Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

BWX Technologies, Inc. 2020 Omnibus Incentive Plan

In May 2020, our stockholders approved the 2020 Omnibus Incentive Plan (the "2020 Plan") which succeeded the 2010 Long-Term Incentive Plan of BWX Technologies, Inc. (the "2010 Plan"). Members of the Board of Directors, executive officers, key employees and consultants are eligible to participate in the 2020 Plan. The Compensation Committee of the Board of Directors selects the participants for the 2020 Plan. The 2020 Plan provides for cash awards and equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares and performance units, subject to satisfaction of specific performance goals. Shares subject to awards under either the 2020 Plan or the 2010 Plan that are cancelled, forfeited, terminated or expire unexercised, shall immediately become available for the granting of awards under the 2020 Plan. As of the effective date of the 2020 Plan, shares available for grant under the 2010 Plan are available for grant under the 2020 Plan. In addition, our stockholders approved an additional 1,450,000 shares of common stock for issuance through the 2020 Plan. Options to purchase shares are granted at not less than 100% of the fair market value closing price on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant.

At December 31, 2020, we had a total of 4,333,710 shares of our common stock available for future awards. In the event of a change in control of the Company, the terms of the awards under the 2020 Plan contain provisions that may cause restrictions to lapse and accelerate the vesting of awards.

2010 Long-Term Incentive Plan of BWX Technologies, Inc.

Members of the Board of Directors, executive officers, key employees and consultants were eligible to participate in the 2010 Plan prior to it being succeeded by the 2020 Plan. The Compensation Committee of the Board of Directors selected the participants for the 2010 Plan. The 2010 Plan provided for a number of forms of stock-based compensation, including incentive and non-qualified stock options, restricted stock, restricted stock units, performance shares and performance units, subject to satisfaction of specific performance goals. Shares subject to award under the 2010 Plan that are cancelled, forfeited, terminated or expire unexercised, shall immediately become available for the granting of awards under the 2020 Plan. As part of the approval of the 2010 Plan, 10,000,000 shares of common stock were initially authorized for issuance, with an additional 2,300,000 authorized for issuance in 2014. Options to purchase shares are granted at not less than 100% of the fair market value closing price on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant.

Long-Term Incentive Plan of BWXT Technical Services Group, Inc.

In June 2012, we established the 2012 Long-Term Incentive Plan of BWXT Technical Services Group, Inc., a cash-settled plan for employees of certain subsidiaries and unconsolidated affiliates as selected by the plan committee. The cash-

settled plan provides for a number of forms of stock-based compensation, including stock appreciation rights, restricted stock units and performance units, subject to satisfaction of specific performance goals. Stock appreciation rights are granted at not less than 100% of the fair market value closing price of a share of BWXT common stock on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant. Stock appreciation rights are cash settled for the excess of the market price of BWXT common stock on the exercise date minus the exercise price. Restricted stock units and performance units are cash settled upon vesting as determined when granted. We will not issue any shares of BWXT common stock under this plan, as all awards are cash settled.

In the event of a change in control of the Company, the terms of the awards under the cash-settled plan contain provisions that may cause restrictions to lapse and accelerate the vesting of awards.

Stock-based compensation expense for all of our plans recognized for the years ended December 31, 2020, 2019 and 2018 totaled $16.8 million, $14.8 million and $10.8 million, respectively, with associated tax benefit totaling $2.7 million, $2.5 million and $1.7 million, respectively.

As of December 31, 2020, unrecognized estimated compensation expense related to nonvested awards was $15.1 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Stock Options

The following table summarizes activity for our stock options for the year ended December 31, 2020 (share data in thousands):


	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (In millions)
Outstanding at beginning of period	324	$	23.91
Granted	—	N/A
Exercised	(123)	$	23.64
Cancelled/expired/forfeited	—	N/A
Outstanding at end of period	201	$	24.07	2.9 years	$	7.3
Exercisable at end of period	201	$	24.07	2.9 years	$	7.3

The aggregate intrinsic value included in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their options on December 31, 2020. The intrinsic value is calculated as the total number of option shares multiplied by the difference between the closing price of our common stock on the last trading day of the period and the exercise price of the options. This amount changes based on the price of our common stock.

During the years ended December 31, 2020, 2019 and 2018, the total intrinsic value of stock options exercised was $4.7 million, $8.1 million and $8.5 million, respectively. The actual tax benefits realized related to the stock options exercised during the year ended December 31, 2020 totaled $0.8 million.

Performance Shares

Nonvested performance shares as of December 31, 2020 and changes during the year ended December 31, 2020 were as follows (share data in thousands):


	Number of Shares	Weighted- Average Grant Date Fair Value
Nonvested at beginning of period	409	$	53.39
Adjustment to assumed vesting percentage	76	$	52.86
Granted	146	$	56.75
Vested	(173)	$	48.76
Cancelled/forfeited	(7)	$	54.64
Nonvested at end of period	451	$	56.15

The actual number of shares in which each participant vests is dependent upon achievement of certain return on invested capital and diluted earnings per share targets over a three-year performance period. The number of shares in which participants can vest ranges from zero to 200% of the initial performance shares granted, to be determined upon completion of the three-year performance period. The nonvested shares at the end of the period in the table above assumes weighted-average vesting of 121%.

The actual tax benefits realized related to the performance shares vested during the year ended December 31, 2020 totaled $1.4 million.

Restricted Stock Units

Nonvested restricted stock units as of December 31, 2020 and changes during the year ended December 31, 2020 were as follows (share data in thousands):


	Number of Shares	Weighted- Average Grant Date Fair Value
Nonvested at beginning of period	166	$	54.51
Granted	120	$	56.70
Vested	(97)	$	54.45
Cancelled/forfeited	(4)	$	54.54
Nonvested at end of period	185	$	55.96

The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2020 totaled $1.3 million.

Cash-Settled Stock Appreciation Rights

The following table summarizes activity for our stock appreciation rights for the year ended December 31, 2020 (unit data in thousands):


	Number of Units	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (In millions)
Outstanding at beginning of period	55	$	23.39
Granted	—	N/A
Exercised	(15)	$	21.69
Cancelled/expired/forfeited	—	N/A
Outstanding at end of period	40	$	24.04	2.9 years	$	1.4
Exercisable at end of period	40	$	24.04	2.9 years	$	1.4

The aggregate intrinsic value included in the table above represents the total pre-tax intrinsic value that would have been received by the stock appreciation rights holders had all holders exercised their rights on December 31, 2020. The intrinsic value is calculated as the total number of stock appreciation rights multiplied by the difference between the closing price of our common stock on the last trading day of the period and the exercise price of the stock appreciation rights. This amount changes based on the price of our common stock.

Cash-Settled Performance Units

The actual number of units in which each participant vests is dependent upon achievement of certain return on invested capital and diluted earnings per share targets over a three-year performance period. The number of units in which participants can vest ranges from zero to 200% of the initial performance units granted, to be determined upon completion of the three-year performance period.

As of December 31, 2020, we had 3,453 nonvested units valued at $60.28 per share with an assumed weighted-average vesting of 104%. The fair value is based on our closing stock price as of December 31, 2020 and is re-determined at the end of each reporting period for purposes of remeasuring compensation expense associated with these cash-settled awards.

Cash-Settled Restricted Stock Units

As of December 31, 2020, we had 1,422 nonvested units valued at $60.28 per share. The fair value is based on our closing stock price as of December 31, 2020 and is re-determined at the end of each reporting period for purposes of remeasuring compensation expense associated with these cash-settled awards.