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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2021
Stock-Based Compensation |
Stock-Based Compensation | 24. Stock-Based Compensation We recognize stock-based compensation expense related to restricted stock awards, restricted stock units, performance-based restricted stock units and shares issued under our ESPP. We account for forfeitures as they occur. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
(in thousands) | ​ | 2021 |  | 2020 |  | 2019
Equity award expense | ​ | $ | 11,336 | ​ | $ | 10,551 | ​ | $ | 8,105
Liability award (benefit) expense (1) | ​ |  | (816) | ​ |  | 1,521 | ​ |  | 2,336
Total stock-based compensation expense | ​ | $ | 10,520 | ​ | $ | 12,072 | ​ | $ | 10,441
(1) | In 2021, includes a reversal of prior period expense of $2.1 million during the fourth quarter as the result of revised estimates of performance achievement of our 2019 and 2020 cash-settled performance-based restricted stock units.
Stock Incentive Plans The 2020 Plan was adopted in April 2020 and provides for the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, other stock-based awards and dividend equivalent rights to employees, directors and consultants of Archrock. The 2020 Plan is administered by the compensation committee of our Board of Directors. Under the 2020 Plan, the maximum number of shares of common stock available for issuance is 8,500,000. Each stock-settled award granted under the 2020 Plan reduces the number of shares available for issuance by one share. Cash-settled awards are not counted against the aggregate share limit. Shares subject to awards granted under the 2020 Plan that are subsequently canceled, terminated, settled in cash or forfeited, excluding shares withheld to satisfy tax withholding obligations or to pay the exercise price of an option, are available for future grant under the 2020 Plan. No additional grants may be made under the 2013 Plan following the adoption of the 2020 Plan. Previous grants made under the 2013 Plan continue to be governed by that plan and the applicable award agreements. The 2020 Plan and 2013 Plan allow us to withhold shares upon vesting of restricted stock at the then-current market price to cover taxes required to be withheld on the vesting date. During the years ended December 31, 2021, 2020 and 2019, we withheld 283,972 shares valued at $2.5 million, 236,752 shares valued at $1.8 million and 212,080 shares valued at $2.0 million, respectively, to cover tax withholding. The compensation committee of our Board of Directors generally establishes its schedule for making annual long-term incentive awards, consisting of a combination of restricted shares and performance units vesting over multiple years, several months in advance and does not make such awards based on knowledge of material nonpublic information. Although the compensation committee of our Board of Directors has historically granted awards on a regular, predictable cycle, such awards may be granted at other times during the year, as determined in the sole discretion of the compensation committee. Restricted Stock Our outstanding restricted stock generally consists of stock-settled restricted stock awards and performance-based restricted stock units, and cash-settled performance-based restricted stock units. For grants of restricted stock, we recognize compensation expense over the vesting period equal to the fair value of our common stock at the grant date. Our restricted stock includes rights to receive dividends or dividend equivalents. We periodically remeasure the fair value of our cash-settled units and record a cumulative adjustment of the expense previously recognized. Our obligation related to the cash-settled units is reflected as a liability in our consolidated balance sheets. Restricted stock awards generally vest one-third per year, subject to continued service through the applicable vesting date. Performance-based restricted stock units generally vest in their entirety at the end of a three-year vesting period, also subject to continued service through the applicable vesting date. Some of our performance-based restricted stock units have a market-based condition that determines the number of restricted stock units and dividend equivalents earned. The market condition is based on our total shareholder return ranked against that of a predetermined peer group over a three-year performance period. The awards vest in their entirety on the date specified in the award agreement following the conclusion of the performance period. The fair value of the performance-based restricted stock units, incorporating the market condition, is estimated on the grant date using a Monte Carlo simulation model. Expected volatilities for us and each peer company utilized in the model are estimated using a historical period consistent with the awards’ remaining performance period as of the grant date. The risk-free interest rate is based on the yield on U.S. Treasury Separate Trading of Registered Interest and Principal Securities for a term consistent with the remaining performance period. The dividend yield used is 0.0% to approximate accumulation of earnings. The following table presents the inputs used and the grant date fair value calculated in the Monte Carlo simulation model for the performance-based restricted stock units awarded during the years ended December 31, 2021, 2020 and 2019: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31, | ​
​ | ​ | 2021 | ​ | 2020 | ​ | 2019 | ​
Remaining performance period as of grant date (in years) |  | ​ | 2.8 |  | ​ | 2.9 |  | ​ | 2.9 |
Risk-free interest rate used |  | ​ | 0.3 | % | ​ | 1.4 | % | ​ | 2.6 | %
Grant-date fair value | ​ | $ | 14.30 | ​ | $ | 11.33 | ​ | $ | 12.91 | ​
​ The following table presents our restricted stock activity during the year ended December 31, 2021: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant Date
​ | ​ | Shares | ​ | Fair Value
​ |  | (in thousands) |  | Per Share
Non-vested restricted stock, December 31, 2020 |  | 2,446 | ​ | $ | 9.69
Granted (1) |  | 1,288 | ​ |  | 11.20
Vested (2) |  | (1,075) | ​ |  | 9.91
Canceled |  | (81) | ​ |  | 9.85
Non-vested restricted stock, December 31, 2021 (3) |  | 2,578 | ​ |  | 10.35
(1) | The weighted average grant date fair value of shares granted during the years ended December 31, 2021, 2020 and 2019 was $11.20, $9.37 and $10.01, respectively.
(2) | The total fair value of all awards vested during the years ended December 31, 2021, 2020 and 2019 was $9.1 million, $7.1 million and $9.0 million, respectively.
(3) | Non-vested awards as of December 31, 2021 were comprised of 523 cash-settled units and 2,055 stock-settled awards and units.
As of December 31, 2021, we expect $12.6 million of unrecognized compensation cost related to our non-vested awards and units to be recognized over the weighted-average period of 1.8 years. Cash paid upon vesting of cash-settled restricted stock units during the years ended December 31, 2021, 2020 and 2019 was $0.6 million, $0.5 million and $1.3 million, respectively. Employee Stock Purchase Plan Adopted in 2017, our ESPP provides employees with an opportunity to participate in our long-term performance and success through the purchase of shares of common stock at a price that may be less than fair market value. Each quarter, eligible employees may elect to withhold a portion of their salary up to the lesser of $25,000 per year or 10% of their eligible pay to purchase shares of our common stock at a price equal to 85% to 100% of the fair market value of the stock as defined by the plan. The ESPP will terminate on the date that all shares of common stock authorized for sale under the ESPP have been purchased, unless it is extended. The maximum number of shares of common stock available for purchase under the ESPP is 1,000,000. As of December 31, 2021, 521,719 shares remained available for purchase under the ESPP. Our ESPP is compensatory and, as a result, we record an expense in our consolidated statements of operations related to the ESPP. The purchase discount under the ESPP is 5% of the fair market value of our common stock on the first or last trading day of the quarter, whichever is lower. Directors’ Stock and Deferral Plan Adopted in 2007, our DSDP provides non-employee members of the Board of Directors with an opportunity to elect to receive our common stock as payment for a portion or all of their retainer. The number of shares paid each quarter is determined by dividing the dollar amount of fees elected to be paid in common stock by the closing sales price per share of the common stock on the last day of the quarter. In addition, directors who elect to receive a portion or all of their fees in the form of common stock may also elect to defer, until a later date, the receipt of a portion or all of their fees to be received in common stock. There are 100,000 shares reserved under the DSDP and, as of December 31, 2021, 37,771 shares remained available to be issued under the plan.

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