EQUITY COMPENSATION

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Upon the consummation of the merger, Evergy assumed both Evergy Kansas Central's Long-Term Incentive and Share Award plan (LTISA) and Great Plains Energy's Amended Long-Term Incentive Plan, which was renamed the Evergy, Inc. Long-Term Incentive Plan. All outstanding share-based payment awards under Evergy Kansas Central's LTISA vested at the closing of the merger transaction and were converted into a right to receive Evergy common stock with the exception of certain RSUs and deferred director share units issued prior to the closing of the merger to certain directors, officers and employees of Evergy Kansas Central. The vesting of these shares resulted in the recognition of $14.6 million of compensation expense in Evergy's and Evergy Kansas Central's consolidated statements of income and comprehensive income for 2018.

All of Great Plains Energy's outstanding performance shares, restricted stock, RSUs and director deferred share units under Great Plains Energy's Amended Long-Term Incentive Plan were converted into equivalent Evergy performance shares, restricted stock, RSUs and director deferred share units at Great Plains Energy's merger exchange ratio of 0.5981. See Note 2 for more information regarding the merger.

The following table summarizes the Evergy Companies' equity compensation expense and the associated income tax benefit.


	2020		2019		2018
Evergy	(millions)
Equity compensation expense	$	15.5	$	15.5	$	30.7
Income tax benefit	2.2		3.0		1.4
Evergy Kansas Central
Equity compensation expense	7.6		6.7		24.8
Income tax benefit	1.6		1.9		1.4
Evergy Metro(a)
Equity compensation expense	5.7		5.7		6.5
Income tax benefit	0.2		0.3		0.1

(a) Evergy Metro amounts are only included in consolidated Evergy from June 4, 2018, the date of the closing of the merger, and thereafter.

Restricted Share Units

Evergy has utilized RSUs for new grants of stock-based compensation awards subsequent to the merger. RSU awards are grants that entitle the holder to receive shares of common stock as the awards vest. These RSU awards are defined as nonvested shares and do not include restrictions once the awards have vested. These RSUs either take the form of RSUs with performance measures that vest upon expiration of the award term or RSUs with only service requirements that vest solely upon the passage of time. As of December 31, 2020, Evergy also had an insignificant amount of restricted stock and performance shares outstanding related to Great Plains Energy equity compensation awards that converted to equivalent Evergy awards at the closing of the merger transaction in 2018. These remaining restricted stock and performance share awards will vest in the first quarter of 2021.

RSUs with Performance Measures

The payment of RSUs with performance measures is contingent upon achievement of specific performance goals over a stated period of time as approved by the Compensation and Leadership Development Committee of the Board. The numbers of RSUs with performances measures ultimately paid can vary from the numbers of RSUs with performance measures initially granted depending on Evergy's performance over stated performance periods. Compensation expense for RSUs with performance measures is calculated by recognizing the portion of the fair value for each reporting period for which the requisite service has been rendered. Dividends are accrued over the vesting period and paid in cash based on the number of RSUs with performance measures ultimately paid.

The fair value of RSUs with performance measures is estimated using the market value of Evergy's stock at the valuation date and a Monte Carlo simulation technique that incorporates assumptions for inputs of expected volatilities, dividend yield and risk-free rates. Expected volatility is based on daily stock price change during a historical period commensurate with the remaining term of the performance period of the grant. The risk-free rate is based upon the rate at the time of the evaluation for zero-coupon government bonds with a maturity consistent with the remaining performance period of the grant. The dividend yield is based on the most recent dividends paid and the actual closing stock price on the valuation date. For shares granted in 2020, inputs for expected volatility, dividend yield and the risk-free rate were 17%, 2.93% and 0.72%, respectively.

RSU activity for awards with performance measures for 2020 is summarized in the following table.


	Nonvested Restricted Share Units		Grant Date Fair Value*
Beginning balance January 1, 2020		197,250		$	37.87
Granted		175,991		87.98

Forfeited		(25,277)		60.55
Ending balance December 31, 2020		347,964		61.57

* weighted-average

At December 31, 2020, the remaining weighted-average contractual term related to RSU awards with performance measures was 1.7 years. The weighted-average grant-date fair value of RSUs granted with performance measures was $87.98 and $37.87 in 2020 and 2019, respectively. At December 31, 2020, there was $17.5 million of unrecognized compensation expense related to unvested RSUs with performance measures. No RSUs with performance measures vested in 2020 and 2019.

RSUs with Only Service Requirements

Evergy measures the fair value of RSUs with only service requirements based on the fair market value of the underlying common stock as of the grant date. RSU awards with only service conditions recognize compensation expense by multiplying shares by the grant-date fair value related to the RSU and recognizing it on a straight-line basis over the requisite service period for the entire award, including for those RSUs that have a graded vesting schedule. Nonforfeitable dividend equivalents, or the rights to receive cash equal to the value of dividends paid on Evergy's common stock, are paid on certain of these RSUs during the vesting period. Nonforfeitable dividend equivalents are recorded directly to retained earnings.

RSU activity for awards with only service requirements for 2020 is summarized in the following table.


	Nonvested Restricted Share Units		Grant Date Fair Value*
Beginning balance January 1, 2020		233,350		$	54.16
Granted		59,539		68.92
Vested		(120,536)		53.94
Forfeited		(11,611)		59.27
Ending balance December 31, 2020		160,742		59.42

* weighted-average

At December 31, 2020, the remaining weighted-average contractual term related to RSU awards with only service requirements was 1.3 years. The weighted-average grant-date fair value of RSUs granted with only service requirements was $68.92, $54.47 and $52.16 in 2020, 2019 and 2018, respectively. At December 31, 2020, there was $3.5 million of unrecognized compensation expense related to unvested RSUs. The total fair value of RSUs with only service requirements that vested was $6.5 million, $2.6 million and $16.0 million in 2020, 2019 and 2018, respectively.