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Share-based Payments | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-based Payments | 24. Share-based Payments Share-based payments consist of the following compensation costs:
Year ended December 31, |  | 2023 |  | 2022 |  | 2021
Selling, general and administrative: |  |  |  |  |  |
Stock option compensation expense |  | $ | 7.7 |  |  | $ | 12.2 |  |  | $ | 8.4 |
Equity-classified share units |  | 32.0 |  |  | 22.0 |  |  | 12.6 |
Liability-classified share units |  | 2.5 |  |  | — |  |  | (0.6) |
Employee share purchase plan |  | 4.7 |  |  | 2.8 |  |  | 2.7 |
|  | 46.9 |  |  | 37.0 |  |  | 23.1 |
Acquisition-related and integration costs: |  |  |  |  |  |
Acceleration of share-based payments expense |  | 6.8 |  |  | — |  |  | — |
Share-based continuing employment costs |  | 3.8 |  |  | 7.5 |  |  | 10.8 |
|  | 10.6 |  |  | 7.5 |  |  | 10.8 |
|  | $ | 57.5 |  |  | $ | 44.5 |  |  | $ | 33.9 |
At December 31, 2023, there were 8,511,523 (December 31, 2022: 3,919,069) shares authorized and available for grants of options under the stock option plans. Conversion of IAA Share Based Awards In connection with the acquisition of IAA, IAA’s stock options, RSUs and performance restrictive stock unit ("PRSU") awards were cancelled and exchanged into 187,727 Company stock options and 366,379 Company 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 payments 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 share-based 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 On May 8, 2023, the Company’s shareholders approved the 2023 Share Incentive Plan (“2023 Plan”) under which 9,355,000 common shares of the Company were reserved for issuance. The 2023 Plan allows the Company to grant to employees, officers, non-employee directors and other key persons various types of equity-based awards, including stock options, performance-based restricted share units and time-based restricted share units. Beginning in the second quarter of 2023, all share-based awards granted are governed by the 2023 Plan. Equity awards granted under previous plans remain outstanding until expiration or settlement. Stock option activity is presented below:
| Stock options |  | Premium-priced stock options
| Common shares under option |  | WA exercise price |  | WA remaining contractual life (in years) |  | Aggregate intrinsic value |  | Common shares under option |  | WA exercise price |  | WA remaining contractual life (in years) |  | Aggregate intrinsic value
Outstanding, December 31, 2020 | 1,985,754 |  | $ | 34.95 |  |  | 7.7 |  | $ | 68.7 |  |  | — |  | $ | — |  |  | — |  |  | $ | — |
Granted | 758,256 |  | 56.29 |  |  | — |  |  | — |  |  | 1,017,064 |  | 91.24 |  |  | — |  |  | — |
Exercised | (495,021) |  | 32.83 |  |  | — |  |  | 14.1 |  |  | — |  | — |  |  | — |  |  | — |
Forfeited | (40,932) |  | 45.86 |  |  | — |  |  | — |  |  | — |  | — |  |  | — |  |  | — |
Outstanding, December 31, 2021 | 2,208,057 |  | $ | 42.55 |  |  | 7.7 |  | $ | 41.9 |  |  | 1,017,064 |  | $ | 91.24 |  |  | 5.7 |  | $ | — |
Granted | 710,847 |  | 58.08 |  |  | — |  |  | — |  |  | 119,157 |  | 91.37 |  |  | — |  |  | — |
Exercised | (159,920) |  | 36.72 |  |  | — |  |  | 4.5 |  |  | — |  | — |  |  | — |  |  | — |
Forfeited | (28,689) |  | 48.09 |  |  | — |  |  | — |  |  | (17,789) |  | 90.93 |  |  | — |  |  | — |
Outstanding, December 31, 2022 | 2,730,295 |  | $ | 46.88 |  |  | 7.3 |  | $ | 31.2 |  |  | 1,118,432 |  | $ | 91.26 |  |  | 4.7 |  | $ | — |
Granted | 262,725 |  | 58.09 |  |  | — |  |  | — |  |  | — |  | — |  |  | — |  |  | — |
Assumed in acquisition (note 4) | 187,727 |  | 50.96 |  |  | — |  |  | — |  |  | — |  | — |  |  | — |  |  | — |
Exercised | (721,503) |  | 47.67 |  |  | — |  |  | 10.3 |  |  | — |  | — |  |  | — |  |  | — |
Forfeited | (140,162) |  | 53.84 |  |  | — |  |  | — |  |  | (225,765) |  | 91.26 |  |  | — |  |  | — |
Outstanding, December 31, 2023 | 2,319,082 |  | $ | 47.82 |  |  | 6.3 |  | $ | 44.5 |  |  | 892,667 |  | $ | 91.26 |  |  | 3.6 |  | $ | — |
Exercisable, December 31, 2023 | 1,462,603 |  | $ | 42.15 |  |  | 5.1 |  | $ | 36.3 |  |  | 86,206 |  | $ | 91.37 |  |  | 2.8 |  | $ | — |
Stock options The Company uses the Black Scholes option pricing model to fair value stock options. Expected volatility is based upon the historical volatility of the Company's common shares for the period corresponding with the expected term of the options. 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 year vesting period and terms not exceeding 10 years. The options outstanding at December 31, 2023 expire on dates ranging to August 08, 2033. The weighted average grant date fair value of options granted during the year ended December 31, 2023 was $17.63 per option (2022: $14.35; 2021: $12.72). The significant assumptions used to estimate the fair value of stock options granted are presented in the following table on a weighted average basis:
|  | December 31, 2023 |  | December 31, 2022 |  | December 31, 2021
Risk free interest rate |  | 4.2 | % |  | 2.2 | % |  | 0.5 | %
Expected dividend yield |  | 1.84 | % |  | 1.74 | % |  | 1.64 | %
Expected lives of the stock options |  | 4 years |  | 4 years |  | 4 years
Expected volatility |  | 35.8 | % |  | 31.8 | % |  | 32.3 | %
At December 31, 2023, the unrecognized stock-based compensation cost related to non-vested stock options was $4.2 million, which is expected to be recognized over a weighted average period of 1.3 years. Cash received from stock-based award exercises for the year ended December 31, 2023 was $34.5 million (2022: $5.9 million; 2021: $16.3 million). The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $0.8 million for the year ended December 31, 2023 (2022: $0.4 million; 2021: $1.8 million). 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:
|  | December 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 has 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 dates. The premium-priced stock options vest and become exercisable upon the third anniversary of their grant date. The significant assumptions used to estimate the fair values were as follows:
|  | December 31, 2022 |  | December 31, 2021
Risk free interest rate |  | 3.0 | % |  | 1.1 | %
Expected dividend yield |  | 1.63 | % |  | 1.59 | %
Expected lives of the stock options |  | 4 years |  | 5 years
Expected volatility |  | 30.2 | % |  | 30.6 | %
There were no premium-priced stock options granted during the year ended December 31, 2023. The fair values of the premium-priced stock options granted in 2022 were calculated on the grant date using a Monte Carlo simulation model and their weighted average estimated grant date fair value was $8.00 per option. At December 31, 2023, the unrecognized stock-based compensation cost related to the premium-priced stock options was $1.2 million, which is expected to be recognized over a weighted average period of 0.8 years. Share Units Share unit activity is presented below:
| Equity-classified awards |  | Liability-classified awards
| PSUs |  | PSUs with Market Conditions |  | RSUs |  | DSUs
| Number |  | WA grant date fair value |  | Number |  | WA grant date fair value |  | Number |  | WA grant date fair value |  | Number |  | WA grant date fair value
Outstanding, December 31, 2020 | 542,676 |  | $ | 38.09 |  |  | — |  | $ | — |  |  | 134,937 |  | $ | 39.14 |  |  | 137,514 |  | $ | 32.06 |
Granted | 160,713 |  | 57.67 |  |  | 88,305 |  | 65.45 |  |  | 46,675 |  | 60.98 |  |  | 19,075 |  | 58.48 |
Vested and settled | (161,248) |  | 31.14 |  |  | — |  | — |  |  | (93,426) |  | 35.04 |  |  | — |  | — |
Forfeited | (18,523) |  | 47.58 |  |  | — |  | — |  |  | (9,074) |  | 55.81 |  |  | — |  | — |
Outstanding, December 31, 2021 | 523,618 |  | $ | 45.90 |  |  | 88,305 |  | $ | 65.45 |  |  | 79,112 |  | $ | 54.96 |  |  | 156,589 |  | $ | 35.28 |
Granted | 236,855 |  | 58.53 |  |  | 14,574 |  | 69.92 |  |  | 34,495 |  | 57.71 |  |  | 21,824 |  | 58.24 |
Vested and settled | (93,241) |  | 36.42 |  |  | — |  | — |  |  | (37,714) |  | 50.29 |  |  | (70,048) |  | 36.13 |
Forfeited | (4,598) |  | 51.76 |  |  | — |  | — |  |  | (7,869) |  | 60.30 |  |  | — |  | — |
Outstanding at December 31, 2022 | 662,634 |  | $ | 51.71 |  |  | 102,879 |  | $ | 66.08 |  |  | 68,024 |  | $ | 58.32 |  |  | 108,365 |  | $ | 39.35 |
Granted | 94,729 |  | 58.04 |  |  | 80,398 |  | 85.33 |  |  | 425,309 |  | 53.35 |  |  | 24,573 |  | 55.49 |
Assumed in IAA acquisition | — |  | — |  |  | — |  | — |  |  | 366,379 |  | 52.79 |  |  | — |  | — |
Vested and settled | (283,086) |  | 42.23 |  |  | — |  | — |  |  | (309,102) |  | 53.22 |  |  | (32,378) |  | 54.68 |
Forfeited | (58,848) |  | 60.62 |  |  | (9,017) |  | 68.59 |  |  | (10,939) |  | 55.06 |  |  | — |  | — |
Outstanding at December 31, 2023 | 415,429 |  | $ | 58.35 |  |  | 174,260 |  | $ | 74.83 |  |  | 539,671 |  | $ | 53.64 |  |  | 100,560 |  | $ | 38.36 |
The total market value of liability-classified share units vested and released during the year ended December 31, 2023 was $1.8 million (2022: $4.9 million; 2021: $nil). In August 2023, the Company granted 159,475 PSUs to senior executives, half of which vest based on performance vesting conditions and half of which vest based on market performance vesting conditions, specifically conditional upon the Company's total shareholder return relative to the performance of a peer group. The PSUs granted have a three year performance period beginning on January 1, 2023. PSUs The fair value of the 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 awards are not subject to market vesting conditions. At December 31, 2023, the unrecognized share unit expense related to equity-classified PSUs was $7.6 million, which is expected to be recognized over a weighted average period of 1.8 years. PSUs with Market Conditions The Company has 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 PSUs granted in June 2022 have approximately a two year performance period to coincide with the remaining performance period of the August 2021 grant. The fair value per PSU granted during the year ended December 31, 2023, was $85.33 and the fair value was calculated on the grant date using a Monte Carlo simulation model. The fair value per PSU granted during the year ended December 31, 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%. The significant assumptions used to estimate the fair value are presented in the following table:
|  | December 31, 2023 |  | December 31, 2022
Risk free interest rate |  | 4.5 | % |  | 2.7 | %
Expected dividend yield |  | — | % |  | 1.63 | %
Expected lives of the PSUs |  | 2 years |  | 2 years
Expected volatility |  | 32.7 | % |  | 33.4 | %
Average expected volatility of comparable companies |  | 48.6 | % |  | 34.4 | %
At December 31, 2023, the unrecognized share unit expense related to equity-classified PSUs with market conditions was $5.3 million, which is expected to be recognized over a weighted average period of 2.1 years. RSUs 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 December 31, 2023, the unrecognized share unit expense related to equity-classified RSUs was $14.3 million, which is expected to be recognized over a weighted average period of 1.4 years. DSUs Fair values of 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 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 December 31, 2023, the Company had a total share unit liability of $7.6 million (2022: $6.3 million) in respect of DSUs presented in trade and other liabilities. Employee Share Purchase Plan In February 2023, the Board approved the suspension of the Company’s 1999 Employee Stock Purchase Plan. On April 3, 2023, the Board approved a new Employee Stock Purchase Plan, which was subsequently approved by the Company's shareholders on May 8, 2023. Effective June 15, 2023, the Company implemented the 2023 ESPP, which allows eligible employees to contribute up to 15% of their base compensation, up to twenty-five thousand dollars, towards the purchase of the Company’s stock, at 85% of the lower of the fair market value on the first day of the applicable offering period or on the last day of the applicable purchase period within the offering period. Employees also have the option to participate through a cashless program, by electing to settle on a net basis on purchase date. The first offering period began on July 3, 2023, ended on the last trading day on or prior to November 15, 2023 and included one purchase period. Subsequent offering periods are for twelve month periods, beginning on the first trading day on or after May 15 and November 15 of each calendar year and include two consecutive purchase periods of six months each. At the end of each purchase period, employee contributions are used to purchase the Company's common stock. During the year ended December 31, 2023, there were two offerings under the 2023 ESPP. The July 2023 offering had a grant date fair value of $11.99 and the November 2023 offering, with two purchase periods, had a weighted average grant date fair value of $12.43. The Company recognized $4.7 million in share-based payments expense in relation to the 2023 ESPP. In addition, at December 31, 2023, the outstanding payroll withholding liability was $1.8 million. The significant assumptions used to estimate the fair value of ESPP awards granted in 2023 are presented in the following table on a weighted average basis:
|  | December 31, 2023
Risk free interest rate |  | 5.3 | %
Expected dividend yield |  | 1.81 | %
Expected lives of the ESPP |  | 8 months
Expected volatility |  | 28.1 | %
On May 9, 2023, the Company registered 3,000,000 shares of common stock for future issuance under the 2023 ESPP, 2,819,497 of which remain available to be issued. During the year ended December 31, 2023, 180,503 shares were issued under the 2023 ESPP.

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