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Equity-Based Compensation | 12 Months Ended
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Dec. 31, 2019
Share-based Payment Arrangement, Disclosure [Abstract] |
Equity-Based Compensation | Equity-Based Compensation Equity-based compensation expense, which is recorded in Selling and administrative expenses in the Consolidated Statements of Operations was as follows:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Equity-based compensation expense |  | $ | 48.5 |  |  | $ | 40.7 |  |  | $ | 43.7 |
Income tax benefit(1) |  | (9.8 | ) |  | (9.9 | ) |  | (15.3 | )
Equity-based compensation expense, net of tax |  | $ | 38.7 |  |  | $ | 30.8 |  |  | $ | 28.4 |
(1) | Represents equity-based compensation tax expense at the statutory tax rates. Excess tax benefits associated with equity awards are excluded from this disclosure and separately disclosed in Note 10 (Income Taxes).
The total unrecognized compensation cost related to non-vested awards was $48 million as of December 31, 2019 and is expected to be recognized over a weighted-average period of 1.8 years. 2013 Long-Term Incentive Plan The 2013 Long-Term Incentive Plan ("2013 LTIP") provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock and performance awards. The maximum aggregate number of shares that may be issued under the 2013 LTIP is 15,500,000 shares of the Company's common stock, in addition to the 3,798,508 shares of restricted stock granted in exchange for unvested Class B Common Units in connection with the Company's Initial Public Offering ("IPO"). As of December 31, 2019, 3,980,054 shares were available for issuance under the 2013 LTIP, which was approved by the Company's pre-IPO shareholders. Authorized but unissued shares are reserved for issuance in connection with equity-based awards. Stock Options The exercise price of a stock option granted is equal to the fair value of the underlying stock on the date of the grant. Stock options have a contractual term of ten years and generally vest ratably over three years. To estimate the fair value of options granted, the Company uses the Black-Scholes option pricing model. The weighted-average assumptions used to value the stock options granted were as follows:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Grant date fair value |  | $ | 19.26 |  |  | $ | 14.80 |  |  | $ | 12.27 |
Volatility (1) |  | 20.00 | % |  | 20.00 | % |  | 22.00 | %
Risk-free rate (2) |  | 2.53 | % |  | 2.75 | % |  | 2.08 | %
Expected dividend yield |  | 1.23 | % |  | 1.14 | % |  | 1.09 | %
Expected term (in years) (3) |  | 6.0 |  |  | 6.0 |  |  | 6.0 |
(1) | Based upon an assessment of the two-year and five-year historical and implied volatility for the Company's selected peer group, adjusted for the Company's leverage.
(2) | Based on a composite US Treasury rate.
(3) | Calculated using the simplified method, which defines the expected term as the average of the option's contractual term and the option's weighted-average vesting period. The Company utilizes this method as it has limited historical stock option data that is sufficient to derive a reasonable estimate of the expected stock option term.
Stock option activity for the year ended December 31, 2019 was as follows:
Options |  | Number of Options |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Outstanding at January 1, 2019 |  | 4,480,772 |  |  | $ | 46.82 |  |  |  |  |
Granted |  | 786,601 |  |  | 96.24 |  |  |  |  |
Forfeited/Expired |  | (63,947 | ) |  | 74.56 |  |  |  |  |
Exercised(1) |  | (1,065,184 | ) |  | 32.80 |  |  |  |  |
Outstanding at December 31, 2019 |  | 4,138,242 |  |  | $ | 59.39 |  |  | 6.17 |  | $ | 345.3 |
Vested and exercisable at December 31, 2019 |  | 2,364,405 |  |  | $ | 43.61 |  |  | 4.99 |  | $ | 234.6 |
Expected to vest after December 31, 2019 |  | 1,752,687 |  |  | $ | 80.34 |  |  | 7.72 |  | $ | 109.5 |
(1) | The total intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $83 million, $47 million and $17 million, respectively.
Restricted Stock Units ("RSUs") Restricted stock units represent the right to receive unrestricted shares of the Company's stock at the time of vesting. RSUs generally cliff-vest at the end of three years. The fair value of RSUs is equal to the closing price of the Company's common stock on date of grant. RSU activity for the year ended December 31, 2019 was as follows:
|  | Number of Units |  | Weighted-Average Grant-Date Fair Value
Non-vested at January 1, 2019 |  | 260,173 |  |  | $ | 59.56 |
Granted (1) |  | 58,577 |  |  | 103.24 |
Vested (2) |  | (88,097 | ) |  | 44.62 |
Forfeited |  | (21,275 | ) |  | 78.52 |
Non-vested at December 31, 2019 |  | 209,378 |  |  | $ | 75.56 |
(1) | The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2019, 2018 and 2017 was $103.24, $73.95 and $58.90, respectively.
(2) | The aggregate fair value of RSUs that vested during the years ended December 31, 2019, 2018 and 2017 was $4 million, $2 million and $18 million, respectively.
Performance Share Units ("PSUs") Performance share units represent the right to receive unrestricted shares of the Company's stock at the time of vesting. PSUs are granted under the 2013 LTIP which cliff-vest at the end of three years. The percentage of PSUs that shall vest will range from 0% to 200% of the number of PSUs granted based on the Company's performance against a cumulative adjusted free cash flow measure and cumulative non-GAAP net income per diluted share measure over a three-year performance period. PSU activity for the year ended December 31, 2019 was as follows:
|  | Number of Units |  | Weighted-Average Grant-Date Fair Value
Non-vested at January 1, 2019 |  | 421,837 |  |  | $ | 65.85 |
Granted (1) |  | 201,441 |  |  | 101.33 |
Attainment Adjustment (2) |  | 129,498 |  |  | 39.92 |
Vested (3) |  | (350,816 | ) |  | 52.16 |
Forfeited |  | (20,055 | ) |  | 72.96 |
Non-vested at December 31, 2019 |  | 381,905 |  |  | $ | 87.78 |
(1) | The weighted-average grant date fair value of PSUs granted during the years ended December 31, 2019, 2018 and 2017 was $101.33, $73.74 and $59.00, respectively.
(2) | During the year ended December 31, 2019, the attainment on PSUs vested at December 31, 2018 was adjusted to reflect actual performance.
(3) | The aggregate fair value of PSUs that vested during the years ended December 31, 2019, 2018 and 2017 was $18 million, $13 million and $20 million, respectively.
Equity Awards Granted by Seller of CDW UK As part of the Company's acquisition of CDW UK, stock options were granted by one of the sellers of CDW UK to certain CDW UK coworkers. These equity awards had a weighted-average grant-date fair value of $35.93 per option. In 2019 and 2018, 110,978 and 456,613 stock options vested and were exercised. In connection with the exercise of such options, the seller of CDW UK distributed shares of common stock to each participant and withheld the number of shares of common stock equal to the respective tax withholding for each participant. The seller of CDW UK then transferred such withheld shares to the Company to satisfy the tax withholding for participants. The Company was required to pay withholding taxes in 2019 and 2018 of $6 million and $19 million to Her Majesty's Revenue and Customs taxing authority for the exercise of these options. The amounts are reported as a financing activity in the Consolidated Statement of Cash Flows and as increases to Accumulated Deficit in the Consolidated Statement of Stockholders' Equity for the years ended December 31, 2019 and December 31, 2018.

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