XML 42 R28.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 The Company has granted restricted common stock and restricted stock units (collectively, “restricted stock”) and performance share units as long-term incentive awards to employees and non-employee directors under the BorgWarner Inc. 2018 Stock Incentive Plan (“2018 Plan”). The Company’s Board of Directors adopted the 2018 Plan in February 2018, and the Company’s stockholders approved the 2018 Plan at the annual meeting of stockholders on April 25, 2018. The 2018 Plan authorizes the issuance of a total of 7.0 million shares. As part of the Delphi Technologies acquisition, 2.2 million shares were registered for future issuance for former Delphi Technologies employees. In aggregate, approximately 2.2 million shares were available for future issuance as of December 31, 2022. Restricted Stock: The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2022, restricted stock in the amount of 1.0 million shares and less than 0.1 million shares were granted to employees and non-employee directors, respectively. The value of the awards is recognized as compensation expense ratably over the restriction periods, generally two or three years. As of December 31, 2022, there was $46 million of unrecognized compensation expense related to restricted stock that will be recognized over a weighted average period of approximately 1.2 years. Restricted stock compensation expense recorded in the Consolidated Statements of Operations is as follows:
| Year Ended December 31,
(in millions, except per share data) | 2022 |  | 2021 |  | 2020
Restricted stock compensation expense | $ | 37 |  |  | $ | 37 |  |  | $ | 31 |
Restricted stock compensation expense, net of tax | $ | 28 |  |  | $ | 28 |  |  | $ | 23 |
A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors is as follows:
| Shares subject to restriction (thousands) |  | Weighted average grant date fair value
Nonvested at January 1, 2020 | 1,664 |  |  | $ | 44.26 |
Granted | 810 |  |  | $ | 33.94 |
Vested | (600) |  |  | $ | 44.85 |
Forfeited | (80) |  |  | $ | 40.20 |
Converted 1 | 346 |  |  | $ | 39.54 |
Nonvested at December 31, 2020 | 2,140 |  |  | $ | 39.58 |
Granted | 1,175 |  |  | $ | 43.66 |
Vested | (845) |  |  | $ | 43.34 |
Forfeited | (107) |  |  | $ | 39.86 |
Nonvested at December 31, 2021 | 2,363 |  |  | $ | 40.24 |
Granted | 1,060 |  |  | $ | 44.32 |
Vested | (862) |  |  | $ | 38.68 |
Forfeited | (188) |  |  | $ | 42.09 |
Nonvested at December 31, 2022 | 2,373 |  |  | $ | 42.47 |
________________ 1 Represents outstanding Delphi Technologies restricted stock converted to BorgWarner restricted stock. The Delphi Technologies awards were converted using an exchange ratio of 0.4307 at the close of the acquisition. Performance share units: The Company grants performance share units to members of senior management that vest at the end of three-year periods based the following metrics: •Total Stockholder Return Units: This performance metric is based on the Company’s market performance in terms of total shareholder return relative to a peer group of automotive companies. Based on the Company’s relative ranking within the performance peer group, it is possible for none of the awards to vest or for a range of up to 200% of the target shares to vest. The Company recognizes compensation expense relating to this performance share plan ratably over the performance period regardless of whether the market conditions are expected to be achieved. Compensation expense associated with the performance share plans is calculated using a lattice model (Monte Carlo simulation). As of December 31, 2022, there was $10 million of unrecognized compensation expense related to total stockholder return units that will be recognized over a weighted average period of approximately 1.7 years. •Relative Revenue Growth Units: This performance metric is based on the Company’s performance in terms of revenue growth relative to the vehicle market over three-year performance periods. Based on the Company’s relative revenue growth in excess of the industry vehicle production, it is possible for none of the awards to vest or for a range of up to 200% of the target shares to vest. The value of this performance share award is determined by the market value of the Company’s common stock at the date of grant. The Company recognizes compensation expense relating to this performance share plan over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly and the expense is adjusted according to the new projections. As of December 31, 2022, these awards were fully expensed. •Adjusted Earnings Per Share Units: Introduced in the first quarter of 2020, this performance metric is based on the Company’s earnings per share adjusted for certain one-time items and non-operating gains and losses against a pre-defined target measured in the third year of the performance period. The value of this performance share award is determined by the adjusted earnings per share performance. The Company recognizes compensation expense relating to this performance share plan over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly and the expense is adjusted according to the new projections. As of December 31, 2022, these awards were fully expensed. •eProducts Revenue Mix: Introduced in the first quarter of 2021, this performance metric is based on the Company’s total revenue derived from eProducts in relation to its total proforma revenue in the third year of the performance period. Based on the Company’s eProducts revenue mix, it is possible for none of the awards to vest or for a range of up to 200% of the target shares to vest. The value of this performance share award is determined by the market value of the Company’s common stock at the date of grant. The Company recognizes compensation expense relating to this performance share plan over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly and the expense is adjusted according to the new projections. As of December 31, 2022, there was $17 million of unrecognized compensation expense related to the eProducts revenue mix units that will be recognized over a weighted average period of approximately 1.5 years. The unrecognized amount of compensation expense is based on projected performance as of December 31, 2022. •Cumulative Free Cash Flow: Introduced in the first quarter of 2021, this performance metric is based on the Company’s performance in terms of its operating cash flow, less capital expenditures, over the three-year performance periods. Based on the Company’s cumulative free cash flow, it is possible for none of the awards to vest or for a range of up to 200% of the target shares to vest. The value of this performance share award is determined by the market value of the Company’s common stock at the date of grant. The Company recognizes compensation expense relating to this performance share plan over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly and the expense is adjusted according to the new projections. As of December 31, 2022, there was $13 million of unrecognized compensation expense related to the cumulative free cash flow units that will be recognized over a weighted average period of approximately 1.7 years. The unrecognized amount of compensation expense is based on projected performance as of December 31, 2022. •eProducts Revenue: Introduced in the first quarter of 2022, this performance metric is based on the amount of the Company’s total revenue derived from eProducts in the third year of the performance period. Based on the Company’s eProducts revenue, it is possible for none of the awards to vest or for a range of up to 200% of the target shares to vest. The value of this performance share award is determined by the market value of the Company’s common stock at the date of grant. The Company recognizes compensation expense relating to this performance share plan over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly and the expense is adjusted according to the new projections. As of December 31, 2022, there was $8 million of unrecognized compensation expense related to the eProducts revenue units that will be recognized over a weighted average period of approximately 2.0 years. The unrecognized amount of compensation expense is based on projected performance as of December 31, 2022. The amounts expensed and common stock issued for performance share units for the years ended December 31, 2022, 2021 and 2020 were as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| Expense (in millions) | Number of shares issued (in thousands) |  | Expense (in millions) | Number of shares issued (in thousands) |  | Expense (in millions) | Number of shares issued (in thousands)
Total Stockholder Return | $ | 7 |  | — |  |  | $ | 6 |  | — |  |  | $ | 5 |  | 165 |
Other Performance-Based | 31 |  | 305 |  |  | 18 |  | 148 |  |  | 5 |  | 340 |
Total | $ | 38 |  | 305 |  |  | $ | 24 |  | 148 |  |  | $ | 10 |  | 505 |
A summary of the status of the Company’s nonvested performance share units for the years ended December 31, 2022, 2021 and 2020 were as follows:
| Total Stockholder Return |  | Other Performance-Based
| Number of shares (in thousands) |  | Weighted average grant date fair value |  | Number of shares (in thousands) |  | Weighted average grant date fair value
Nonvested at January 1, 2020 | 240 |  |  | $ | 64.61 |  |  | 240 |  |  | $ | 48.52 |
Granted | 137 |  |  | $ | 28.55 |  |  | 253 |  |  | $ | 34.15 |
Vested | (89) |  |  | $ | 69.75 |  |  | (89) |  |  | $ | 51.29 |
Forfeited | (17) |  |  | $ | 57.36 |  |  | (19) |  |  | $ | 44.19 |
Nonvested at December 31, 2020 | 271 |  |  | $ | 45.20 |  |  | 385 |  |  | $ | 38.66 |
Granted | 135 |  |  | $ | 70.39 |  |  | 404 |  |  | $ | 45.30 |
Vested | (143) |  |  | $ | 47.93 |  |  | (143) |  |  | $ | 41.92 |
Forfeited | (4) |  |  | $ | 37.28 |  |  | (6) |  |  | $ | 36.79 |
Nonvested at December 31, 2021 | 259 |  |  | $ | 56.90 |  |  | 640 |  |  | $ | 42.14 |
Granted | 138 |  |  | $ | 66.96 |  |  | 415 |  |  | $ | 44.33 |
Vested | (127) |  |  | $ | 28.55 |  |  | (234) |  |  | $ | 34.73 |
Forfeited | (20) |  |  | $ | 59.87 |  |  | (56) |  |  | $ | 43.35 |
Nonvested at December 31, 2022 | 250 |  |  | $ | 76.68 |  |  | 765 |  |  | $ | 45.51 |

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