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Share-based payments | 9 Months Ended
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Sep. 30, 2022
Share-based payments |
Share-based payments | 20. Share-based payments Share-based payments consist of the following compensation costs: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended |  | Nine months ended | ​
​ | ​ | September 30, | ​ | September 30, | ​
​ |  | 2022 |  | 2021 |  | 2022 |  | 2021 | ​
Selling, general and administrative: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Stock option compensation expense | ​ | $ | 3,249 | ​ | $ | 2,133 | ​ | $ | 8,871 | ​ | $ | 5,903 | ​
Equity-classified share units | ​ | ​ | 4,759 | ​ | ​ | 2,283 | ​ | ​ | 16,450 | ​ | ​ | 9,840 | ​
Liability-classified share units | ​ | ​ | 108 | ​ | ​ | 527 | ​ | ​ | 427 | ​ | ​ | (862) | ​
Employee share purchase plan - employer contributions | ​ |  | 690 | ​ |  | 684 | ​ |  | 2,085 | ​ |  | 2,064 | ​
​ | ​ | ​ | 8,806 | ​ | ​ | 5,627 | ​ | ​ | 27,833 | ​ | ​ | 16,945 | ​
Acquisition-related costs: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​
Share-based continuing employment costs | ​ |  | 1,863 | ​ |  | 2,707 | ​ |  | 6,075 | ​ |  | 7,938 | ​
​ | ​ |  | 1,863 | ​ |  | 2,707 | ​ |  | 6,075 | ​ |  | 7,938 | ​
​ | ​ | $ | 10,669 | ​ | $ | 8,334 | ​ | $ | 33,908 | ​ | $ | 24,883 | ​
​ 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: (i) Amended and Restated Stock Option Plan, (ii) IronPlanet 1999 Stock Plan, and (iii) IronPlanet 2015 Stock Plan. ​ ​ Stock option activity for the nine months ended September 30, 2022 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, 2021 | 2,208,057 | ​ | $ | 42.55 | ​ | ​ | 7.7 | ​ | $ | 41,884 | ​ | 1,017,064 | ​ | $ | 91.24 | ​ | ​ | 5.7 | ​ | $ | —
Granted | 697,536 | ​ | ​ | 58.14 | ​ |  | — | ​ |  | — | ​ | 119,157 | ​ | ​ | 91.37 | ​ | ​ | — | ​ | ​ | —
Exercised | (155,694) | ​ | ​ | 37.02 | ​ | ​ | — | ​ | ​ | 4,359 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Forfeited | (20,662) | ​ | ​ | 47.96 | ​ |  | — | ​ |  | — | ​ | (17,789) | ​ | ​ | 90.93 | ​ |  | — | ​ |  | —
Outstanding, September 30, 2022 | 2,729,237 | ​ | $ | 46.81 | ​ | ​ | 7.6 | ​ | $ | 43,405 | ​ | 1,118,432 | ​ | $ | 91.26 | ​ | ​ | 4.9 | ​ | $ | —
Exercisable, September 30, 2022 | 1,280,995 | ​ | $ | 37.62 | ​ | ​ | 6.3 | ​ | $ | 31,859 | ​ | — | ​ | $ | — | ​ |  | — | ​ | $ | —
​ 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, 2022 and 2021 are presented in the following table on a weighted average basis: ​
​ | ​ | ​ | ​ | ​ | ​
Nine months ended September 30, |  | 2022 |  | 2021 |
Risk free interest rate |  | 2.2 | % | 0.5 | %
Expected dividend yield |  | 1.74 | % | 1.66 | %
Expected lives of the stock options |  | 4 | years | 4 | years
Expected volatility |  | 31.8 | % | 32.3 | %
​ At September 30, 2022, the unrecognized stock-based compensation cost related to the non-vested stock options was $9.4 million, which is expected to be recognized over a weighted average period of 2.2 years. ​ ​ 20. Share-based payments (continued) ​ Premium-priced stock options ​ The Company also grants premium-priced stock options to the senior executives with exercise prices above the fair market value of the Company’s common shares on grant dates. The premium-priced stock options vest and become exercisable upon the third anniversary of their grant date. The premium-priced stock options granted in August and November 2021 expire on the sixth anniversary of their grant date, and those granted in June 2022 expire in August 2027 to coincide with the expiry of the August 2021 grant. 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 June 30, 2022 was $8.00 per option. There were no premium-priced stock options granted during the three month period ended September 30, 2022. ​ The significant assumptions used to estimate the fair values were as follows: ​
​ | ​ | ​ | ​ | ​ | ​
Nine months ended September 30, |  | 2022 |  | 2021 | ​
Risk free interest rate |  | 3.0 | % | 1.00 | %
Expected dividend yield |  | 1.63 | % | 1.66 | %
Expected lives of the stock options | ​ | 4 | years | 5 | years
Expected volatility |  | 30.2 | % | 30.6 | %
​ At September 30, 2022, the unrecognized stock-based compensation cost related to the premium-priced stock options was $6.4 million, which is expected to be recognized over a weighted average period of 2.1 years. ​ Share unit plans ​ Share unit activity for the nine months ended September 30, 2022 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 at December 31, 2021 |  | 523,618 | ​ | $ | 45.90 | ​ | 88,305 | ​ | $ | 65.45 | ​ | 79,112 | ​ | $ | 54.96 |  | ​ | 156,589 | ​ | $ | 35.28
Granted |  | 230,122 | ​ |  | 58.68 | ​ | 14,574 | ​ |  | 69.92 | ​ | 34,135 | ​ |  | 57.70 |  | ​ | 16,182 | ​ |  | 59.57
Vested and settled |  | (93,241) | ​ |  | 36.42 | ​ | — | ​ |  | — | ​ | (27,850) | ​ |  | 44.02 |  | ​ | — | ​ |  | —
Forfeited |  | (3,503) | ​ |  | 50.97 | ​ | — | ​ |  | — | ​ | (6,070) | ​ |  | 59.67 |  | ​ | — | ​ |  | —
Outstanding at September 30, 2022 |  | 656,996 | ​ | $ | 51.70 | ​ | 102,879 | ​ | $ | 66.08 | ​ | 79,327 | ​ | $ | 59.62 |  | ​ | 172,771 | ​ | $ | 37.55
​ The total market value of liability-classified share units vested and released during the first nine months of 2022 was nil (at December 31, 2021: 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 of 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 equity-classified PSUs are estimated on grant date using the market close price of the Company's common shares listed on the NYSE, as these are not subject to market vesting conditions. At September 30, 2022, the unrecognized share unit expense related to equity-classified PSU’s was $17.8 million, which is expected to be recognized over a weighted average period of 1.9 years. 20. Share-based payments (continued) ​ PSUs with market conditions ​ The Company also grants 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 PSUs granted in August and November 2021 have a three year performance period and the PSUs granted in June 2022 have approximately a 2 year performance period to coincide with the remaining performance period of the August 2021 grant. The fair value per PSU granted during the three month period ended June 30, 2022 of $69.92 was calculated on the grant date using the Monte Carlo simulation model which takes into consideration a required post-vesting holding period of one year with a discount value of $5.34 per PSU. The discount was calculated using the Chaffe Protective Put Method and an effective tax rate of 35%. There were no PSUs with market conditions granted in the three month period ended September 30, 2022. ​ The significant assumptions used to estimate the fair value are presented in the following table: ​
​ | ​ | ​ | ​ | ​ | ​
Nine months ended September 30, |  | 2022 |  | 2021 | ​
Risk free interest rate |  | 2.7 | % | 0.5 | %
Expected dividend yield |  | 1.63 | % | 1.63 | %
Expected lives of the PSUs | ​ | 2 | years | 3 | years
Expected volatility |  | 33.4 | % | 31.0 | %
Average expected volatility of comparable companies | ​ | 34.4 | % | 38.6 | %
​ At September 30, 2022, the unrecognized share unit expense related to equity-classified PSUs with market conditions was $4.5 million, which is expected to be recognized over a weighted average period of 1.9 years. ​ RSUs ​ The Company has restricted share unit plans (RSU plans) that are equity-settled and not subject to market vesting conditions. Fair values of RSUs are estimated on grant date using the market close price of the Company's common shares listed on the NYSE. At September 30, 2022, the unrecognized share unit expense related to equity-classified RSUs was $2.1 million, which is expected to be recognized over a weighted average period of 1.5 years. DSUs The Company has deferred share unit plans (DSU plans) that are cash-settled and not subject to market vesting conditions. Fair values of deferred share units (“DSUs”) are estimated on grant date and at each reporting date using the market close price of the Company’s common shares listed on the NYSE. 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, 2022, the Company had a total share unit liability of $11.3 million (at December 31, 2021: $10.1 million) 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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