XML 34 R20.htm IDEA: XBRL DOCUMENT
v3.22.4

Stock-based Compensation | 12 Months Ended
--- | ---
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation Tempur Sealy International has two stock-based compensation plans which provide for grants of non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock unit awards, performance shares, stock grants and performance based awards to employees, non-employee directors, consultants and Company advisors. The plan under which equity awards may be granted in the future is the Amended and Restated 2013 Equity Incentive Plan (the "2013 Plan"). It is the policy of the Company to issue stock out of treasury shares upon issuance or exercise of share-based awards. The Company believes that awards and purchases made under these plans better align the interests of the plan participants with those of its stockholders. On May 5, 2022, the Company's stockholders approved the amendment and restatement of the 2013 Plan, which had been previously amended and restated on May 11, 2017. The 2013 Plan provides for grants of stock options to purchase shares of common stock to employees and directors of the Company. The 2013 Plan may be administered by the Compensation Committee of the Board of Directors, by the Board of Directors directly, or, in certain cases, by an executive officer or officers of the Company designated by the Compensation Committee. The shares issued or to be issued under the 2013 Plan may be either authorized but unissued shares of the Company's common stock or shares held by the Company in its treasury. Tempur Sealy International may issue a maximum of 44.7 million shares of common stock under the 2013 Plan, subject to certain adjustment provisions. The Amended and Restated 2003 Equity Incentive Plan, as amended (the "2003 Plan"), was administered by the Compensation Committee of the Board of Directors, which, together with the Board of Directors, had the exclusive authority to administer the 2003 Plan, including the power to determine eligibility to receive awards, the types and number of shares of stock subject to the awards, the price and timing of awards and the acceleration or waiver of any vesting and performance of forfeiture restrictions, in each case subject to the terms of the 2003 Plan. Any of the Company's employees, non-employee directors, consultants and Company advisors, as determined by the Compensation Committee, were eligible to be selected to participate in the 2003 Plan. Tempur Sealy International allowed a maximum of 46.0 million shares of its common stock under the 2003 Plan to be issued. In May 2013, the Company's Board of Directors adopted a resolution that prohibited further grants under the 2003 Plan. In 2010, the Board of Directors approved the terms of a Long-Term Incentive Plan established under the 2003 Plan. In 2013, the Board of Directors approved the terms of another Long-Term Incentive Plan established under the 2013 Plan. Awards under both Long-Term Incentive Plans have typically consisted primarily of a mix of stock options, RSUs and PRSUs. Shares with respect to the PRSUs will be granted and vest following the end of the applicable performance period and achievement of applicable performance metrics, market and environmental, social and corporate governance ("ESG") conditions as determined by the Compensation Committee of the Board of Directors. The Company's stock-based compensation expense for the year ended December 31, 2022, 2021 and 2020 included PRSUs, stock options, RSUs and DSUs. A summary of the Company’s stock-based compensation expense is presented below:
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020
PRSU expense | $ | 31.0 |  |  | $ | 39.4 |  |  | $ | 77.4 |
Stock option expense | 1.1 |  |  | 1.5 |  |  | 4.9 |
RSU/DSU expense | 21.0 |  |  | 20.5 |  |  | 22.2 |
Total stock-based compensation expense | $ | 53.1 |  |  | $ | 61.4 |  |  | $ | 104.5 |
Performance Restricted Stock Units The Company grants PRSUs to executive officers and certain members of management. The Company granted PRSUs during the years ended December 31, 2022, 2021 and 2020. Actual payout under the PRSUs is dependent upon the achievement of certain financial and qualitative goals. A summary of the Company's PRSU activity and related information for the years ended December 31, 2022 and 2021 is presented below:
(shares in millions) | Shares |  | Weighted Average Grant Date Fair Value
Awards unvested at December 31, 2020 | 3.6 |  |  | $ | 21.18 |
Granted | 0.5 |  |  | 28.92 |
Performance adjustments(1) | 1.0 |  |  | 28.98 |
Vested | (0.1) |  |  | 15.07 |
Forfeited | (0.1) |  |  | — |
Awards unvested at December 31, 2021 | 4.9 |  |  | 22.99 |
Granted | 0.3 |  |  | 51.38 |
Performance adjustments(1) | — |  |  | — |
Vested | (1.3) |  |  | 21.38 |
Forfeited | (0.1) |  |  | 28.71 |
Awards unvested at December 31, 2022 | 3.8 |  |  | $ | 25.85 |
(1) | Adjustments based on current attainment expectations of performance targets.
During the first quarter of 2022, the Company granted 0.3 million PRSUs at target at a weighted average grant date fair value of $51.38 per share with a performance period of January 1, 2022 through December 31, 2022 as a component of the long-term incentive plan ("2022 PRSUs"). For the year ended December 31, 2022, the Company recognized stock-based compensation expense related to the 2022 PRSUs based on the Company's achievement of its performance targets for the performance period. During the first quarter of 2021, the Company granted 0.5 million PRSUs at target at a weighted average grant date fair value of $28.92 per share with a performance period of January 1, 2021 through December 31, 2021 as a component of the long-term incentive plan ("2021 PRSUs"). For the year ended December 31, 2021, the Company recognized stock-based compensation expense related to the 2021 PRSUs, as the Company achieved the maximum specified performance target for the performance period. Stock Options The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock options granted. During the year ended December 31, 2021 and 2020, no stock options were granted. The assumptions used in the Black-Scholes option-pricing model for the year ended December 31, 2022 are set forth in the following table. Expected volatility is based on the unbiased standard deviation of the Company's common stock over the option term. The expected life of the options represents the period of time that the Company expects the options granted to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option for the expected term of the instrument. The dividend yield reflects an estimate of dividend payouts over the term of the award. The Company uses historical data to determine these assumptions.
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Expected volatility of stock | 53.2 % |  | N/A |  | N/A
Expected life of option, in years | 5 |  | N/A |  | N/A
Risk-free interest rate | 2.9% |  | N/A |  | N/A
Expected dividend yield on stock | 2.0% |  | N/A |  | N/A
A summary of the Company's stock option activity under the 2003 Plan and 2013 Plan for the years ended December 31, 2022 and 2021 is presented below:
(in millions, except per share amounts and years) | Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Options outstanding at December 31, 2020 | 4.7 |  |  | $ | 16.69 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (0.9) |  |  | 15.40 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Options outstanding at December 31, 2021 | 3.8 |  |  | $ | 17.03 |  |  |  |  |
Granted | 1.2 |  |  | 30.00 |  |  |  |  |
Exercised | — |  |  | 10.44 |  |  |  |  |
Forfeited | (0.1) |  |  | 18.19 |  |  |  |  |
Options outstanding at December 31, 2022 | 4.9 |  |  | $ | 20.34 |  |  | 6.34 |  | $ | 67.2 |
Options exercisable at December 31, 2022 | 3.7 |  |  | $ | 17.11 |  |  | 5.97 |  | $ | 61.8 |
The aggregate intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was $0.9 million and $22.3 million, respectively. A summary of the Company's unvested shares relating to stock options as of December 31, 2022 and 2021, and changes during the years ended December 31, 2022 and 2021, are presented below:
(shares in millions) | Shares |  | Weighted Average Grant Date Fair Value
Options unvested at December 31, 2020 | 1.1 |  |  | $ | 16.38 |
Granted | — |  |  | — |
Vested | (0.8) |  |  | 15.40 |
Forfeited | — |  |  | — |
Options unvested at December 31, 2021 | 0.3 |  |  | $ | 15.45 |
Granted | 1.2 |  |  | 30.00 |
Vested | (0.3) |  |  | 10.44 |
Forfeited | — |  |  | — |
Options unvested at December 31, 2022 | 1.2 |  |  | $ | 30.00 |
Restricted/Deferred Stock Units A summary of the Company's RSU and DSU activity and related information for the years ended December 31, 2022 and 2021 is presented below:
(in millions, except per share amounts) | Shares |  | Weighted Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Awards outstanding at December 31, 2020 | 4.2 |  |  | $ | 14.57 |  |  |
Granted | 0.7 |  |  | 28.68 |  |  |
Vested | (1.5) |  |  | 14.32 |  |  |
Terminated | (0.1) |  |  | 25.54 |  |  |
Awards outstanding at December 31, 2021 | 3.3 |  |  | $ | 17.37 |  |  | $ | 154.0 |
Granted | 0.4 |  |  | 46.49 |  |  |
Vested | (1.3) |  |  | 15.96 |  |  |
Terminated | (0.1) |  |  | 32.84 |  |  |
Awards outstanding at December 31, 2022 | 2.3 |  |  | $ | 22.99 |  |  | $ | 78.3 |
The aggregate intrinsic value of RSUs and DSUs vested during the years ended December 31, 2022 and 2021 was $61.7 million and $42.5 million, respectively. A summary of total unrecognized stock-based compensation expense based on current performance estimates related to stock options, DSUs, RSUs and PRSUs for the year ended December 31, 2022 is presented below:
(in millions, except years) | December 31, 2022 |  | Weighted Average Remaining Vesting Period (Years)
Unrecognized stock option expense | $ | 7.8 |  |  | 3.51
Unrecognized DSU/RSU expense | 23.5 |  |  | 2.17
Unrecognized PRSU expense | 21.1 |  |  | 1.53
Total unrecognized stock-based compensation expense | $ | 52.4 |  |  | 2.11

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a)(1) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration