Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

ATSG's Board of Directors has granted stock-based incentive awards to certain employees and board members pursuant to a long term incentive plan which was approved by the Company's stockholders in May 2005 and in May 2015. Employees have been awarded non-vested restricted stock, non-vested stock units with performance conditions, and non-vested stock units with market conditions. 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. The non-vested stock units will be converted into a number of ATSG common shares depending on performance and market conditions at the end of a specified service period, which is typically three years from the date of grant. The performance condition awards will be converted into a number of ATSG common shares based on the Company's average return on invested capital during the service period. Similarly, the market condition awards will be converted into a number of common shares depending on the appreciation of ATSG common shares compared to the Nasdaq Transportation Index. Board members have been granted time-based awards that vest after a period of twelve months. Under each of the stock-based incentive awards, the restrictions may lapse sooner than the stated settlement period upon (1) the participant's death or disability, (2) an employee participant's qualification for retirement or (3) a change in control, in the case of an employee participant under the 2015 long-term incentive plan,

or a business combination, in the case of a director participant under the 2005 or 2015 long-term incentive plan. The Company expects to settle all of the stock unit awards by issuing new ATSG common shares. The table below summarizes award activity for the three months ended March 31, 2023 and 2022:


	Three Months Ended
	March 31, 2023			March 31, 2022
	Number of Awards	Weighted average grant-date fair value		Number of Awards	Weighted average grant-date fair value
Outstanding at beginning of period	929,205	$	21.83	978,188	$	17.49
Granted	—	—		285,867	35.45
Converted	(186,828)	20.87		(118,222)	24.69
Expired	—	—		—	—
Forfeited	(600)	36.93		(1,400)	22.22
Outstanding at end of period	741,777	$	22.04	1,144,433	$	21.23
Vested	298,928	$	8.02	362,594	$	10.20

For the three months ended March 31, 2023 and 2022, the Company recorded expense of $1.4 million and $1.7 million respectively, for stock-based incentive awards. At March 31, 2023, there was $6.7 million of unrecognized expense related to the stock-based incentive awards that is expected to be recognized over a weighted-average period of 1.3 years. As of March 31, 2023, none of the awards were convertible, 298,928 units of the directors' 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 a maximum number of 904,302 additional outstanding shares of ATSG's common stock depending on service, performance and market results through December 31, 2025.