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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of December 31, 2021, the Company had 4.3 million shares of its common stock, par value $0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its 2014 Long-Term Incentive Plan (the “Plan”). Currently, the Company issues treasury shares upon the exercise, release or settlement of stock-based compensation awards. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain subjective assumptions, including the expected life of a stock-based compensation award and Common Stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current year. Stock-Based Compensation Expense The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the years ended December 31 (in millions).
Award type |  | 2021 |  | 2020 |  | 2019
Stock appreciation rights |  | $ | 8.2 |  |  | $ | 7.8 |  |  | $ | 6.7 |
Restricted stock units (1) |  | 89.6 |  |  | 54.1 |  |  | 61.6 |
Common stock equivalents |  | 0.8 |  |  | 0.7 |  |  | 0.7 |
Total (2) |  | $ | 98.6 |  |  | $ | 62.6 |  |  | $ | 69.0 |
Expense category line item |  | 2021 |  | 2020 |  | 2019
Cost of services and product development |  | $ | 35.0 |  |  | $ | 29.7 |  |  | $ | 29.1 |
Selling, general and administrative |  | 63.6 |  |  | 32.9 |  |  | 39.4 |
Acquisition and integration charges (3) |  | — |  |  | — |  |  | 0.5 |
Total (1) (2) |  | $ | 98.6 |  |  | $ | 62.6 |  |  | $ | 69.0 |
(1)On February 5, 2020, prior to the COVID-19 related shutdown in the U.S., the Compensation Committee (“Committee”) of the Board of Directors of the Company established performance measures for the performance-based restricted stock units (the “PSUs”) awarded to the Company’s executive officers in 2020 under the Plan. Based on preliminary corporate performance results for the 2020 performance measures, the 2020 PSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to use its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the performance-based RSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the significant negative impact of the COVID-19 pandemic. As a result of the modification, the Company recognized $6.5 million of incremental compensation cost during the year ended December 31, 2021. (2)Includes charges of $41.2 million, $17.9 million and $21.5 million during 2021, 2020 and 2019, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis. (3)These charges were the result of restricted stock units granted in connection with the CEB integration process. As of December 31, 2021, the Company had $103.0 million of total unrecognized stock-based compensation cost, which is expected to be expensed over the remaining weighted average service period of approximately 2.4 years. Stock-Based Compensation Awards The disclosures presented below provide information regarding the Company’s stock-based compensation awards, all of which have been classified as equity awards in accordance with FASB ASC Topic 505. Stock Appreciation Rights Stock-settled stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the value of the Common Stock. After the applicable vesting criteria have been satisfied, SARs are settled in shares of Common Stock upon exercise by the employee. SARs vest ratably over a four-year service period and expire seven years from the date of grant. The fair value of a SARs award is recognized as compensation expense on a straight-line basis over four years. SARs have only been awarded to the Company’s executive officers. When SARs are exercised, the number of shares of Common Stock issued is calculated as follows: (1) the total proceeds from the exercise of the SARs award (calculated as the closing price of the Common Stock as reported on the New York Stock Exchange on the date of exercise less the exercise price of the SARs award, multiplied by the number of SARs exercised) is divided by (2) the closing price of the Common Stock on the date of exercise. Upon exercise, the Company withholds a portion of the shares of the Common Stock to satisfy statutory tax withholding requirements. SARs recipients do not have any stockholder rights until the shares of Common Stock are issued in respect of the award, which is subject to the prior satisfaction of the vesting and other criteria relating to such grants. The table below summarizes changes in SARs outstanding during the year ended December 31, 2021.
| Units of SARs (in millions) |  | Per Share Weighted Average Exercise Price |  | Per Share Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2020 | 1.0 |  |  | $ | 123.59 |  |  | $ | 27.76 |  |  | 4.37
Granted | 0.2 |  |  | 180.64 |  |  | 49.13 |  |  | 6.11
Exercised | (0.4) |  |  | 103.53 |  |  | 22.97 |  |  | n/a
Outstanding at December 31, 2021 (1) (2) | 0.8 |  |  | $ | 145.36 |  |  | $ | 34.72 |  |  | 4.45
Vested and exercisable at December 31, 2021 (2) | 0.3 |  |  | $ | 125.20 |  |  | $ | 28.17 |  |  | 3.44
n/a = not applicable (1)As of December 31, 2021, 0.5 million of the total SARs outstanding were unvested. The Company expects that substantially all of those unvested awards will vest in future periods. (2)As of December 31, 2021, the total SARs outstanding had an intrinsic value of $156.1 million. On such date, SARs vested and exercisable had an intrinsic value of $62.8 million. The fair value of a SARs award is determined on the date of grant using the Black-Scholes-Merton valuation model with the following weighted average assumptions for the years ended December 31:
| 2021 |  | 2020 |  | 2019
Expected dividend yield (1) | — | % |  | — | % |  | — | %
Expected stock price volatility (2) | 31 | % |  | 23 | % |  | 21 | %
Risk-free interest rate (3) | 0.4 | % |  | 1.5 | % |  | 2.5 | %
Expected life in years (4) | 4.74 |  | 4.68 |  | 4.59
(1)The expected dividend yield assumption was based on both the Company’s historical and anticipated dividend payouts. Historically, the Company has not paid cash dividends on its Common Stock. (2)The determination of expected stock price volatility was based on both historical Common Stock prices and implied volatility from publicly traded options in the Common Stock. (3)The risk-free interest rate was based on the yield of a U.S. Treasury security with a maturity similar to the expected life of the award. (4)The expected life represents the Company’s estimate of the weighted average period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date). Restricted Stock Units Restricted stock units (“RSUs”) give the awardee the right to receive shares of Common Stock when the vesting conditions are met and certain restrictions lapse. Each RSU that vests entitles the awardee to one share of Common Stock. RSU awardees do not have any of the rights of a Gartner stockholder, including voting rights and the right to receive dividends and distributions, until the shares are released. The fair value of an RSU award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. Service-based RSUs vest ratably over four years and are expensed on a straight-line basis over the vesting period. Performance-based RSUs are subject to the satisfaction of both performance and service conditions, vest ratably over four years and are expensed on an accelerated basis over the vesting period. The table below summarizes the changes in RSUs outstanding during the year ended December 31, 2021.
| Units of RSUs (in millions) |  | Per Share Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020 | 1.2 |  |  | $ | 136.09 |
Granted (1) | 0.5 |  |  | 188.02 |
Vested and released | (0.5) |  |  | 127.77 |
Forfeited | (0.1) |  |  | 153.68 |
Outstanding at December 31, 2021 (2) (3) | 1.1 |  |  | $ | 160.04 |
(1)The 0.5 million of RSUs granted during 2021 consisted of 0.1 million of performance-based RSUs awarded to executives and 0.4 million of service-based RSUs awarded to non-executive employees and non-management board members. The performance-based awards include RSUs in final adjustments of 2020 grants and approximately 0.1 million of RSUs representing the target amount of the grant for 2021 that is tied to an increase in Gartner’s total contract value for such year. The number of performance-based RSUs for 2021 that holders could receive ranges from 0% to 200% of the target amount based on the extent to which the corresponding performance goals have been achieved and subject to certain other conditions. Any adjustments in the number of performance-based RSUs under the 2021 grant will be made in 2022. (2)The Company expects that substantially all of the RSUs outstanding will vest in future periods. (3)As of December 31, 2021, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.1 years. Common Stock Equivalents Common stock equivalents (“CSEs”) are convertible into Common Stock. Each CSE entitles the holder to one share of Common Stock. Members of the Company’s Board of Directors receive their directors’ fees in CSEs unless they opt to receive up to 50% of those fees in cash. Generally, CSEs have no defined term and are converted into shares of Common Stock when service as a director terminates unless the director has elected an accelerated release. The fair value of a CSE award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. CSEs vest immediately and, as a result, they are recorded as expense on the date of grant. The table below summarizes the changes in CSEs outstanding during the year ended December 31, 2021.
| Units of CSEs |  | Per Share Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020 | 113,540 |  |  | $ | 28.80 |
Granted | 2,810 |  |  | 255.93 |
Converted to shares of Common Stock upon grant | (2,032) |  |  | 211.00 |
Outstanding at December 31, 2021 | 114,318 |  |  | $ | 31.15 |
Employee Stock Purchase Plan The Company has an employee stock purchase plan (the “ESP Plan”) wherein eligible employees are permitted to purchase shares of Common Stock through payroll deductions, which may not exceed 10% of an employee’s compensation, or $23,750 in any calendar year, at a price equal to 95% of the closing price of the Common Stock as reported on the New York Stock Exchange at the end of each offering period. As of December 31, 2021, the Company had 3.3 million shares available for purchase under the ESP Plan. The ESP Plan is considered non-compensatory under FASB ASC Topic 718 and, as a result, the Company does not record stock-based compensation expense for employee share purchases. The Company received $18.2 million, $18.1 million and $17.6 million in cash from employee share purchases under the ESP Plan during 2021, 2020 and 2019, respectively.

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