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SHARE-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Stock Plan On May 3, 2023, the 2023 Omnibus Incentive Plan (“2023 Plan”) was approved by our stockholders to replace the 2017 Omnibus Incentive Plan and the 2017 Plan for Non-Employee Directors (the “2017 Plans”). The 2023 Plan authorizes the issuance of restricted stock units (“Service RSUs” or “RSUs”), nonqualified stock options (“Options”), time and performance-vesting restricted stock units (“Performance RSUs” or “PSUs”), and stock appreciation rights (“SARs”) to certain employees and directors. Pursuant to the 2023 Plan, 5,240,000 shares of our common stock are reserved for issuance. The 2017 Plans remain in place until all of the awards previously granted thereunder have been paid, forfeited or expired. Shares underlying awards that are canceled or forfeited under the 2017 Plans without the issuance of any shares are added to the 2023 Plan share pool. However, the shares which remained available for issuance under the 2017 Plans are no longer available for issuance, and all future awards will be granted pursuant to the 2023 Plan. On March 4, 2024, we filed a Registration Statement on Form S-8 to register 118,078 shares of common stock, par value $0.01 per share, of HGV’s Common Stock that may be issued under the 2023 Plan in accordance with, and subject to the terms and conditions of, an exception under Rule 303A.08 of the NYSE Listed Company Manual (“Rule 303A.08”). The shares of Common Stock registered represented the number of shares of Bluegreen common stock that were available for issuance under the Bluegreen’s 2021 Incentive Plan immediately prior to the Bluegreen Acquisition, as appropriately adjusted to reflect the Bluegreen Acquisition and assumed by us, in accordance with Rule 303A.08. On March 5, 2024, our Board of Directors approved transaction incentive awards (“Transaction Incentive Awards”) in connection with the Bluegreen Acquisition consisting of Performance RSUs and performance-based cash awards (the “Performance Cash Awards”) for certain executive officers and employees. The Transaction Incentive Awards were granted under, and pursuant to the terms and conditions of, the 2023 Plan, and the award agreements approved by the Compensation Committee. The Performance Cash Awards are $8 million and are payable based on the level of achievement of pre-established performance goals relating to run rate cost savings following an 18-month performance period commencing on the Bluegreen Acquisition Date, and ending on June 30, 2025. On September 30, 2024, due to achievement of certain run rate cost savings, fifty percent (50%) of the Performance Cash Awards vested and were payable to certain executive officers and employees. These performance cash awards were included within Acquisition and integration-related expense in our unaudited condensed consolidated statements of operations. As of September 30, 2024, there were 3,921,501 shares of common stock available for future issuance under the 2023 Plan. We recognized share-based compensation expense of $11 million and $12 million for the three months ended September 30, 2024 and 2023 and $37 million, for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, unrecognized compensation costs for unvested awards were approximately $46 million, which is expected to be recognized over a weighted average period of 1.8 years. Service RSUs During the nine months ended September 30, 2024, we issued 710,784 Service RSUs with a weighted-average grant date fair value of $44.06, which generally vest in equal annual installments over three years from the date of grant. Options During the nine months ended September 30, 2024, we granted 388,084 Options with a weighted-average exercise price of $44.45, which generally vest over three years from the date of the grant. The weighted-average grant date fair value of these Options was $22.63, which was determined using the Black-Scholes-Merton option-pricing model with the assumptions included in the table below. Expected volatility is calculated using the historical volatility of our share price. Risk-free rate is based on the Treasury Constant Maturity Rate closest to the expected life as of the grant date. Expected term is estimated using the vesting period and contractual term of the Options.
Expected volatility | 47.7 | %
Dividend yield (1) | — | %
Risk-free rate | 4.1% - 4.3%
Expected term (in years) | 6.0
(1)At the date of grant we had no plans to pay dividends during the expected term of these options. As of September 30, 2024, we had 1,903,655 Options outstanding that were exercisable. Performance RSUs During the nine months ended September 30, 2024, we issued 156,809 Performance RSUs with a weighted-average grant date fair value of $44.54. The Performance RSUs are settled at the end of a 3-year performance period, with 50% of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization, further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 50% of the Performance RSUs are subject to the achievement of certain contract sales targets. As part of the Transaction Incentive Awards, we issued 275,477 Performance RSUs with a grant date fair value of $44.32. These Performance RSUs are settled at the end of a 2-year performance period commencing as of the Bluegreen Acquisition Date, with 50% of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization, further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 50% of the Performance RSUs are subject to the achievement of certain run rate cost savings. These Performance RSUs are subject to the executive’s continued employment with the Company. We determined that the performance conditions for our Performance RSUs are probable of achievement and, for the nine months ended September 30, 2024, and 2023, we recognized compensation expense based on the number of Performance RSUs we expect to vest. Employee Stock Purchase Plan In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the ESPP, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The Board of Directors amended the ESPP plan in 2022 to allow eligible employees to purchase shares of our common stock at a price per share not less than 85% of the fair market value per share of common stock on the first day of the Purchase Period or the last day of the Purchase Period, whichever is lower, up to a maximum threshold established by the plan administrator for the offering period. The amendment became effective in 2023. During the three months ended September 30, 2024, we recognized less than $1 million of compensation expense related to this plan. During the nine months ended September 30, 2024, we recognized $1 million of compensation expense related to this plan. During the three and nine months ended September 30, 2023, we recognized less than $1 million of compensation expense related to this plan, respectively.

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