Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

The Company has a 2021 Long-Term Incentive Plan ("LTI Plan") under which we may grant restricted stock units ("RSU"), performance share units ("PSU"), stock options and other equity-based awards to employees and non-employee directors providing services to the Company and our subsidiaries. A total of up to 29.5 million shares of Class A common stock are reserved and available for issuance pursuant to awards granted under the LTI Plan over its term which expires on the date of the annual meeting of the Company in 2031. A total of 31.7 million shares of Class A common stock are available for issuance as of December 31, 2021. This amount includes 29.2 million shares remaining from the initial reserve and 2.5 million shares added due to forfeitures, cancellations, and shares withheld to pay the employee's taxes, subject to the adjustments as provided in the LTI Plan.

Stock-based compensation cost was $205 million, $210 million and $187 million for the years ended December 31, 2021, 2020 and 2019, respectively. We recorded a tax benefit of approximately $16 million in 2021 on our stock-based compensation cost. Stock-based compensation cost is measured at the date of grant based on the calculated fair value of the award and is generally recognized on a straight-line basis over the vesting period of the equity grant. The compensation cost is determined based on awards ultimately expected to vest; therefore, we have reduced the cost for estimated forfeitures based on historical forfeiture rates. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods to reflect actual forfeitures. There were no stock-based compensation costs capitalized as the amounts were not material.

Restricted Stock

We may grant to our officers, directors and key employees restricted stock units ("RSU"), where each unit represents the right to receive, at the end of a stipulated period, one unrestricted share of stock with no exercise price. Certain RSUs are subject to cliff or graded vesting, generally ranging over a period of 3 years, or over a one year period for non-employee directors. Cash dividend equivalents are accumulated on RSUs and are payable upon vesting of the awards. We determine the fair value of RSUs based on the market price of our common stock on the date of grant.

The following table presents the changes in RSUs outstanding and related information (in thousands, except per unit prices):


	Number of Units	Weighted Average Grant Date Fair Value Per Unit
Unvested balance at December 31, 2020	14,292	$	23.70
Granted	9,357	20.64
Vested	(6,439)	25.10
Forfeited	(1,175)	21.98
Unvested balance at December 31, 2021	16,035	$	21.50

In 2021, the total intrinsic value of RSUs vested (defined as the value of shares awarded based on the price of our common stock at vesting date) was $141 million and unvested RSUs was $386 million. The total grant date fair value of RSUs vested in 2021 was $162 million. As of December 31, 2021, there was $185 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted average period of 1.86 years.

Performance Share Units

We may grant performance share units ("PSUs") to certain officers and key employees. The PSUs are stock-based awards tied to predefined company metrics and total shareholder return ("TSR"). PSUs generally cliff vest after a service period of 3 years. Cash dividend equivalents are accumulated on certain PSUs and are payable upon vesting of the awards. The fair value of the awards determined for the predefined company metrics are based on the market price of our common stock on the date of grant. The fair value of the TSR awards are determined based on a Monte Carlo simulation method.

The following table presents the changes in PSUs outstanding and related information (in thousands, except per unit prices):


	Number of Units	Weighted Average Grant Date Fair Value Per Unit
Unvested balance at December 31, 2020	3,161	$	25.39
Granted	1,352	22.14
Vested	(637)	35.16
Forfeited	(174)	24.43
Unvested balance at December 31, 2021	3,702	$	22.57

The total intrinsic value of PSUs vested and unvested, (defined as the value of the shares awarded at the year-end market price) was $15 million and $89 million, respectively, as of December 31, 2021. The total grant date fair value of PSUs vested in 2021 was $22 million. Total unrecognized compensation cost related to unvested PSUs, which is expected to be recognized over a weighted average period of 1.95 years, was $35 million as of December 31, 2021.

Stock Options

We previously granted stock options to our officers, directors and key employees. Stock options generally vest in equal amounts over a vesting period of 3 years provided that the employee has remained continuously employed by the Company through such vesting date. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. Our 2019 option assumptions were as follows: expected life - 6 years, risk free interest rate - 2.6%, volatility - 36.5%, dividend yield - 3.1%, and the weighted average fair value per share at grant date was $6.37. We have not granted stock options to officers, directors, or key employees since 2019.

The following table presents the changes in stock options outstanding and related information (in thousands, except per option prices):


	Number of Options	Weighted Average Exercise Price Per Option
Outstanding at December 31, 2020	7,285	$	32.63

Exercised	(438)	22.48
Forfeited	(11)	26.42
Expired	(1,587)	40.13
Outstanding at December 31, 2021	5,249	$	31.25
Exercisable at December 31, 2021	4,719	$	32.18

The weighted average remaining contractual term for options outstanding and options exercisable at December 31, 2021 were 4.4 years and 4.1 years, respectively. The maximum contractual term of options outstanding is 7.1 years.

There were 850 thousand, 1,553 thousand and 867 thousand options that vested in 2021, 2020 and 2019, respectively. The total fair value of options vested was $7 million, $14 million and $10 million, in 2021, 2020 and 2019, respectively. Unrecognized compensation cost related to unvested stock options was immaterial as of December 31, 2021. Generally, all stock options outstanding will be fully vested and exercisable by the end of the first quarter of 2022.

The total intrinsic value of stock options exercised (defined as the amount by which the market price of our common stock on the date of exercise exceeds the exercise price of the option) in 2021 was $1 million. The total intrinsic value of stock options outstanding and options exercisable at December 31, 2021 was $2 million. The

intrinsic value of stock options outstanding is calculated as the amount by which the quoted price of $24.06 of our common stock as of the end of 2021 exceeds the exercise price of the options.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan ("ESPP") provides for eligible employees to purchase shares of Class A common stock quarterly on an after-tax basis in an amount between 1% and 20% of their annual pay on March 31, June 30, September 30 and December 31 of each year at a 15% discount of the fair market value of our Class A common stock on March 31, June 30, September 30 and December 31. An employee may not purchase more than $3,000 in any of the three-month measurement periods described above or $12,000 annually.

A total of 21.5 million shares of Class A common stock are authorized for issuance, and at December 31, 2021, there were 12.5 million shares of Class A common stock reserved for future issuance.