U.S. income tax deduction under the Tax Cuts and Jobs Act (2017 Tax Act).