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STOCK-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2023
STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION |
15. | STOCK-BASED COMPENSATION
The Company has two stock-based compensation plans under which shares were available for grant at September 30, 2023: (i) the Monster Beverage Corporation 2020 Omnibus Incentive Plan, including the Monster Beverage Corporation Deferred Compensation Plan as a sub-plan thereunder, and (ii) the Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors as Amended and Restated on February 23, 2022, including the Monster Beverage Corporation Deferred Compensation Plan for Non-Employee Directors as a sub-plan thereunder. The Company recorded $17.9 million and $16.6 million of compensation expense relating to outstanding options, restricted stock units, performance share units and other share-based awards during the three-months ended September 30, 2023 and 2022, respectively. The Company recorded $52.5 million and $49.2 million of compensation expense relating to outstanding options, restricted stock units, performance share units and other share-based awards during the nine-months ended September 30, 2023 and 2022, respectively. The tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units and performance share units for the three-months ended September 30, 2023 and 2022 was ($0.2) million and $2.0 million, respectively. The tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units and performance share units for the nine-months ended September 30, 2023 and 2022 was $29.9 million and $4.6 million, respectively. Stock Options Under the Company’s stock-based compensation plans, all stock options granted as of September 30, 2023 were granted at prices based on the fair value of the Company’s common stock on the date of grant. The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company uses historical data to determine the exercise behavior, volatility and forfeiture rate of the options. The following weighted-average assumptions were used to estimate the fair value of options granted during: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three-Months Ended September 30, | ​ | Nine-Months Ended September 30, | ​
​ |  | 2023 |  | 2022 | ​ | 2023 |  | 2022 | ​
Dividend yield | ​ | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | %
Expected volatility | ​ | 27.0 | % | 27.6 | % | 27.6 | % | 27.7 | %
Risk-free interest rate | ​ | 4.2 | % | 2.8 | % | 3.7 | % | 2.1 | %
Expected term | ​ | 6.3 | years | 6.2 | years | 6.3 | years | 6.1 | years
​ Expected Volatility: The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the option. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option. Expected Term: The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns. The following table summarizes the Company’s activities with respect to its stock option plans as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted- | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted- | ​ | Average | ​ | ​ | ​
​ | ​ | ​ | ​ | Average | ​ | Remaining | ​ | ​ | ​
​ | ​ | Number of | ​ | Exercise | ​ | Contractual | ​ | ​ | ​
​ | ​ | Shares (in | ​ | Price Per | ​ | Term (in | ​ | Aggregate
Options |  | thousands) |  | Share |  | years) |  | Intrinsic Value
Outstanding at January 1, 2023 |  | 29,710 | ​ | $ | 26.38 |  | 5.0 | ​ | $ | 724,651
Granted 01/01/23 - 03/31/23 |  | 3,962 | ​ | $ | 50.82 | ​ | ​ | ​ | ​ | ​
Granted 04/01/23 - 06/30/23 |  | 31 | ​ | $ | 59.36 | ​ | ​ | ​ | ​ | ​
Granted 07/01/23 - 09/30/23 |  | 25 | ​ | $ | 57.71 | ​ | ​ | ​ | ​ | ​
Exercised |  | (4,218) | ​ | $ | 15.54 | ​ | ​ | ​ | ​ | ​
Cancelled or forfeited |  | (306) | ​ | $ | 40.05 | ​ | ​ | ​ | ​ | ​
Outstanding at September 30, 2023 |  | 29,204 | ​ | $ | 31.17 |  | 5.3 | ​ | $ | 636,250
Vested and expected to vest in the future at September 30, 2023 | ​ | 28,330 | ​ | $ | 30.77 | ​ | 5.2 | ​ | $ | 628,547
Exercisable at September 30, 2023 |  | 18,467 | ​ | $ | 24.70 |  | 3.5 | ​ | $ | 521,638
​ The weighted-average grant-date fair value of options granted during the three-months ended September 30, 2023 and 2022 was $21.01 per share and $15.97 per share, respectively. The weighted-average grant-date fair value of options granted during the nine-months ended September 30, 2023 and 2022 was $18.27 per share and $11.68 per share, respectively. The total intrinsic value of options exercised during the three-months ended September 30, 2023 and 2022 was $7.1 million and $15.3 million, respectively. The total intrinsic value of options exercised during the nine-months ended September 30, 2023 and 2022 was $164.9 million and $38.2 million, respectively. Cash received from option exercises under all plans for the three-months ended September 30, 2023 and 2022 was $5.9 million and $12.1 million, respectively. Cash received from option exercises under all plans for the nine-months ended September 30, 2023 and 2022 was $65.6 million and $34.8 million, respectively. At September 30, 2023, there was $106.2 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of 3.2 years. Restricted Stock Units and Performance Share Units The cost of stock-based compensation for restricted stock units and performance share units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. The following table summarizes the Company’s activities with respect to non-vested restricted stock units and performance share units as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | Number of | ​ | Average
​ | ​ | Shares (in | ​ | Grant-Date
​ |  | thousands) |  | Fair Value
Non-vested at January 1, 2023 | ​ | 2,026 | ​ | $ | 36.27
Granted 01/01/23 - 03/31/231 | ​ | 523 | ​ | $ | 48.49
Granted 04/01/23 - 06/30/23 | ​ | 22 | ​ | $ | 59.70
Granted 07/01/23 - 09/30/23 | ​ | 2 | ​ | $ | 56.38
Vested | ​ | (593) | ​ | $ | 32.82
Forfeited/cancelled | ​ | (12) | ​ | $ | 32.71
Non-vested at September 30, 2023 | ​ | 1,968 | ​ | $ | 40.86
​ 1The grant activity for performance share units is recorded based on the target performance level earning 100% of target performance share units. The actual number of performance share units earned could range from 0% to 200% of target depending on the achievement of pre-established performance goals. The weighted-average grant-date fair value of restricted stock units and/or performance share units granted during the three-months ended September 30, 2023 and 2022 was $56.38 and $47.59 per share, respectively. The weighted-average grant-date fair value of restricted stock units and/or performance share units granted during the nine-months ended September 30, 2023 and 2022 was $51.22 and $37.12 per share, respectively. As of September 30, 2023, 1.9 million of restricted stock units and performance share units are expected to vest over their respective terms. At September 30, 2023, total unrecognized compensation expense relating to non-vested restricted stock units and performance share units was $39.5 million, which is expected to be recognized over a weighted-average period of 1.4 years. Other Share-Based Awards The Company has granted other share-based awards to certain employees that are payable in cash. These awards are classified as liabilities and are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement, with compensation expense being recognized in proportion to the completed requisite service period up until date of settlement. At September 30, 2023, other share-based awards outstanding included grants that vest over three years payable in the first quarters of 2024, 2025 and 2026. At September 30, 2023, there was $1.2 million of total unrecognized compensation expense related to nonvested other share-based awards granted to employees under the Company’s stock-based compensation plans. That expense is expected to be recognized over a weighted-average period of 1.6 years.

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