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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Wesco sponsors a stock-based compensation plan. On May 27, 2021, the Company's stockholders approved the WESCO International, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”). The 2021 Plan is administered by the Compensation Committee of the Company's Board of Directors. The 2021 Plan was designed to be the successor plan to all prior stock-based compensation plans. Accordingly, no new awards may be granted under the Company’s 1999 Long-Term Incentive Plan, as amended and restated (the “1999 Plan”) or any other prior plan. Awards outstanding under any such prior plans will remain in full force and effect under such plans according to their respective terms. To the extent that any such award is forfeited, terminates, expires or lapses without being exercised, or is settled for cash, the shares subject to such award not delivered will again be available for awards under the 2021 Plan. The maximum number of shares of the Company’s common stock that may be granted pursuant to awards under the 2021 Plan is 2,150,000, less any shares issued under the 1999 Plan between March 31, 2021 and May 27, 2021. If any award granted under the 2021 Plan is forfeited, terminates, expires or lapses instead of being exercised, or is settled for cash, the shares subject to such award will again be available for grant under the 2021 Plan. Shares delivered by participants or withheld by the Company to pay all or a portion of the exercise price or withholding taxes with respect to stock option or stock appreciation right awards will not again be available for issuance. Shares delivered by participants or withheld by the Company to satisfy applicable tax withholding obligations with respect to restricted shares or restricted stock units will again be available for grant under the 2021 Plan. As of December 31, 2023, 1,877,701 shares of common stock were reserved under the 2021 Plan for future equity award grants. Stock-based compensation awards outstanding under Wesco's plans comprise stock options, stock-settled stock appreciation rights, restricted stock units and performance-based awards. Compensation cost for all stock-based awards is measured at fair value on the date of grant and compensation cost is recognized, net of estimated forfeitures, over the service period for awards expected to vest. The fair value of stock options and stock-settled stock appreciation rights is determined using the Black-Scholes model. The fair value of restricted stock units and performance-based awards with performance conditions is determined by the grant-date closing price of Wesco’s common stock. The forfeiture assumption is based on Wesco’s historical participant behavior that is reviewed on at least an annual basis. For stock options and stock-settled stock appreciation rights that are exercised, and for restricted stock units and performance-based awards that vest, shares are issued out of Wesco's outstanding common stock. Stock options and stock-settled stock appreciation rights vest ratably over a three-year period and terminate on the tenth anniversary of the grant date unless terminated sooner under certain conditions. Restricted stock unit awards that were granted under the 1999 Plan vest fully on the third anniversary of the date of grant, except for the special award described below, which vested in tranches. Restricted stock units awarded under the 2021 Plan vest ratably over a three-year period on each of the first, second and third anniversaries of the grant date. Vesting of performance-based awards is based on a three-year performance period, and the number of shares earned, if any, depends on the attainment of certain performance levels, as described below. Outstanding awards would vest upon the consummation of a change in control transaction with performance-based awards vesting at the target level. On July 2, 2020, a special award of restricted stock units was granted to certain officers of the Company. These awards vested in tranches of 30% on each of the first and second anniversaries of the grant date and 40% on the third anniversary of the grant date, subject to continued employment through the applicable anniversary date. Performance-based awards are based on two equally-weighted performance measures: the three-year average growth rate of Wesco's net income attributable to common stockholders and the three-year cumulative return on net assets. These awards are accounted for as awards with performance conditions; compensation cost is recognized over the performance period based upon Wesco's determination of whether it is probable that the performance targets will be achieved. Wesco recognized $48.1 million, $46.4 million and $30.8 million of non-cash stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively, which is included in selling, general and administrative expenses for all such periods. As of December 31, 2023, there was $50.2 million of total unrecognized compensation expense related to non-vested stock-based compensation arrangements for all awards previously made, which is expected to be recognized as follows:
For the year ending December 31, | (In millions)
2024 | $ | 32.2 |
2025 | 16.1 |
2026 | 1.9 |
The aggregate intrinsic value of awards exercised during the years ended December 31, 2023, 2022, and 2021 was $172.8 million, $68.3 million, and $69.7 million, respectively. The gross income tax benefit associated with the exercise of stock-based awards totaled $40.8 million, $15.8 million, and $16.8 million in 2023, 2022, and 2021, respectively. During the years ended December 31, 2023, 2022 and 2021, Wesco granted the following stock options, stock-settled stock appreciation rights, restricted stock units, and performance-based awards at the following weighted-average fair values:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Stock options granted | 78,729 |  |  | 92,799 |  |  | — |
Weighted-average fair value | $ | 76.69 |  |  | $ | 57.15 |  |  | n/a
Stock-settled stock appreciation rights granted | — |  |  | — |  |  | 139,592 |
Weighted-average fair value | n/a |  | n/a |  | $ | 33.19 |
Restricted stock units granted | 177,659 |  |  | 234,800 |  |  | 314,480 |
Weighted-average fair value | $ | 169.65 |  |  | $ | 122.13 |  |  | $ | 77.81 |
Performance-based awards granted(1) | 212,656 |  |  | 83,991 |  |  | 122,812 |
Weighted-average fair value(1) | $ | 87.04 |  |  | $ | 122.09 |  |  | $ | 76.76 |
(1) As described further below, the year ended December 31, 2023 includes performance-based awards granted in February 2020 for which actual achievement levels were certified in February 2023, as well as performance-based awards granted during the year ended December 31, 2023. The fair values of stock options and stock-settled stock appreciation rights, as disclosed in the table above, were estimated using the following weighted-average assumptions in the respective periods:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Risk free interest rate | 4.1% |  | 2.0% |  | 0.8%
Expected life (in years) | 5 |  | 7 |  | 7
Expected volatility | 50% |  | 43% |  | 41%
Expected dividend yield | 0.89% |  | n/a |  | n/a
The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve rate as of the grant date. The expected life is based on historical exercise experience, the expected volatility is based on the volatility of the Company's daily stock price over the expected life preceding the grant date of the award, and the expected dividend yield is based on the calculated yield on the Company's common stock at date of grant using the current year projected dividend distribution rate. The Company did not pay dividends to holders of its common stock during the years ended December 31, 2022 and 2021. The following table sets forth a summary of stock options and related information for the periods presented:
| Year Ended December 31,
| 2023 |  | 2022
| Awards |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (In years) |  | Aggregate Intrinsic Value (In millions) |  | Awards |  | Weighted-Average Exercise Price
Beginning of year | 87,347 |  |  | $ | 121.55 |  |  |  |  |  |  | — |  |  | $ | — |
Granted | 78,729 |  |  | 169.72 |  |  |  |  |  |  | 92,799 |  |  | 121.58 |
Exercised | (1,279) |  |  | 122.09 |  |  |  |  |  |  | — |  |  | — |
Forfeited | (1,715) |  |  | 148.67 |  |  |  |  |  |  | (5,452) |  |  | 122.09 |
End of year | 163,082 |  |  | 144.51 |  |  | 8.6 |  | $ | 4.8 |  |  | 87,347 |  |  | 121.55 |
Exercisable at end of year | 28,411 |  |  | $ | 121.53 |  |  | 8.1 |  | $ | 1.5 |  |  | 879 |  |  | $ | 122.09 |
For the year ended December 31, 2023, the aggregate intrinsic value of stock options exercised during such period was not material. The following table sets forth a summary of stock-settled stock appreciation rights and related information for the periods presented:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| Awards |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (In years) |  | Aggregate Intrinsic Value (In millions) |  | Awards |  | Weighted-Average Exercise Price |  | Awards |  | Weighted-Average Exercise Price
Beginning of year | 1,248,115 |  |  | $ | 62.02 |  |  |  |  |  |  | 1,370,388 |  |  | $ | 62.09 |  |  | 2,161,556 |  |  | $ | 60.48 |
Granted | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | 139,592 |  |  | 77.05 |
Exercised | (428,500) |  |  | 66.70 |  |  |  |  |  |  | (113,382) |  |  | 61.90 |  |  | (916,906) |  |  | 60.70 |
Forfeited | (1,331) |  |  | 74.57 |  |  |  |  |  |  | (8,891) |  |  | 73.35 |  |  | (13,854) |  |  | 54.42 |
End of year | 818,284 |  |  | 59.55 |  |  | 5.0 |  | $ | 93.6 |  |  | 1,248,115 |  |  | 62.02 |  |  | 1,370,388 |  |  | 62.09 |
Exercisable at end of year | 777,479 |  |  | $ | 58.64 |  |  | 4.9 |  | $ | 89.6 |  |  | 1,083,320 |  |  | $ | 61.91 |  |  | 1,001,708 |  |  | $ | 62.79 |
For the year ended December 31, 2023, the aggregate intrinsic value of stock-settled appreciation rights exercised during such period was $40.2 million. The following table sets forth a summary of restricted stock units and related information for the periods presented:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| Awards |  | Weighted-Average Fair Value |  | Awards |  | Weighted-Average Fair Value |  | Awards |  | Weighted-Average Fair Value
Unvested at beginning of year | 774,233 |  |  | $ | 73.79 |  |  | 974,162 |  |  | $ | 53.48 |  |  | 921,495 |  |  | $ | 43.15 |
Granted | 177,659 |  |  | 169.65 |  |  | 234,800 |  |  | 122.13 |  |  | 314,480 |  |  | 77.81 |
Vested | (508,173) |  |  | 59.72 |  |  | (393,194) |  |  | 53.13 |  |  | (232,152) |  |  | 44.10 |
Forfeited | (36,106) |  |  | 137.28 |  |  | (41,535) |  |  | 66.30 |  |  | (29,661) |  |  | 63.86 |
Unvested at end of year | 407,613 |  |  | $ | 127.49 |  |  | 774,233 |  |  | $ | 73.79 |  |  | 974,162 |  |  | $ | 53.48 |
The following table sets forth a summary of performance-based awards and related information for the periods presented:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| Awards |  | Weighted-Average Fair Value |  | Awards |  | Weighted-Average Fair Value |  | Awards |  | Weighted-Average Fair Value
Unvested at beginning of year | 335,329 |  |  | $ | 75.26 |  |  | 380,819 |  |  | $ | 59.23 |  |  | 305,269 |  |  | $ | 52.61 |
Granted(1) | 212,656 |  |  | 87.04 |  |  | 83,991 |  |  | 122.09 |  |  | 122,812 |  |  | 76.76 |
Vested | (289,394) |  |  | 48.32 |  |  | (115,394) |  |  | 54.64 |  |  | (22,371) |  |  | 62.80 |
Forfeited | (3,732) |  |  | 111.00 |  |  | (14,087) |  |  | 60.75 |  |  | (24,891) |  |  | 61.26 |
Unvested at end of year | 254,859 |  |  | $ | 115.15 |  |  | 335,329 |  |  | $ | 75.26 |  |  | 380,819 |  |  | $ | 59.23 |
(1) Includes 63,098 performance-based awards granted in February 2023 with a fair value of $171.96 and three-year performance period ending December 31, 2025, and 144,697 of additional performance-based awards related to awards originally granted in February 2020 with a fair value of $48.32 and three-year performance period ended December 31, 2022 for which actual achievement levels were certified in February 2023. Also includes 3,074, 662, and 549 performance-based awards granted during the three months ended June 30, 2023, September 30, 2023, and December 31, 2023, respectively, with weighted-average fair values of $150.32, $115.04, and $115.21, respectively, and three-year performance periods ending December 31, 2025.

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