Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

We grant stock-based compensation awards, including restricted stock units, phantom stock, and unrestricted stock units, under the Second Amended and Restated 2010 Stock Incentive Plan (Stock Incentive Plan). Prior to December 31, 2020, stock options were also granted as part of the stock-based compensation awards. In the Stock Incentive Plan, we have 10,357,273 shares of common stock authorized for issuance subject to stock splits, dividends, and other similar events, and at December 31, 2023, 1,843,272 shares were available for grant. The reduction in shares available for grant from prior periods is largely attributed to the shares held in Itron's INS share pool, which expired August 21, 2023. We issue new shares of common stock upon the exercise of stock options or when vesting conditions on restricted stock units are fully satisfied. These shares are subject to a fungible share provision such that the authorized share available for grant is reduced by (i) one share for every one share subject to a stock option or share appreciation right granted under the Plan and (ii) 1.7 shares for every one share of common stock that was subject to an award other than an option or share appreciation right.

We also award phantom stock units, which are settled in cash upon vesting and accounted for as liability-based awards, with no impact to the shares available for grant.

In addition, we maintain the Employee Stock Purchase Plan (ESPP), for which 520,200 shares of common stock were available for future issuance at December 31, 2023. In May 2023, the shareholders authorized, via a proxy approval, the reallocation of 500,000 reserved shares from the shares available for grant in the Stock Incentive Plan to the ESPP.

ESPP activity and stock-based grants other than stock options and restricted stock units were not significant for the years ended December 31, 2023, 2022, and 2021.

Stock-Based Compensation Expense

Total stock-based compensation expense and the related tax benefit were as follows:


	Year Ended December 31,
In thousands	2023		2022		2021
Stock options	$	103	$	891	$	1,371
Restricted stock units	27,189		20,038		21,391
Unrestricted stock awards	1,065		952		856
Phantom stock units	5,025		1,315		3,242
Total stock-based compensation	$	33,382	$	23,196	$	26,860

Related tax benefit	$	6,928	$	5,371	$	4,991

Stock Options

A summary of our stock option activity is as follows:


	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Weighted Average Grant Date Fair Value
	In thousands			Years	In thousands
Outstanding, January 1, 2021	433	$	61.95	6.9	$	14,697


Granted	—	—					$	—
Exercised	(34)	67.21			1,215
Forfeited	(6)	83.33

Outstanding, December 31, 2021	393	$	61.18	5.9	$	4,737


Granted	—	—					$	—
Exercised	(1)	45.90			4
Forfeited	(2)	87.27
Canceled	(9)	80.00
Outstanding, December 31, 2022	381	$	60.63	4.8	$	1,892


Granted	—	—					$	—
Exercised	(18)	45.96			397
Forfeited	—	—
Canceled	—	—
Outstanding and Exercisable, December 31, 2023	363	$	61.36	4.0	$	5,886

At December 31, 2023, all stock-based compensation expense related to nonvested stock options has been recognized.

Restricted Stock Units

The following table summarizes restricted stock unit activity:


	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
	In thousands			In thousands
Outstanding, January 1, 2021	544	$	71.79


Granted	230	97.66
Released (1)	(293)			$	20,639
Forfeited	(51)
Outstanding, December 31, 2021	430	$	85.77


Granted	391	53.33
Released (1)	(227)			$	18,169
Forfeited	(66)
Outstanding, December 31, 2022	528	$	66.39

Granted	497	56.89
Released (1)	(242)	71.64		$	13,974
Forfeited	(32)	61.59
Outstanding, December 31, 2023	751	$	58.89

Vested but not released, December 31, 2023	15	$	75.51	$	1,159

(1) Shares released is presented as gross shares and does not reflect shares withheld by us for employee payroll tax obligations.

At December 31, 2023, total unrecognized compensation expense on restricted stock units was $32.0 million, which is expected to be recognized over a weighted average period of approximately 1.8 years.

The weighted average assumptions used to estimate the fair value of performance-based restricted stock units granted with a service and market condition and the resulting weighted average fair value are as follows:


	Year Ended December 31,
	2023			2022			2021
Expected volatility	46.0		%	55.7		%	54.2		%
Risk-free interest rate	4.6		%	1.7		%	0.4		%
Expected term (years)	1.9			2.9			1.9

Weighted average fair value	$	73.41		$	57.88		$	77.65

Phantom Stock Units

The following table summarizes phantom stock unit activity:


	Number of Phantom Stock Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
	In thousands			In thousands
Outstanding, January 1, 2021	82	$	73.13

Granted	35	96.49
Released	(41)			$	4,100
Forfeited	(7)
Outstanding, December 31, 2021	69	$	85.47





Granted	59	53.07
Released	(34)			$	1,780
Forfeited	(9)
Outstanding, December 31, 2022	85	$	66.46




Granted	77	56.52
Released	(43)	69.85		$	2,511
Forfeited	(4)	66.19
Outstanding, December 31, 2023	115	$	58.58

At December 31, 2023, total unrecognized compensation expense on phantom stock units was $4.4 million, which is expected to be recognized over a weighted average period of approximately 1.7 years. As of December 31, 2023 and 2022, we have recognized a phantom stock liability of $4.4 million and $1.7 million within wages and benefits payable in the Consolidated Balance Sheets.