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Share-based payments | 9 Months Ended
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Sep. 30, 2021
Share-based payments |
Share-based payments | 19. Share-based payments Share-based payments consist of the following compensation costs: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended |  | Nine months ended | ​
​ | ​ | September 30, | ​ | September 30, | ​
​ |  | 2021 |  | 2020 |  | 2021 |  | 2020 | ​
SG&A expenses: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Stock option compensation expense | ​ | $ | 2,133 | ​ | $ | 1,671 | ​ | $ | 5,903 | ​ | $ | 4,401 | ​
Equity-classified share units | ​ | ​ | 2,283 | ​ | ​ | 4,138 | ​ | ​ | 9,840 | ​ | ​ | 9,155 | ​
Liability-classified share units | ​ | ​ | 527 | ​ | ​ | 2,123 | ​ | ​ | (862) | ​ | ​ | 1,938 | ​
Employee share purchase plan - employer contributions | ​ |  | 684 | ​ |  | 636 | ​ |  | 2,064 | ​ |  | 1,835 | ​
​ | ​ | ​ | 5,627 | ​ | ​ | 8,568 | ​ | ​ | 16,945 | ​ | ​ | 17,329 | ​
Acquisition-related costs: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​
Share-based continuing employment costs | ​ |  | 2,707 | ​ |  | — | ​ |  | 7,938 | ​ |  | — | ​
​ | ​ |  | 2,707 | ​ |  | — | ​ |  | 7,938 | ​ |  | — | ​
​ | ​ | $ | 8,334 | ​ | $ | 8,568 | ​ | $ | 24,883 | ​ | $ | 17,329 | ​
​ Stock option plans ​ The Company has the following three stock option plans that provide for the award of stock options and premium-priced 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 nine months ended September 30, 2021 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Stock options | ​ | Premium-priced stock options
​ | ​ | ​ | ​ | ​ | ​ | WA | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | WA | ​ | ​ | ​
​ | Common | ​ | WA | ​ | remaining | ​ | Aggregate | ​ | Common | ​ | WA | ​ | remaining | ​ | Aggregate
​ | shares under | ​ | exercise | ​ | contractual | ​ | intrinsic | ​ | shares under | ​ | exercise | ​ | contractual | ​ | intrinsic
​ | option |  | price |  | life (in years) |  | value |  | option |  | price |  | life (in years) |  | value
Outstanding, December 31, 2020 | 1,985,754 | ​ | $ | 34.95 | ​ |  | 7.7 | ​ | $ | 68,717 | ​ | — | ​ | $ | — | ​ |  | — | ​ | $ | —
Granted | 690,353 | ​ | ​ | 54.88 | ​ |  |  | ​ |  |  | ​ | 721,980 | ​ | ​ | 91.37 | ​ |  | 5.9 | ​ |  |
Exercised | (411,856) | ​ | ​ | 33.79 | ​ | ​ | ​ | ​ | ​ | 10,652 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Forfeited | (27,130) | ​ | ​ | 46.69 | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |
Outstanding, September 30, 2021 | 2,237,121 | ​ | ​ | 41.17 | ​ |  | 7.7 | ​ | ​ | 45,878 | ​ | 721,980 | ​ | ​ | 91.37 | ​ |  | 5.9 | ​ | ​ | —
Exercisable, September 30, 2021 | 929,944 | ​ | $ | 31.85 | ​ |  | 6.1 | ​ | $ | 27,718 | ​ | — | ​ | $ | — | ​ |  | — | ​ | $ | —
​ Stock options ​ The Company uses the Black Scholes option pricing model to fair value stock options. Significant assumptions used to estimate the fair value of stock options granted during the nine months ended September 30, 2021 and 2020 are presented in the following table on a weighted average basis: ​
​ | ​ | ​ | ​ | ​ | ​
Nine months ended September 30, |  | 2021 |  | 2020 |
Risk free interest rate |  | 0.5 | % | 0.7 | %
Expected dividend yield |  | 1.66 | % | 1.96 | %
Expected lives of the stock options |  | 4 | years | 5 | years
Expected volatility |  | 32.3 | % | 27.9 | %
​ At September 30, 2021, the unrecognized stock-based compensation cost related to the non-vested stock options was $7,052,000, which is expected to be recognized over a weighted average period of 2.2 years. ​ Premium-priced stock options ​ On August 12, 2021, the Company granted premium-priced stock options to the senior executives with exercise prices above the fair market value of the Company’s common shares on grant date. The premium-priced stock options vest and become exercisable upon the third anniversary of the grant date and expire on the sixth anniversary of the grant date. The fair values of the premium-priced stock options were calculated on the grant date using a Monte Carlo simulation model. The weighted average estimated grant date fair value of premium-priced options during the three month period ended September 30, 2021 was $7.24 per option. 19. Share-based payments (continued) Premium-priced stock options (continued) ​ The significant assumptions used to estimate the fair values are presented in the following table: ​
​ | ​ | ​ | ​
August 12, 2021 |  | 2021 |
Risk free interest rate |  | 1.0 | %
Expected dividend yield |  | 1.66 | %
Expected lives of the stock options | ​ | 5 | years
Expected volatility |  | 30.6 | %
​ In addition, the estimated fair value of a premium priced stock option is a function of the expected stock option exercise behaviour assumption. The Company estimated that vested premium priced stock options will be exercised at the midpoint between (i) the later of the date that the premium priced stock options are expected to vest and the date that the exercise price is achieved, and (ii) the end of the premium priced options contractual term. ​ At September 30, 2021, the unrecognized stock-based compensation cost related to the premium-priced stock options was $4,988,000, which is expected to be recognized over a weighted average period of 2.9 years. ​ Share unit plans ​ During the three month period ended September 30, 2021, the Company granted PSUs with market conditions to senior executives. ​ Share unit activity for the nine months ended September 30, 2021 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Equity-classified awards | ​ | Liability-classified awards
​ | ​ | PSUs | ​ | PSUs with Market Conditions | ​ | RSUs | ​ | DSUs
​ | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | WA grant | ​ | ​ | ​ | ​ | WA grant
​ | ​ | ​ | ​ | date fair | ​ | ​ | ​ | date fair | ​ | ​ | ​ | date fair | ​ | ​ | ​ | ​ | date fair
​ |  | Number |  | value |  | Number |  | value |  | Number |  | value |  | ​ | Number |  | value
Outstanding, December 31, 2020 |  | 542,676 | ​ | $ | 38.09 | ​ | — | ​ | $ | — | ​ | 134,937 | ​ | $ | 39.14 |  | ​ | 137,514 | ​ | $ | 32.06
Granted |  | 142,847 | ​ |  | 56.55 | ​ | 88,305 | ​ |  | 65.45 | ​ | 29,805 | ​ |  | 56.55 |  | ​ | 14,569 | ​ |  | 56.42
Vested and settled |  | (161,248) | ​ |  | 31.14 | ​ | — | ​ |  | — | ​ | (88,348) | ​ |  | 33.20 |  | ​ | — | ​ |  | —
Forfeited |  | (16,878) | ​ |  | 47.36 | ​ | — | ​ |  | — | ​ | (6,347) | ​ |  | 58.58 |  | ​ | — | ​ |  | —
Outstanding, September 30, 2021 |  | 507,397 | ​ | $ | 45.18 | ​ | 88,305 | ​ | $ | 65.45 | ​ | 70,047 | ​ | $ | 52.28 |  | ​ | 152,083 | ​ | $ | 34.39
​ The total market value of liability-classified share units vested and released during the first nine months of 2021 was nil (December 31, 2020: nil). ​ 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) issue a number of shares equal to the number of units that vest. Fair values of PSUs 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. At September 30, 2021, the unrecognized share unit expense related to equity-classified PSU’s was $12,193,000, which is expected to be recognized over a weighted average period of 1.9 years. ​ ​ 19. Share-based payments (continued) PSUs with market conditions On August 12, 2021 the Company granted PSUs to senior executives with a market condition where vesting is conditional upon the total stockholder return performance of the Company’s stock relative to the performance of a peer group over a three year performance period from the date of grant. The fair value of $65.45 per PSU was calculated on the grant date using the Monte Carlo simulation model and taking into consideration a required post-vesting holding period of one year with a discount value of $5.90 per PSU. The discount was calculated using the Chaffe Protective Put Method and an effective tax rate of 35%. ​ The significant assumptions used to estimate the fair value are presented in the following table: ​
​ | ​ | ​ | ​
August 12, 2021 | ​ | 2021 | ​
Risk free interest rate | ​ | 0.5 | %
Expected dividend yield | ​ | 1.63 | %
Expected lives of the PSUs | ​ | 3 | years
Expected volatility | ​ | 31.0 | %
Average expected volatility of comparable companies | ​ | 38.6 | %
​ At September 30, 2021, the unrecognized share unit expense related to equity-classified PSUs with market conditions was $5,516,000, which is expected to be recognized over a weighted average period of 2.9 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. At September 30, 2021, the unrecognized share unit expense related to equity-classified RSUs was $1,798,000, which is expected to be recognized over a weighted average period of 1.5 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. 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. At September 30, 2021, the Company had a total share unit liability of $9,501,000 (December 31, 2020: $9,597,000) in respect of share units under the DSU plans. 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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