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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2019
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | STOCK-BASED COMPENSATION The AutoNation, Inc. 2017 Employee Equity and Incentive Plan (the “2017 Plan”) provides for the grant of time-based and performance-based RSUs, restricted stock, stock options, stock appreciation rights, and other stock-based and cash-based awards to employees. A maximum of 5.5 million shares may be issued under the 2017 Plan. The AutoNation, Inc. 2014 Non-Employee Director Equity Plan (the “2014 Director Plan”) provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, and other stock-based awards to our non-employee directors. As of December 31, 2019, the total number of shares authorized for issuance under the 2014 Director Plan was 600,000. No director may be granted awards in any calendar year with an aggregate grant date fair market value (determined, with respect to options and stock appreciation rights, based on a Black-Scholes or other option valuation methodology approved by the Compensation Committee) in excess of $750,000 per director. Restricted Stock Units On January 2, 2019, each of our non-employee directors received a grant of 6,934 RSUs under the 2014 Director Plan. RSUs granted to our non-employee directors are fully vested on the grant date and are settled in shares of the Company’s common stock on the first trading day of February in the third year following the grant date, unless the non-employee director elects to defer delivery in accordance with the terms of the award and the 2014 Director Plan. Settlement of the RSUs will be accelerated in certain circumstances as provided in the terms of the award and the 2014 Director Plan, including in the event the non-employee director ceases to serve as a non-employee director of the Company. Compensation cost is recognized on the grant date and is based on the closing price of our common stock on the grant date. In 2019, our Board’s Compensation Committee approved the grant of 1.2 million RSUs, which included time-based and performance-based RSUs. Time-based RSUs vest in equal installments over four years. The performance-based RSUs are subject to a one-year earnings performance measure. Certain performance-based RSUs vest in equal installments over four years, and others cliff vest after three years subject to the achievement of certain additional performance goals measured over a three-year period. The additional performance goals are based on an additional measure of earnings, a measure of return on invested capital, and a measure of our performance relative to certain customer satisfaction indices. The fair value of each RSU award grant is based on the closing price of our common stock on the date of grant. Compensation cost for time-based RSUs is recognized on a straight-line basis over the shorter of the stated vesting period or the period until employees become retirement-eligible, and for performance-based awards is recognized over the requisite service period based on the expected achievement level of the performance goals, which is evaluated over the performance period. The amount of compensation cost recognized on performance-based RSUs depends on the relative satisfaction of the performance condition based on performance to date. We account for forfeitures of stock-based awards as they occur. The following table summarizes information about vested and nonvested RSUs for 2019:
| RSUs
| Shares (in actual number of shares) |  | Weighted-Average Grant Date Fair Value
Nonvested at January 1 | 1,028,532 |  |  | $ | 46.69 |
Granted (1) | 1,246,040 |  |  | $ | 35.51 |
Vested | (255,243 | ) |  | $ | 35.28 |
Forfeited | (358,126 | ) |  | $ | 41.80 |
Nonvested at December 31 | 1,661,203 |  |  | $ | 40.56 |
(1) | The RSUs granted during 2019 are primarily related to our employee annual equity award grant in March 2019 and non-employee director annual equity award grant in January 2019.
The weighted average grant-date fair value of RSUs and total fair value of RSUs vested are summarized in the following table:
| 2019 |  | 2018 |  | 2017
Weighted average grant-date fair value of RSUs granted | $ | 35.51 |  |  | $ | 49.16 |  |  | $ | 43.66 |
Total fair value of RSUs vested (in millions) | $ | 9.0 |  |  | $ | 7.3 |  |  | $ | 2.3 |
Stock Options Prior to 2017, we granted non-qualified stock options with a term of 10 years from the date of grant that vest in equal installments over four years. Upon exercise, shares of common stock are issued from our treasury stock. We use the Black-Scholes valuation model to determine compensation expense and amortize compensation expense on a straight-line basis over the requisite service period of the grants. We account for forfeitures of stock-based awards as they occur. Certain of our equity-based compensation plans contain provisions that provide for vesting of awards upon retirement. Accordingly, compensation cost is recognized over the shorter of the stated vesting period or the period until employees become retirement-eligible. The following table summarizes stock option activity during 2019:
| Stock Options
| Shares (in millions) |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in millions)
Options outstanding at January 1 | 3.1 |  |  | $ | 50.20 |  |  |  |  |
Granted | — |  |  | $ | — |  |  |  |  |
Exercised | (0.4 | ) |  | $ | 33.87 |  |  |  |  |
Forfeited | — |  |  | $ | — |  |  |  |  |
Expired | (0.1 | ) |  | $ | 55.35 |  |  |  |  |
Options outstanding as of December 31 | 2.6 |  |  | $ | 52.29 |  |  | 4.49 |  | $ | 5.7 |
Options exercisable at December 31 | 2.4 |  |  | $ | 52.28 |  |  | 4.39 |  | $ | 5.7 |
Options exercisable at December 31 and expected to vest thereafter | 2.6 |  |  | $ | 52.29 |  |  | 4.49 |  | $ | 5.7 |
Options available for future grants at December 31 | 3.9 |  |  |  |  |  |  |
The total intrinsic value of stock options exercised was $5.2 million during 2019, $8.2 million during 2018, and $11.9 million during 2017. Restricted Stock Prior to 2017, we granted restricted stock awards, which are considered nonvested share awards as defined under U.S. generally accepted accounting principles and are issued from our treasury stock. Restricted stock awards vest in equal installments over four years on the anniversary date of the grant. Compensation cost for restricted stock awards is based on the closing price of our common stock on the date of grant and is recognized on a straight-line basis over the shorter of the stated vesting period or the period until employees become retirement-eligible. We account for forfeitures of stock-based awards as they occur. The following table summarizes information about vested and nonvested restricted stock for 2019:
| Restricted Stock
| Shares (in actual number of shares) |  | Weighted-Average Grant Date Fair Value
Nonvested at January 1 | 70,718 |  |  | $ | 55.38 |
Granted | — |  |  | $ | — |
Vested | (44,406 | ) |  | $ | 56.92 |
Forfeited | (10,045 | ) |  | $ | 52.41 |
Nonvested at December 31 | 16,267 |  |  | $ | 52.53 |
The total fair value of restricted stock awards vested was $1.7 million in 2019, $3.3 million in 2018, and $4.2 million in 2017. Compensation Expense The following table summarizes the total stock-based compensation expense recognized in Selling, General, and Administrative Expenses in the Consolidated Statements of Income and the total recognized tax benefit related thereto:
| 2019 |  | 2018 |  | 2017
RSUs | $ | 29.4 |  |  | $ | 21.7 |  |  | $ | 14.2 |
Stock options | 0.9 |  |  | 1.6 |  |  | 3.1 |
Restricted stock | 0.8 |  |  | 2.2 |  |  | 3.3 |
Total stock-based compensation expense | $ | 31.1 |  |  | $ | 25.5 |  |  | $ | 20.6 |
Tax benefit related to stock-based compensation expense | $ | 2.5 |  |  | $ | 3.0 |  |  | $ | 7.8 |
As of December 31, 2019, there was $20.1 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, of which $19.9 million relates to RSUs, $0.1 million relates to stock options, and $0.1 million relates to restricted stock. These amounts are expected to be recognized over a weighted average period of 1.74 years. Tax benefits related to stock options exercised and vesting of restricted stock and RSUs were $3.3 million in 2019, $3.4 million in 2018, and $6.2 million in 2017.

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