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Stock and Stock-Based Compensation Plans | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stock and Stock-Based Compensation Plans | Stock and Stock-Based Compensation Plans The KAR Auction Services, Inc. Amended and Restated 2009 Omnibus Stock and Incentive Plan ("Omnibus Plan") is intended to provide equity and/or cash-based awards to our executive officers and key employees. Our stock-based compensation expense includes expense associated with service-based options ("service options"), market-based options ("market options"), performance-based restricted stock units ("PRSUs") and service-based restricted stock units ("RSUs"). We have determined that the service options, market options, PRSUs and RSUs should be classified as equity awards. The following table summarizes our stock-based compensation expense by type of award (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
PRSUs | $ | 1.5 |  |  | $ | 1.3 |  |  | $ | 3.4 |  |  | $ | 15.1 |
RSUs | 1.9 |  |  | 0.9 |  |  | 7.1 |  |  | 3.4 |
Service options | 0.2 |  |  | 0.2 |  |  | 0.5 |  |  | 0.6 |
Market options | 0.6 |  |  | 0.9 |  |  | 2.1 |  |  | 3.5 |
Total stock-based compensation expense | $ | 4.2 |  |  | $ | 3.3 |  |  | $ | 13.1 |  |  | $ | 22.6 |
PRSUs In the first nine months of 2023, we granted a target amount of approximately 0.5 million PRSUs to certain executive officers of the Company. Three quarters of the PRSUs vest if and to the extent that the Company's three-year cumulative Adjusted EBITDA ("Adjusted EBITDA PRSUs") attains certain specified goals. The other one quarter of the PRSUs vest if and to the extent that the Company's total shareholder return relative to that of companies within the S&P SmallCap 600 ("TSR PRSUs") exceeds certain levels over the three-year period ending December 31, 2025. The weighted average grant date fair value of the Adjusted EBITDA PRSUs was $14.25 per share, which was determined using the closing price of the Company's common stock on the dates of grant. The weighted average grant date fair value of the TSR PRSUs was $21.62 per share and was developed with Monte Carlo simulations using a multivariate Geometric Brownian Motion. RSUs In the first nine months of 2023, approximately 0.6 million RSUs were granted to certain management members of the Company. The RSUs are contingent upon continued employment and generally vest in three equal annual installments. The fair value of RSUs is the value of the Company's common stock at the date of grant and the weighted average grant date fair value of the RSUs was $14.18 per share. Service Options In the first nine months of 2023, we granted approximately 0.1 million service options with a weighted average exercise price of $14.83 per share to a new executive officer of the Company. The service options have a life of ten years and vest in equal annual installments on each of the first four anniversaries of the grant date. The weighted average fair value of the service options granted in the first nine months of 2023 was $7.14 per share. The fair value of the service options granted was estimated on the date of grant using the Black-Scholes option pricing model with an expected life of 6.25 years, an expected volatility of 44.31%, an expected dividend yield of 0.0% and a weighted average risk-free interest rate of 3.38%. Market Options In the first nine months of 2023, we granted approximately 0.2 million market options with a weighted average exercise price of $14.83 per share to a new executive officer of the Company. The market options have a life of ten years and have a service component along with an additional market component. The market options become eligible to vest and become exercisable in equal increments, each upon the later to occur of (i) the first four anniversaries of the grant date, respectively, and (ii) for each respective 25% increment, the attainment of the Company's closing stock price at or above $5, $10, $15 and $20 over the exercise price, for 20 consecutive trading days. The weighted average fair value of the market options granted in the first nine months of 2023 was $6.91 per share. The fair value and requisite service period of the market options was developed with a Monte Carlo simulation using a multivariate Geometric Brownian Motion with a drift equal to the risk-free rate. Share Repurchase Program In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company's outstanding common stock, par value $0.01 per share, through October 30, 2021. In October 2021, the board of directors authorized an extension of the October 2019 share repurchase program through December 31, 2022. In April 2022, the board of directors authorized an increase in the size of the Company’s $300 million share repurchase program by an additional $200 million and an extension of the share repurchase program through December 31, 2023. At September 30, 2023, approximately $104.7 million of the Company's outstanding common stock remained available for repurchase under the 2019 share repurchase program. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions. This program does not oblige the Company to repurchase any dollar amount or any number of shares under the authorization, and the program may be suspended, discontinued or modified at any time, for any reason and without notice. For the three and nine months ended September 30, 2023, we repurchased and retired 1,438,859 shares of common stock in the open market at a weighted average price of $15.43 per share. For the three and nine months ended September 30, 2022, we repurchased and retired 3,309,527 shares and 8,740,316 shares of common stock, respectively, in the open market at a weighted average price of $15.11 per share and $15.11 per share, respectively.

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