|6 Months Ended|
Jun. 30, 2021
|Share-based Payment Arrangement, Noncash Expense [Abstract]|
|Stock-Based Compensation||Stock-Based Compensation
The Company has a stock-based compensation plan available to grant RSUs, PSUs, Stock-settled appreciation rights (“SSARs”), NQs, and other stock-based awards to key employees, non-employee directors, advisors, and consultants.
The Wyndham Worldwide Corporation 2006 Equity and Incentive Plan was originally adopted in 2006 and was amended and restated in its entirety and approved by shareholders on May 17, 2018, (the “Amended and Restated Equity Incentive Plan”). Under the Amended and Restated Equity Incentive Plan, a maximum of 15.7 million shares of common stock may be awarded. As of June 30, 2021, 11.3 million shares remain available.
Incentive Equity Awards Granted by the Company
During the six months ended June 30, 2021, the Company granted incentive equity awards to key employees and senior officers totaling $33 million in the form of RSUs, $7 million in the form of PSUs, and $2 million in the form of stock options. Of these awards, the NQs and RSUs will vest ratably over a period of four years. The PSUs will cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics.
During the six months ended June 30, 2020, the Company granted incentive equity awards to key employees and senior officers totaling $35 million in the form of RSUs, $8 million in the form of PSUs, and $8 million in the form of stock options.
The activity related to incentive equity awards granted to the Company’s key employees and senior officers by the Company for the six months ended June 30, 2021, consisted of the following (in millions, except grant prices):
(a)The Company recognizes forfeitures as they occur.
(b)Aggregate unrecognized compensation expense related to RSUs was $64 million as of June 30, 2021, which is expected to be recognized over a weighted average period of 2.8 years.
(c)There was no unrecognized compensation expense related to PSUs as these awards were not probable of vesting as of June 30, 2021. The maximum amount of compensation expense associated with these awards would be $8 million which would be recognized over a weighted average period of 2.5 years.
(d)As of June 30, 2021, all SSARs had been exercised and thus there was no unrecognized compensation expense.
(e)There were 0.9 million NQs which were exercisable as of June 30, 2021. These exercisable NQs will expire over a weighted average period of 7.4 years and carry a weighted average grant date fair value of $8.39. Unrecognized compensation expense for NQs was $10 million as of June 30, 2021, which is expected to be recognized over a weighted average period of 2.6 years.
(f)Upon exercise of NQs, the Company issues new shares to participants.
The fair values of stock options granted by the Company during 2021 were estimated on the date of grant using the Black-Scholes option-pricing model with the relevant weighted average assumptions outlined in the table below. Expected volatility was based on both historical and implied volatilities of the Company’s stock and the stock of comparable companies over the estimated expected life for options. The expected life represents the period of time these awards are expected to be outstanding. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to the estimated expected life of the options. The projected dividend yield was based on the Company’s anticipated annual dividend divided by the price of the Company’s stock on the date of the grant.
Stock-Based Compensation Expense
The Company recorded stock-based compensation expense of $9 million and $16 million during the three and six months ended June 30, 2021, and $7 million and $8 million during the three and six months ended June 30, 2020, related to incentive equity awards granted to key employees, senior officers, and non-employee directors.
The Company paid $9 million and $2 million of taxes for the net share settlement of incentive equity awards that vested during the six months ended June 30, 2021 and 2020.
Employee Stock Purchase Plan
The Company has an employee stock purchase plan which allows eligible employees to purchase common shares of Company stock through payroll deductions at a 10% discount off the fair market value at the grant date. The Company issued 0.1 million shares and recognized less than $1 million of compensation expense related to grants under this plan during the six months ended June 30, 2021 and 2020.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef