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Share-based payments | 12 Months Ended
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Dec. 31, 2020
Share-based payments |
Share-based payments | 24. Share-based payments Share-based payments consist of the following compensation costs:
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Year ended December 31, | ​ | 2020 |  | 2019 |  | 2018
SG&A expenses: | ​ | ​ |  |  | ​ |  |  | ​ |
Stock option compensation expense | ​ | $ | 5,853 | ​ | $ | 4,697 | ​ | $ | 7,895
Equity-classified share units | ​ | ​ | 9,897 | ​ |  | 8,047 | ​ |  | 11,256
Liability-classified share units | ​ | ​ | 3,635 | ​ |  | 1,380 | ​ |  | 1,764
Employee share purchase plan - employer contributions | ​ |  | 2,497 | ​ |  | 2,281 | ​ |  | 2,174
​ | ​ | ​ | 21,882 | ​ | ​ | 16,405 | ​ | ​ | 23,089
Acquisition-related costs: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock option compensation expense | ​ |  | — | ​ |  | — | ​ |  | 357
Share-based continuing employment costs | ​ |  | 802 | ​ | ​ | — | ​ | ​ | —
​ | ​ |  | 802 | ​ | ​ | — | ​ | ​ | 357
​ | ​ | $ | 22,684 | ​ | $ | 16,405 | ​ | $ | 23,446
​ Stock option plans The Company has three stock option plans that provide for the award of stock options to selected employees, directors, and officers of the Company: a) Amended and Restated Stock Option Plan, b) IronPlanet 1999 Stock Plan, and c) IronPlanet 2015 Stock Plan. Stock option activity for the years ended December 31, 2020, 2019, and 2018 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | WA | ​ | ​ | ​
​ | ​ | Common | ​ | WA | ​ | remaining | ​ | Aggregate
​ | ​ | shares under | ​ | exercise | ​ | contractual | ​ | intrinsic
​ |  | option |  | price |  | life (in years) |  | value
Outstanding, December 31, 2017 |  | 4,459,744 |  | $ | 24.29 |  | ​ | 7.5 |  | $ | 17,649
Granted |  | 923,199 |  | ​ | 32.14 |  | ​ |  |  | ​ |
Assumed in acquisition |  | (1,235,154) | ​ |  | 23.10 | ​ |  |  | ​ |  | ​
Exercised |  | (132,624) |  | ​ | 25.91 | ​ | ​ | ​ |  | ​ | 14,808
Forfeited |  | (1,302) |  | ​ | 25.76 | ​ |  |  |  | ​ |
Outstanding, December 31, 2018 |  | 4,013,863 | ​ | $ | 26.41 | ​ |  | 7.2 | ​ | $ | 25,374
Granted |  | 914,068 | ​ |  | 34.03 | ​ |  |  | ​ |  |
Exercised |  | (1,672,022) | ​ |  | 24.58 | ​ | ​ | ​ | ​ | ​ | 27,349
Forfeited |  | (458,092) | ​ |  | 32.15 | ​ |  |  | ​ |  |
Expired | ​ | (628) | ​ | ​ | 24.44 | ​ | ​ | ​ | ​ | ​ | ​
Outstanding, December 31, 2019 |  | 2,797,189 | ​ | $ | 29.05 | ​ |  | 7.1 | ​ | $ | 38,874
Granted |  | 822,626 | ​ |  | 41.94 | ​ |  |  | ​ |  |
Exercised |  | (1,563,941) | ​ |  | 28.22 | ​ | ​ | ​ | ​ | ​ | 37,062
Forfeited |  | (68,056) | ​ |  | 34.30 | ​ |  |  | ​ |  |
Expired |  | (2,064) | ​ |  | 20.74 | ​ |  |  | ​ |  |
Outstanding, December 31, 2020 |  | 1,985,754 | ​ | ​ | 34.95 | ​ |  | 7.7 | ​ | ​ | 68,717
Exercisable, December 31, 2020 |  | 702,443 | ​ | $ | 28.45 | ​ |  | 6.0 | ​ | $ | 28,869
​ 24. Share-based payments (continued) Stock option plans (continued) Stock options are granted with an exercise price equal to the fair market value of the Company’s common shares at the grant date, with a three years vesting period and terms not exceeding 10 years. At December 31, 2020, there were 6,442,360 (December 31, 2019: 7,222,978) shares authorized and available for grants of options under the stock option plans. The options outstanding at December 31, 2020 expire on dates ranging to November 10, 2030. The weighted average grant date fair value of options granted during the year ended December 31, 2020 was $8.69 per option (2019: $7.52; 2018: $7.69). The weighted average share price of options exercised during the year ended December 31, 2020 was $51.92 (2019: $40.32; 2018: $35.08). The significant assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2020, 2019, and 2018 are presented in the following table on a weighted average basis: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year ended December 31, |  | 2020 |  | 2019 |  | 2018 |
Risk free interest rate |  | 0.7 | % | 2.5 | % | 2.7 | %
Expected dividend yield |  | 1.96 | % | 2.06 | % | 2.11 | %
Expected lives of the stock options |  | 5 | years | 5 | years | 5 | years
Expected volatility |  | 28.0 | % | 26.8 | % | 28.1 | %
​ ​ As at December 31, 2020, the unrecognized stock-based compensation cost related to the non-vested stock options was $4,424,000, which is expected to be recognized over a weighted average period of 2.2 years. Cash received from stock-based award exercises for the year ended December 31, 2020 was $44,128,000 (2019: $41,094,000; 2018: $28,524,000). The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $4,594,000 for the year ended December 31, 2020 (2019: $1,679,000; 2018: $2,793,000). ​ 24. Share-based payments (continued) Share unit plans Share unit activity for the years ended December 31, 2020, 2019, and 2018 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Equity-classified awards | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Liability-classified awards
​ | ​ | PSUs | ​ | RSUs | ​ | PSUs(1) | ​ | RSUs | ​ | DSUs
​ | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | ​ | WA grant
​ | ​ | ​ | ​ | date fair | ​ | ​ | ​ | date fair | ​ | ​ | ​ | date fair | ​ | ​ | ​ | date fair | ​ | ​ | ​ | ​ | date fair
​ |  | Number |  | value |  | Number |  | value |  | Number |  | value |  | Number |  | value |  | ​ | Number |  | value
Outstanding, December 31, 2017 |  | 434,248 | ​ | $ | 27.83 |  | 125,152 | ​ | $ | 26.93 |  | 259,241 | ​ | $ | 26.38 |  | 4,666 | ​ | $ | 26.42 |  | ​ | 93,487 | ​ | $ | 26.32
Granted |  | 240,803 | ​ |  | 35.63 |  | 91,251 | ​ |  | 32.10 |  | — | ​ |  | — |  | 66 | ​ |  | 34.70 |  | ​ | 26,553 | ​ |  | 33.42
Transferred to (from) equity awards on modification |  | 257,659 | ​ |  | 31.30 |  | — | ​ |  | — |  | (257,659) | ​ |  | 26.38 |  | — | ​ |  | — |  | ​ | — | ​ |  | —
Vested and settled |  | (212,263) | ​ |  | 33.78 |  | — | ​ |  | — |  | — | ​ |  | — |  | (4,732) | ​ |  | 26.54 |  | ​ | (6,605) | ​ |  | 23.16
Forfeited |  | (50,159) | ​ |  | 31.41 |  | (8,417) | ​ |  | 32.00 |  | (1,582) | ​ |  | 26.45 |  | — | ​ |  | — |  | ​ | — | ​ |  | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Outstanding, December 31, 2018 |  | 670,288 | ​ | $ | 31.46 |  | 207,986 | ​ | $ | 28.99 |  | — | ​ | $ | — |  | — | ​ | $ | — |  | ​ | 113,435 | ​ | $ | 28.16
Granted |  | 170,208 | ​ |  | 36.13 |  | 36,350 | ​ |  | 35.40 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | 24,810 | ​ |  | 35.99
Transferred to equity awards on modification |  | — | ​ |  | — |  | — | ​ |  | — |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | — | ​ |  | —
Vested and settled |  | (251,883) | ​ |  | 30.33 |  | (265) | ​ |  | 31.98 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | (19,877) | ​ |  | 27.45
Forfeited |  | (159,889) | ​ |  | 33.21 |  | (6,651) | ​ |  | 34.27 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | — | ​ |  | —
Outstanding, December 31, 2019 |  | 428,724 | ​ | $ | 32.89 |  | 237,420 | ​ | $ | 29.72 |  | — | ​ | $ | — |  | — | ​ | $ | — |  | $ | 118,368 | ​ | $ | 29.64
Granted |  | 303,829 | ​ |  | 42.09 |  | 45,781 | ​ |  | 51.36 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | 19,146 | ​ |  | 47.01
Vested and settled |  | (156,238) | ​ |  | 31.94 |  | (98,542) | ​ |  | 27.68 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | — | ​ |  | —
Forfeited |  | (33,639) | ​ |  | 36.60 |  | (49,722) | ​ |  | 28.14 |  | — | ​ |  | — |  | — | ​ |  | — |  | ​ | — | ​ |  | —
Outstanding, December 31, 2020 |  | 542,676 | ​ | $ | 38.09 |  | 134,937 | ​ | $ | 39.14 |  | — | ​ | $ | — |  | — | ​ | $ | — |  | $ | 137,514 | ​ | $ | 32.06
(1) | Liability-classified PSUs include PSUs awarded under the employee PSU plan and the previous 2013 PSU plan, in place prior to 2015, are cash-settled and not subject to market vesting conditions.
The total market value of liability-classified share units vested and released during the year ended December 31, 2020 was nil (2019: $774,000; 2018: $410,000). The Company modified the employee PSU plans from liability-classified to equity-classified share units prior to the 2018 vesting. Senior executive and employee PSU plans The Company grants PSUs under a senior executive PSU plan and an employee PSU plan (the “PSU Plans”). Under the PSU Plans, the number of PSUs that vest is conditional upon specified market, service, and/or performance vesting conditions being met. The PSU Plans allow the Company to choose whether to settle the awards in cash or in shares. The Company intends to settle by issuance of shares. With respect to settling in shares, the Company has the option to either (i) arrange for the purchase shares on the open market on the employee’s behalf based on the cash value that otherwise would be delivered, or (ii) to issue a number of shares equal to the number of units that vest. 24. Share-based payments (continued) Share unit plans (continued) The fair value of the equity-classified PSUs awarded in 2020 and 2019 is estimated using the 20-day volume weighted average price of the Company’s common shares listed on the New York Stock Exchange, as these awards are not subject to market vesting conditions. PSUs awarded in 2018 contained market vesting conditions and their fair value is estimated on modification date and on the date of grant using a Monte-Carlo simulation model. The significant assumptions used to estimate the fair value of the equity-classified PSUs awarded in 2018 are presented in the following table on a weighted average basis: ​
​ | ​ | ​ | ​
Year ended December 31, | ​ | 2018 |
Risk free interest rate | ​ | 1.92 | %
Expected dividend yield | ​ | 2.09 | %
Expected lives of the PSUs | ​ | 3 | years
Expected volatility | ​ | 31.1 | %
Average expected volatility of comparable companies | ​ | 34.1 | %
​ Risk free interest rate is estimated using Bloomberg’s United States dollar Swap Rate as of the valuation date. Expected dividend yield assumes a continuation of the most recent quarterly dividend payments. Given the limited historical information available for the PSUs, the Company estimated the expected life of PSUs with reference to the expected life of stock options. Stock options have five-year expected lives, whereas PSUs vest after three years. As such, the Company estimates the expected life of the PSUs to equal the three-year vesting period. Expected volatility is estimated from Bloomberg’s volatility surface of the common shares as of the valuation date. As at December 31, 2020, the unrecognized share unit expense related to equity-classified PSUs was $10,447,000, which is expected to be recognized over a weighted average period of 2.0 years. RSUs The Company has RSU plans that are equity-settled and not subject to market vesting conditions. Fair values of RSUs are estimated on grant date using the 20-day volume weighted average price of the Company's common shares listed on the New York Stock Exchange. As at December 31, 2020, the unrecognized share unit expense related to equity-classified RSUs was $1,980,000, which is expected to be recognized over a weighted average period of 1.7 years. DSUs The Company has DSU plans that are cash-settled and not subject to market vesting conditions. Fair values of DSUs are estimated on grant date and at each reporting date using the 20-day volume weighted average price of the Company's common shares listed on the New York Stock Exchange. DSUs are granted under the DSU plan to members of the Board of Directors. There is no unrecognized share unit expense related to liability-classified DSUs as they vest immediately and are expensed upon grant. ​ 24. Share-based payments (continued) Share unit plans (continued) DSUs (continued) As at December 31, 2020, the Company had a total share unit liability of $9,597,000 (2019: $5,130,000) in respect of share units under the DSU plans presented in other payable within current liabilities. ​ Modifications The Company modified various share-based payment plans in 2018. The nature and impact of these modifications are discussed further below. Employee and Executive PSU Plan modification On March 1, 2018, the Company modified the market and performance vesting conditions for the PSUs. Concurrently, the PSUs under the employee PSU plan were reclassified to equity awards based on the Company’s settlement intentions. The weighted average fair value of the PSU awards outstanding on the modification date was $31.35. The incremental compensation recognized as a result of the vesting condition modification was $1,400,000. The share unit liability related to the employee PSUs, representing the portion of the fair value attributable to past service, was $6,701,000, which was reclassified to equity on that date. No incremental compensation was recognized as a result of the employee PSU settlement modification. Sign-on Grants modifications On September 11, 2018, the Company modified the performance vesting conditions of the Sign-on Grant (“SOG”) PSUs related to our former Chief Executive Officer. The modification impacted the third and fourth tranches of PSUs to vest. As a result of the modification, the actual number of units to vest will be determined by the Board of Directors of the Company based on absolute Total Shareholder Return (“TSR”) performance over the period commencing on July 1, 2017, and ending on the fourth and fifth anniversaries of the grant date. Prior to this modification, the absolute TSR performance period commenced on August 11, 2014. The weighted average fair value of the PSU awards outstanding on the modification date was $43.34. The incremental compensation recognized as a result of the vesting condition modification was $838,000. It was determined based on the change in fair value of the equity-classified SOG PSUs immediately before and after modification. Significant assumptions used to estimate the fair value of the equity-classified SOG PSUs to determine the incremental compensation cost were as follows: ​
​ | ​ | ​ | ​
September 11, 2018 |  | 2018 |
Risk free interest rate |  | 2.7 | %
Expected dividend yield |  | 1.53 | %
Expected lives of the PSU |  | 1 | year
Expected volatility |  | 29.2 | %
​ Unrecognized compensation expense based on the fair value of the SOG PSU award on the modification has already amortized over the remaining service period. ​ Employee share purchase plan The Company has an employee share purchase plan that allows all employees that have completed two months of service to contribute funds to purchase common shares at the current market value at the time of share purchase. Employees may contribute up to 4% of their salary. The Company will match between 50% and 100% of the employee’s contributions, depending on the employee’s length of service with the Company. ​

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