Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

A summary of the status of the Company’s nonvested restricted stock awards as of March 31, 2023, and changes during the three months ended March 31, 2023, are presented below:


	Shares			Weighted- Average Grant-Date Fair Value Per Share
Nonvested at January 1, 2023		662,875		$	27.42
Granted		355,278		$	26.21
Vested		(265,341	)	$	26.25
Forfeited		(5,279	)	$	24.86
Nonvested at March 31, 2023		747,533		$	27.28

Schedule of PSU Activity

A summary of the status of the Company’s outstanding 2022 and 2023 PSU awards as of March 31, 2023, and changes during the three months ended March 31, 2023, are presented below:


	PSUs			Weighted- Average Grant-Date Fair Value Per Share
Outstanding at January 1, 2023		607,128		$	24.69
2023 PSUs granted		157,789		$	38.79
Incremental PSUs granted (1)		10,909		$	24.54
Forfeited		(51,019	)	$	24.87
Outstanding at March 31, 2023		724,807		$	27.90

(1)

PSUs granted shall be adjusted as if the shares of common stock represented by such PSUs had received any applicable stock or cash dividends declared. As for stock dividends, a number of PSUs shall be added to the target amount corresponding to the number of shares of common stock that would have been payable per such stock dividend on the then outstanding number of PSUs under the agreement as if common stock had been issued for such PSUs. As to cash dividends, a number of PSUs shall be added to the target amount corresponding to the number of shares of common stock that could have been acquired by the cash dividend payable on the then outstanding number of PSUs under the agreement as if common stock had been issued for such PSUs, and the calculation of the number of shares of common stock that could have been acquired shall be based on the closing price of the common stock on the record date for the cash dividend at issue.

Schedule of Assumptions used in the Monte Carlo Simulation Pricing Models

The following table summarizes the assumptions used in the Monte Carlo simulation pricing model related to the PSUs granted in 2023:


	2023 PSUs
Grant date	February 17, 2023
Fair value per share on valuation date (1)	$	38.79
Risk-free interest rate (2)		4.37	%
Expected share price volatility (3)		62.50	%

(1)

The value of the PSU awards is estimated on the date of grant using a Monte Carlo simulation model. The valuation consists of computing the fair value using CBL's simulated stock price as well as TSR over a three-year performance period. The award is modeled as a contingent claim in that the expected return on the underlying shares is risk-free and the rate of discounting the payoff of the award is also risk-free. The weighted-average fair value per share related to the 2023 PSUs consists of 63,114 shares at a fair value of $40.64 per share (which relates to the relative TSR) and 94,675 shares at a fair value of $37.55 per share (which relates to absolute TSR).

(2)

The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury securities in effect as of the valuation date, which is the grant date listed above.

(3)

The computation of expected volatility was based on the historical volatility of CBL's shares of common stock based on annualized daily total continuous returns over a three-year period and implied volatility data based on the trailing month average of daily implied volatilities implied by stock call option contracts that were both closest to the terms shown and closest to the money.