Share-Based Payment Awards

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

The 2012 Incentive Compensation Plan ("2012 Plan") allows for the granting of stock options, restricted stock units and common stock. During 2018, the Company retroactively approved an increase to the shares of common stock reserved for issuance at January 1, 2018 from 4.3 million shares to 5.3 million shares. As of December 31, 2020 there were 1.4 million remaining shares available for grants. The shares of common stock authorized to be issued under the 2012 Plan may be drawn from the shares of the Company's authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares purchased on the open market or private transactions.

The 2012 Plan consists of four separate incentive compensation programs: (i) the discretionary grant program, (ii) the stock issuance program, (iii) the incentive bonus program and (iv) the automatic grant program for the non-employee members of the Company’s Board of Directors. Share-based compensation is generally awarded under three of the four programs, as more fully described below.

Discretionary Grant Program: Under the Discretionary Grant Program, stock options may be granted with an exercise price no less than 100% of the fair market value (defined as the closing market price) of the Company’s common stock on the date of the grant. Options generally become exercisable ratably over three years and have a maximum contractual term of ten years. There were no option grants in 2020, 2019 or 2018, and the Company currently has no plans to issue options in the future.

Stock Issuance Program: Under the Stock Issuance Program, shares of common stock or restricted stock units may be granted. Equity awards granted may be designated as time-based awards or market-based performance awards.

Automatic Grant Program: At each annual shareholder meeting, non-employee directors will receive an award of restricted stock units that entitle the holder to an equivalent number of shares of common stock upon vesting.

The following table summarizes the Company's stock option activity for the year ended December 31, 2020 (in thousands, except weighted-average exercise price and weighted-average contractual life):


	2012 Plan Stock Options	Weighted- Average Exercise Price		Weighted- Average Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2020	352.2	$	13.95
Exercised	(254.3)	$	13.62
Canceled	—	$	—
Outstanding, December 31, 2020	97.9	$	14.80	1.0 year	$	221.7
Vested or expected to vest	97.9	$	14.80	1.0 year	$	221.7
Exercisable, December 31, 2020	97.9	$	14.80	1.0 year	$	221.7

The following table summarizes non-vested restricted stock unit activity for the year ended December 31, 2020 (in thousands, except weighted-average grant-date fair value amounts):


	2012 Plan Restricted Stock Units	Weighted- Average Grant-date Fair Value
Outstanding, January 1, 2020	454.7	$	27.33
Granted	286.2	$	22.01
Vested	(135.3)	$	25.14
Canceled	(55.1)	$	23.93
Outstanding, December 31, 2020	550.5	$	25.44

The time-based restricted stock units granted to employees vest ratably over a period of three years. The time-based restricted stock units granted to non-employee directors prior to 2018 vest ratably over a period of three years, and commencing in 2018, the time-based restricted stock units granted to non-employee directors vest over one year. The market-based performance share units cliff vest over three years, provided that the total shareholder return of the Company's common stock over the relevant period meets or exceeds pre-defined levels of total shareholder returns relative to indices, as defined.

As of December 31, 2020, there was $5.7 million of total unrecognized compensation cost related to non-vested restricted stock units granted under the 2012 plan; that cost is expected to be recognized over a period of three years.

The fair value of the Company's time-based awards is determined using the Company's stock price on the date of grant. The fair value of the Company's market-based awards is estimated using the Company's stock price on the date of grant and the probability of vesting using a Monte Carlo simulation with the following weighted-average assumptions:


	2020 Grants		2019 Grants		2018 Grants
Volatility of A&B common stock	22.6	%	23.6	%	22.7	%
Average volatility of peer companies	22.5	%	24.2	%	21.6	%
Risk-free interest rate	1.3	%	2.5	%	2.3	%

The weighted-average grant date fair value of the time-based restricted units and market-based performance share units granted in 2020, 2019 and 2018 was $22.01, $20.05 and $28.76, respectively. No compensation cost is recognized for actual forfeitures of time-based or market-based awards if an employee is terminated prior to rendering the requisite service period. There was no tax benefit realized upon vesting for the years ended December 31, 2020, 2019 and 2018.

The Company recognizes compensation cost net of actual forfeitures of time-based or market-based awards. A summary of compensation cost related to share-based payments is as follows for the years ended December 31, 2020, 2019 and 2018 (in millions):


	2020		2019		2018
Share-based expense:
Time-based and market-based restricted stock units	$	5.8	$	5.4	$	4.7
Total share-based expense	5.8		5.4		4.7
Total recognized tax benefit	—		—		—
Share-based expense (net of tax)	$	5.8	$	5.4	$	4.7

Cash received upon option exercise	$	3.5	$	2.6	$	0.4
Intrinsic value of options exercised	$	0.5	$	2.6	$	0.4
Tax benefit realized upon option exercise	$	—	$	—	$	—
Fair value of stock vested	$	3.0	$	4.5	$	4.0