Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

ATSG's Board of Directors has granted stock incentive awards to certain employees and board members pursuant to a long term incentive plan which was approved by its stockholders in May 2005 and in May 2015. Employees have been awarded non-vested stock units with performance conditions, non-vested stock units with market conditions and non-vested time-based restricted stock. The restrictions on the non-vested restricted stock awards lapse at the end of a specified service period, which is typically three years from the date of grant. Restrictions may lapse sooner upon a business combination, death, disability or after an employee qualifies for retirement. The non-vested stock units will be converted into ATSG common stock depending on performance and market conditions at the end of a specified service period, lasting approximately three years. The performance condition awards will be converted into ATSG common stock based on the Company's average return on invested capital during the service period. Similarly, the market condition awards will be converted into ATSG common stock based on the appreciation of the common stock price compared to the NASDAQ Transportation Index. Board members have been granted time-based restricted stock unit awards that vest after a period of twelve months. The Company expects to settle all of the stock unit awards by issuing new shares of ATSG common stock. The table below summarizes stock-based award activity.


	Six Months Ended
	June 30, 2022			June 30, 2021
	Number of Awards	Weighted average grant-date fair value		Number of Awards	Weighted average grant-date fair value
Outstanding at beginning of period	978,188	$	17.49	1,085,023	$	17.14
Granted	283,467	35.44		274,606	26.65
Converted	(170,560)	22.09		(120,830)	25.40
Expired	(3,000)	40.02		(1,200)	26.60
Forfeited	(9,000)	26.06		—	—
Outstanding at end of period	1,079,095	$	21.34	1,237,599	$	18.44
Vested	322,156	$	9.76	357,499	$	9.26

The average grant-date fair value of each performance condition award, non-vested restricted stock award and time-based award granted by the Company in 2022 was $33.84, the fair value of the Company’s stock on the date of grant. The average grant-date fair value of each market condition award granted in 2022 was $46.20. The market condition awards granted in 2022 were valued using a Monte Carlo simulation technique based on daily stock prices over three years and using the following variables:


			2022
Risk-free interest rate			2.5%
Volatility			38.3%

For the six month period ended June 30, 2022 and 2021, the Company recorded expense of $3.9 million and $3.5 million, respectively, for stock incentive awards. At June 30, 2022, there was $12.9 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.5 years. As of June 30, 2022, none of the awards were convertible, 322,156 units of the Board members' time-based awards had vested and none of the outstanding shares of the restricted stock had vested. These awards could result in the issuance of up to 1,365,445 shares of ATSG common stock depending on service, performance and market results through December 31, 2024.