Capital Stock

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Capital Stock

11. Capital Stock

The authorized capital stock of Teekay at December 31, 2023, 2022, and 2021, was 25 million shares of Preferred Stock, with a par value of $1 per share, and 725 million shares of Common Stock, with a par value of $0.001 per share. As at December 31, 2023, 92,379,826 shares of Common Stock (2022 – 102,077,387) were issued, 91,006,182 (2022 – 98,318,395) were outstanding, 1,373,644 (2022 - 3,758,992) were held in treasury, and no shares of Preferred Stock were issued or outstanding

In August 2022, Teekay's Board of Directors authorized the repurchase of up to $30 million of common shares in the open market and other transactions. Following the completion of this share repurchase program in March 2023, Teekay's Board of Directors authorized two additional share repurchase programs in March 2023 and June 2023 for the repurchase of up to an additional $30 million and $25 million, respectively, of Teekay common shares in the open market, through privately-negotiated transactions and by any other means permitted under the rules of the U.S. Securities and Exchange Commission (or SEC).

During the year ended December 31, 2023, Teekay repurchased approximately 8.9 million common shares for $50.7 million, or an average of $5.69 per share, pursuant to such authorizations, which resulted in the Company recording a reduction of book value of capital stock of $84.3 million and a reduction to accumulated deficit of $33.6 million. As at December 31, 2023, the total remaining share repurchase authorization was $19.2 million.

During the year ended December 31, 2022, Teekay repurchased approximately 3.8 million common shares for $15.3 million, or an average of $4.07 per share pursuant to the prior authorization, which resulted in the Company recording a reduction of book value of capital stock of $35.8 million and a reduction to accumulated deficit of $20.4 million.

In June 2022, the Company authorized 5,000,000 additional shares of common stock to be reserved for issuance pursuant to the 2013 Equity Incentive Plan.

In December 2020, Teekay filed a continuous offering program (or COP) under which Teekay could issue shares of its common stock, at market prices up to a maximum aggregate amount of $65.0 million. No shares of common stock were issued under this COP prior to its expiration in January 2024.

Dividends may be declared and paid out of surplus, but if there is no surplus, dividends may be declared or paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Surplus is the excess of the net assets of the Company over the aggregated par value of the issued shares of Teekay. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to share equally in any dividends that the Board of Directors may declare from time to time out of funds legally available for dividends.

Equity-based compensation

In March 2013, the Company adopted the 2013 Equity Incentive Plan (or the 2013 Plan) and suspended the 1995 Stock Option Plan and the 2003 Equity Incentive Plan. In March 2023, the Company adopted a 2023 Equity Incentive Plan (or the 2023 Plan and, together with the 2013 Plan, collectively referred to as the Plans) and suspended the Company’s 2013 Plan. As at December 31, 2023, the Company had reserved 11,324,227 (2022 – 11,787,597) shares of Common Stock pursuant to the Plans, for issuance upon the exercise of options or equity awards granted or to be granted.

During the year ended December 31, 2023, the Company granted options under the 2023 Plan to acquire up to 506,579 shares (2022 - 1,489,648) of Common Stock, to certain eligible officers, employees and non-management directors of the Company. The options under the Plans have ten-year terms and vest equally over three years from the grant date, with the exception of options granted to directors, which vest on their respective grant dates. No stock options were granted by the Company during 2021. All options outstanding as of December 31, 2023, expire between March 11, 2024 and June 7, 2033, ten years after the date of each respective grant.

A summary of the Company’s stock option activity and related information for the years ended December 31, 2023, 2022, and 2021, are as follows:

	December 31, 2023		December 31, 2022		December 31, 2021
	Options (000’s) #	Weighted-Average Exercise Price $	Options (000’s) #	Weighted-Average Exercise Price $	Options (000’s) #	Weighted-Average Exercise Price $
Outstanding – beginning of year	6,208	6.99	5,449	9.90	5,584	10.02
Granted	507	5.81	1,490	2.88	—	—
Exercised	(1,210)	3.89	(205)	3.98	—	—
Forfeited / expired	(112)	21.70	(526)	26.59	(135)	14.22
Outstanding – end of year	5,393	7.27	6,208	6.99	5,449	9.90
Exercisable – end of year	4,392	8.01	4,952	8.03	4,690	10.86

A summary of the Company’s non-vested stock option activity and related information for the years ended December 31, 2023, 2022 and 2021, are as follows:

	December 31, 2023		December 31, 2022		December 31, 2021
	Options (000’s) #	Weighted-Average Grant Date Fair Value $	Options (000’s) #	Weighted-Average Grant Date Fair Value $	Options (000’s) #	Weighted-Average Grant Date Fair Value $
Outstanding non-vested stock options – beginning of year	1,255	1.16	759	1.53	2,094	1.97
Granted	507	2.55	1,490	1.16	—	—
Vested	(761)	1.36	(853)	0.65	(1,309)	2.22
Forfeited	—	—	(141)	6.03	(26)	1.73
Outstanding non-vested stock options – end of year	1,001	1.71	1,255	1.16	759	1.53

The weighted average grant date fair value for non-vested options forfeited in 2023 was $nil (2022 – $nil, 2021 – $45.0 thousand).

As of December 31, 2023, there was $nil unrecognized compensation cost related to non-vested stock options granted under the Plans. During the years ended December 31, 2023, 2022, and 2021, the Company recognized $1.6 million, $1.1 million and $1.0 million, respectively, of compensation cost relating to stock options granted under the Plans. The intrinsic value of options exercised was $3.5 million, $0.1 million and $nil, respectively, during the years ended December 31, 2023, 2022, and 2021.

As at December 31, 2023, the intrinsic value was $10.5 million for outstanding stock options and $7.4 million for exercisable stock options (2022 – $3.8 million for outstanding stock options and $1.7 million for exercisable stock options). As at December 31, 2023, the weighted-average remaining life of options vested and expected to vest was 5.5 years (2022 – 5.9 years).

Further details regarding the Company’s outstanding and exercisable stock options at December 31, 2023 are as follows:

	Outstanding Options			Exercisable Options
Range of Exercise Prices	Options (000’s) #	Weighted- Average Remaining Life (Years)	Weighted- Average Exercise Price $	Options (000’s) #	Weighted- Average Remaining Life (Years)	Weighted- Average Exercise Price $
$0.00 – $4.99	2,602	6.9	3.37	1,999	6.5	3.52
$5.00 – $9.99	2,043	4.7	8.17	1,645	3.6	8.75
$10.00 – $19.99	571	2.8	10.18	571	2.8	10.18
$20.00 – $59.99	177	1.1	44.90	177	1.1	44.90
	5,393	5.5	7.27	4,392	4.7	8.01

The weighted-average grant-date fair value of options granted during 2023 was $2.55 (2022 - $1.16). The fair value of the options granted was estimated on the date of the grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in computing the fair value of the options granted in 2023: expected volatility of 41.27% (2022 - 38.63%); expected life of 5.5 years (2022 - 5.5 years); dividend yield of 0% (2022 - 0%); risk-free interest rate of 3.83% (2022 - 3.01%); and estimated forfeiture rate of 0% (2022 - 6%). The expected life of the options granted was estimated using the historical exercise behavior of employees. The expected volatility was based on historical volatility as calculated using historical data from October 4, 2021 (the announcement date of the divestment of the Teekay Gas Business) to the grant date.

The Company grants restricted stock units to certain eligible officers and employees of the Company. Each restricted stock unit is equal in value to one share of the Company’s common stock plus reinvested dividends or distributions from the grant date to the vesting date. The restricted stock units vest equally over three years from the grant date. Any portion of an award that is not vested on the date of a recipient’s termination of service is canceled, unless their termination arises as a result of the recipient’s retirement, in which case the award will continue to vest in accordance with the vesting schedule. Upon vesting, the awards are paid to a substantial majority of the grantees in the form of common shares, net of withholding tax.

During 2023, the Company granted 329,735 restricted stock units with a fair value of $1.9 million to certain eligible officers and employees of the Company. During 2023, a total of 651,135 restricted stock units with a market value of $2.0 million vested, and that amount, net of withholding taxes, was paid to grantees by issuing 149,217 shares of common stock, with the issuance of a remaining 354,580 shares deferred. During 2023, an additional 369,672 previously vested and deferred restricted stock units were released, net of withholding taxes, to grantees by issuing 184,498 shares of common stock. During 2022, the Company granted 787,586 restricted stock units with a fair value of $2.3 million to certain of the Company’s employees. During 2022, a total of 631,706 restricted stock units with a market value of $2.2 million vested and that amount, net of withholding taxes, was paid to grantees by issuing 218,671 shares of common stock, with the issuance of a remaining 243,171 shares deferred. During 2021, the Company granted 355,944 restricted stock units with a fair value of $1.4 million, to certain of the Company’s officers and employees. During 2021, a total of 880,320 restricted stock units with a market value of $4.7 million vested and that amount, net of withholding taxes, was paid to grantees by issuing 222,590 shares of common stock. For the year ended December 31, 2023, the Company recorded an expense of $2.7 million (2022 – $2.9 million, 2021 – $2.3 million) related to the restricted stock units.

The Company grants restricted stock awards to certain of the Company's non-management directors. Each restricted stock award is equal in value to one share of the Company’s common stock. Restricted stock awards vest immediately. Upon vesting, the value of the restricted stock units or restricted stock awards are paid to each grantee in the form of shares.

During 2023, the Company granted 47,330 (2022 – 95,485 and 2021 – 149,366) shares as restricted stock awards with a fair value of $0.3 million (2022 – $0.3 million and 2021 – $0.6 million), based on the quoted market price, to the Company’s non-management directors. During 2023, the Company issued 28,398 shares (2022 - 82,396) to restricted stock award grantees with a further 18,932 shares deferred (2022 - 19,097).

During 2021, the Company granted 489,443 performance share units with a fair value of $5.7 million, to certain of the Company’s officers and employees. The performance share units vested in full following closing of the sale of the Teekay Gas Business, which occurred in January 2022. Each performance share unit was equal in value to one common unit of Seapeak. Upon vesting, the value of the performance share units was paid to each grantee in the form of cash.

Equity-based Compensation of Subsidiaries

During 2023, 2022 and 2021, no stock options were granted by Teekay Tankers.

For the year ended December 31, 2023, a total of 8,188 shares (2022 – 16,648 shares, 2021 – 16,772 shares) of Class A common stock were granted to Teekay Tankers' non-management directors as part of their annual compensation with an aggregate value of $0.3 million, (2022 - $0.3 million, 2021 - $0.3 million).

Teekay Tankers grants equity-based compensation awards as incentive-based compensation to certain employees of Teekay’s subsidiaries that provide services to Teekay Tankers. During 2023, 2022 and 2021, Teekay Tankers granted restricted stock units with respect to 63,699, 104,185 and 109,953 Class A common shares of Teekay Tankers, respectively, with aggregate grant date fair values of $2.3 million, $1.9 million, and $1.7 million, respectively, based on Teekay Tankers’ closing unit or stock prices on the grant dates.

Each restricted stock unit is equal in value to one of Teekay Tankers’ Class A common shares plus reinvested distributions or dividends from the grant date to the vesting date. The awards vest equally over three years from the grant date. Any portion of an award that is not vested on the date of a recipient’s termination of service is canceled, unless their termination arises as a result of the recipient’s retirement, in which case the award will continue to vest in accordance with the vesting schedule. Upon vesting, the awards are paid to a substantial majority of the grantees in the form of common shares, net of withholding tax