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Share-based Payments | 3 Months Ended
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Mar. 31, 2023
Share-based Payments |
Share-based Payments | 21. Share-based Payments ​ Share-based payments consist of the following compensation costs: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended
​ | ​ | March 31,
​ |  | 2023 |  | 2022
Selling, general and administrative: |  | ​ |  |  | ​ |
Stock option compensation expense | ​ | $ | 2.6 | ​ | $ | 2.6
Equity-classified share units | ​ | ​ | 3.5 | ​ | ​ | 2.9
Liability-classified share units | ​ | ​ | — | ​ | ​ | (0.8)
Employee share purchase plan - employer contributions | ​ |  | 0.6 | ​ |  | 0.7
​ | ​ | ​ | 6.7 | ​ | ​ | 5.4
Acquisition-related and integration costs: | ​ |  | ​ | ​ |  | ​
Acceleration of share-based payments expense | ​ | ​ | 5.0 | ​ | ​ | —
Share-based continuing employment costs | ​ |  | 1.0 | ​ |  | 2.1
​ | ​ |  | 6.0 | ​ |  | 2.1
​ | ​ | $ | 12.7 | ​ | $ | 7.5
​ 21. Share-based Payments (continued) ​ Conversion of IAA Share Based Awards ​ In connection with the acquisition of IAA, IAA’s stock options, RSU and PRSU awards were cancelled and exchanged into 187,727 Company stock options and 366,379 Company RSU awards. The PRSU’s were replaced with RSU awards. At the closing of the acquisition of IAA, the converted share-based awards had an estimated aggregate fair value of $24.9 million, of which $4.8 million was attributable to post-combination services and will be recognized as share-based payment expense over the remaining service periods. The Company awards are subject to the same terms and conditions as applicable to the corresponding IAA equity awards held prior to the acquisition of IAA, including vesting terms, with the exception of any Company RSU awards that replace IAA’s PRSU awards, where vesting will no longer be subject to the achievement of performance goals and will be solely based on providing continued services to the Company through the end of the applicable service period. ​ IAA restricted stock awards and IAA phantom stock awards which were granted to non-employee directors of IAA, vested at closing of the acquisition of IAA and therefore do not have a future service requirement. Accordingly, the entire post-combination portion of such awards of $0.3 million has been recognized as share-based payment expense concurrent with the closing of the acquisition of IAA. ​ In addition, certain former executives of IAA were terminated in connection with the acquisition of IAA and their outstanding awards were fully accelerated as of the closing date. Accordingly, $4.3 million has been recognized as share-based payment expense concurrent with the closing of the acquisition of IAA. ​ Stock Option Plans ​ The Company has the following four 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, (iii) IronPlanet 2015 Stock Plan, and (iv) 2019 IAA Omnibus Stock and Incentive Plan. ​ The 2019 IAA Omnibus Stock and Incentive Plan was assumed by the Company as part of the acquisition of IAA. ​ ​ Stock option activity for the three months ended March 31, 2023 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, 2022 | 2,730,295 | ​ | $ | 46.88 | ​ | ​ | 7.3 | ​ | $ | 31.2 | ​ | 1,118,432 | ​ | $ | 91.26 | ​ | ​ | 4.7 | ​ | $ | —
Granted | — | ​ | ​ | — | ​ |  | — | ​ |  | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Assumed in IAA acquisition (Note 5) | 187,727 | ​ | ​ | 50.96 | ​ | ​ | — | ​ | ​ | 1.7 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Exercised | (19,729) | ​ | ​ | 34.01 | ​ | ​ | — | ​ | ​ | 0.5 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Forfeited | (52,978) | ​ | ​ | 45.33 | ​ |  | — | ​ |  | — | ​ | (38,635) | ​ | ​ | 91.19 | ​ |  | — | ​ |  | —
Outstanding, March 31, 2023 | 2,845,315 | ​ | $ | 47.26 | ​ | ​ | 6.5 | ​ | $ | 28.7 | ​ | 1,079,797 | ​ | $ | 91.26 | ​ | ​ | 4.3 | ​ | $ | —
Exercisable, March 31, 2023 | 2,069,936 | ​ | $ | 43.61 | ​ | ​ | 5.8 | ​ | $ | 27.8 | ​ | — | ​ | $ | — | ​ |  | — | ​ | $ | —
​ ​ 21. Share-based Payments (continued) ​ Stock Option Plans (continued) ​ Stock Options ​ The Company uses the Black Scholes option pricing model to fair value stock options. There were no stock options granted during the three month period ended March 31, 2023 other than the stock options assumed as part of the IAA acquisition. Significant assumptions used to estimate the fair value of stock options granted during the three months ended March 31, 2022 are presented in the following table on a weighted average basis: ​
​ | ​ | ​ | ​
Three months ended March 31, |  | 2022 |
Risk free interest rate |  | 2.1 | %
Expected dividend yield |  | 1.75 | %
Expected lives of the stock options |  | 4 | years
Expected volatility |  | 31.7 | %
​ At March 31, 2023, the unrecognized stock-based compensation cost related to the non-vested stock options was $4.8 million, which is expected to be recognized over a weighted average period of 1.8 years. ​ The fair value of the assumed stock options is estimated on the IAA acquisition date using the Black-Scholes option pricing model. The weighted average fair value of the assumed options was $15.52. The significant assumptions used to estimate the fair value of these assumed stock options are presented in the following table on a weighted average basis: ​ ​
​ | ​ | ​ | ​
Three months ended March 31, |  | 2023 |
Risk free interest rate |  | 3.9 | %
Expected dividend yield |  | 2.05 | %
Expected lives of the stock options |  | 2 | years
Expected volatility |  | 33.3 | %
​ 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 fair values of the premium-priced stock options were calculated on the grant date using a Monte Carlo simulation model. There were no premium-priced stock options granted during the three month period ended March 31, 2023 and 2022. ​ At March 31, 2023, the unrecognized stock-based compensation cost related to the premium-priced stock options was $4.6 million, which is expected to be recognized over a weighted average period of 1.6 years. ​ ​ 21. Share-based Payments (continued) ​ Share Unit Plans ​ Share unit activity for the nine months ended March 31, 2023 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, 2022 |  | 662,634 | ​ | $ | 51.71 | ​ | 102,879 | ​ | $ | 66.08 | ​ | 68,024 | ​ | $ | 58.32 |  | ​ | 108,365 | ​ | $ | 39.35
Granted |  | 10,216 | ​ |  | 56.74 | ​ | — | ​ |  | — | ​ | 1,137 | ​ |  | 60.11 |  | ​ | 7,094 | ​ |  | 53.05
Assumed in IAA acquisition (Note 5) |  | — | ​ |  | — | ​ | — | ​ |  | — | ​ | 366,379 | ​ |  | 52.79 |  | ​ | — | ​ |  | —
Vested and settled |  | (283,086) | ​ |  | 42.23 | ​ | — | ​ |  | — | ​ | (23,986) | ​ |  | 53.68 |  | ​ | — | ​ |  | —
Forfeited |  | (4,123) | ​ |  | 58.93 | ​ | — | ​ |  | — | ​ | (1,459) | ​ |  | 60.95 |  | ​ | — | ​ |  | —
Outstanding at March 31, 2023 |  | 385,641 | ​ | $ | 58.72 | ​ | 102,879 | ​ | $ | 66.08 | ​ | 410,095 | ​ | $ | 53.65 |  | ​ | 115,459 | ​ | $ | 40.19
​ The total market value of liability-classified share units vested and released during the first three months of 2023 was nil (2022: 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 the 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 March 31, 2023, the unrecognized share unit expense related to equity-classified PSU’s was $11.2 million, which is expected to be recognized over a weighted average period of 1.7 years. 21. 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. There were no PSUs with market conditions granted in the three month period ended March 31, 2023 and 2022. ​ At March 31, 2023, the unrecognized share unit expense related to equity-classified PSUs with market conditions was $3.1 million, which is expected to be recognized over a weighted average period of 1.4 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 March 31, 2023, the unrecognized share unit expense related to equity-classified RSUs was $5.8 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 March 31, 2023, the Company had a total share unit liability of $6.7 million (at December 31, 2022: $6.3 million) in respect of share units under the DSU plans. Employee Share Purchase Plan In February 2023, the Board approved the suspension of the Company’s 1999 Employee Share Purchase Plan. On April 3, 2023, the Board adopted the Company’s 2023 Employee Stock Purchase Plan (the “2023 ESPP”), subject to shareholder approval. The 2023 ESPP is described in greater detail in the Company’s Proxy Statement filed on Form DEF14A on EDGAR and SEDAR on April 11, 2023.

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