Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION:

Quanta has stock-based compensation awards outstanding under two equity incentive plans, the Quanta Services, Inc. 2011 Omnibus Equity Incentive Plan and the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan. For descriptions and further information regarding these plans, refer to Note 12 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of the 2020 Annual Report.

RSUs to be Settled in Common Stock

A summary of the activity for RSUs to be settled in common stock for the six months ended June 30, 2021 and 2020 is set forth below (shares in thousands):

	2021		2020
	RSUs	Weighted Average Grant Date Fair Value (Per share)	RSUs	Weighted Average Grant Date Fair Value (Per share)
Unvested at January 1	3,869	$37.57	3,265	$35.34
Granted	929	$82.57	1,890	$39.03
Vested	(1,375)	$36.85	(1,168)	$35.79
Forfeited	(85)	$44.60	(79)	$36.02
Unvested at period ended June 30	3,338	$50.26	3,908	$36.98

The grant date fair value for RSUs to be settled in common stock is based on the closing price of Quanta’s common stock on the date of grant. The approximate fair values of RSUs settled in common stock during the six months ended June 30, 2021 and 2020 were $115.1 million and $45.9 million.

During the six months ended June 30, 2021 and 2020, Quanta recognized $31.6 million and $26.2 million of non-cash stock-based compensation expense related to RSUs to be settled in common stock. Such expense is recorded in “Selling, general and administrative expenses.” As of June 30, 2021, there was $116.0 million of total unrecognized compensation expense related to unvested RSUs to be settled in common stock granted to both employees and non-employees. This cost is expected to be recognized over a weighted average period of 2.39 years.

PSUs to be Settled in Common Stock

A summary of the activity for PSUs to be settled in common stock for the six months ended June 30, 2021 and 2020 is set forth below (shares in thousands):

	2021		2020
	PSUs	Weighted Average Grant Date Fair Value (Per share)	PSUs	Weighted Average Grant Date Fair Value (Per share)
Unvested at January 1	1,047	$37.65	848	$33.20
Granted	174	$90.44	436	$34.56
Vested	(268)	$38.28	(238)	$17.48
Forfeited	(11)	$36.90	—	N/A
Unvested at June 30	942	$47.27	1,046	$37.34

The grant date fair value for PSUs is determined as follows: (i) for the portion of the awards based on company financial and operational performance metrics, by utilizing the closing price of Quanta’s common stock on the date of grant and (ii) for the portion of the awards based on total shareholder return, by utilizing a Monte Carlo simulation valuation methodology. The Monte Carlo simulation valuation methodology applied the following key inputs:

	2021		2020
Valuation date price based on March 25, 2021 and March 26, 2020 closing stock prices of Quanta common stock	$83.48		$31.49
Expected volatility	36	%	34	%
Risk-free interest rate	0.26	%	0.35	%
Term in years	2.77		2.76

During the six months ended June 30, 2021 and 2020, Quanta recognized $11.0 million and $10.7 million in compensation expense associated with PSUs. Such expense is recorded in “Selling, general and administrative expenses.” During both the six months ended June 30, 2021 and 2020, 0.5 million shares of common stock were earned and either issued or deferred for future issuance in connection with PSUs.

RSUs to be Settled in Cash

Compensation expense related to RSUs to be settled in cash was $8.4 million and $2.7 million for the six months ended June 30, 2021 and 2020. Such expense is recorded in “Selling, general and administrative expenses.” RSUs that are anticipated to be settled in cash are not included in the calculation of weighted average shares outstanding for earnings per share, and the estimated earned value of such RSUs is classified as a liability. Quanta paid $7.9 million and $3.5 million to settle liabilities related to cash-settled RSUs in the six months ended June 30, 2021 and 2020. Accrued liabilities for the estimated earned value of outstanding RSUs to be settled in cash were $7.6 million and $8.7 million at June 30, 2021 and December 31, 2020.