STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

We grant stock-based compensation awards to management, employees and non-employee directors under the U.S. Concrete, Inc. Long Term Incentive Plan (the “LTI Plan”), which we amended effective February 13, 2019 (the “Amendment”) to reserve an additional 0.9 million shares of common stock for future issuance as equity-based awards to management and employees. As of December 31, 2019, there were 0.5 million shares remaining for future issuance under the LTI Plan. Stock-based compensation may include stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled equity awards and performance awards.

Stock-Based Compensation Cost

We recognized stock-based compensation expense related to restricted stock and restricted stock units of $19.1 million in 2019, $10.4 million in 2018 and $8.3 million in 2017. We realized tax benefits of $2.4 million in 2019, $2.4 million in 2018 and $3.2 million in 2017. Realized tax benefits for stock-based compensation expense are inclusive of excess tax benefits recognized in income tax expense of less than $0.1 million in 2019, $0.2 million in 2018 and $1.4 million in 2017. Stock-based compensation expense is reflected in selling, general and administrative expenses in our consolidated statements of operations.

As of December 31, 2019, we had approximately $10.7 million of unrecognized stock-based compensation expense, which we expect to recognize over a weighted average period of approximately 1.5 years.

Restricted Stock Units

Restricted stock units (“RSU”) that are granted to our Board of Directors as compensation for their services generally vest over a one-to-three year period on a quarterly basis. Restricted stock units are subject to restrictions on transfer and certain conditions to vesting. These restricted stock units are not considered outstanding shares of our common stock.

On March 1, 2019, the Compensation Committee of the Board of Directors approved grants of 0.3 million RSUs (the “2019 RSU Grant”), conditioned upon obtaining stockholder approval of the Amendment. The Amendment was approved by the Company's stockholders at the Company's annual meeting in May 2019, and the stockholder approval condition related to the 2019 RSU Grant was satisfied. The 2019 RSU Grant consisted of a 60% time-vested component that vests annually over a three-year period and a 40% stock performance hurdle component. The stock performance hurdle component triggers vesting upon our stock price reaching certain thresholds and may vest up to 200% of the target number of performance stock units granted.

The fair value of the 2019 RSU Grant subject to time-based vesting restrictions was determined based upon the closing price of our common stock on the effective date of the grant. The fair value of the 2019 RSU Grant subject to market performance hurdles was determined utilizing a Monte Carlo financial valuation model. Compensation expense determined utilizing the Monte Carlo simulation is recognized regardless of whether the common stock reaches the defined thresholds, provided that each grantee remains an employee at the end of the expected term. The effective date of the grant was in May 2019, whereas the communication of the equity award was made March 1, 2019, contingent upon approval of the LTI Plan by the Company's shareholders. As the stock price increased from March 1, 2019 to the date of shareholder approval, the fair value of the award was higher than it would have been if the dates had been the same. The assumptions used to estimate the fair value of performance-based restricted stock units granted in 2019 were as follows:



		2019
Expected term (years)		0.0 - 0.5
Expected volatility		41.1%
Risk-free interest rate		2.1%
Vesting price⁽¹⁾		$45.90 - $58.60
Weighted average grant date fair value per share		$39.60 - $48.75


(1)	The vesting price is the average of the daily volume-weighted average share price of our common stock over any period of 20 consecutive trading days within the three-year period beginning on the date of grant. These hurdles were established on March 1, 2019.

RSU activity for 2019 was as follows (units in thousands):



	Number of Units			Weighted Average Grant Date Fair Value Per Share
Unvested RSUs outstanding at beginning of period	22			$	49.94
Granted	474		⁽¹⁾	46.26
Vested	(144	)		47.16
Forfeited	(21	)		45.65
Unvested RSUs outstanding at end of period	331			$	46.15


(1)	Reflects the 2019 RSU Grant at the maximum 200% of the target.

Additional RSU information was as follows:



	2019		2018		2017
Weighted average fair value per share on grant date⁽¹⁾	$	46.26	$	49.94	$	76.30
Fair value of vested units (in millions)	$	6.8	$	0.8	$	0.8


(1)	The fair value was determined based upon the closing price of our common stock on the effective date of the grant.

Restricted Stock Awards

Restricted stock awards granted are subject to restrictions on transfer and certain conditions to vesting. The restricted stock awards issued to date consist of a 60% time-vested component and a 40% stock performance hurdle component. The time-vested component vests annually over a three year period. The stock performance hurdle component triggers vesting upon our stock price reaching certain thresholds. During the restriction period, the holders of restricted stock are entitled to vote and receive dividends; however, such dividends would be forfeited in the event the stock does not vest. As a result, these awards are included in our outstanding shares of common stock.

Restricted stock award activity for 2019 was as follows (shares in thousands):



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock awards outstanding at beginning of period	326		$	59.93
Granted	—		—
Vested	(97	)	64.04
Forfeited	(21	)	57.40
Unvested restricted stock awards outstanding at end of period	208		$	58.20

During 2019, there were no restricted stock awards granted. During 2018 and 2017, the weighted average grant date fair value of restricted stock awards granted was $61.97 and $60.24 per share, respectively. The fair value of restricted stock awards subject only to time-based vesting restrictions was determined based upon the closing price of our common stock on the date of grant. The fair value of restricted stock awards subject to market performance hurdles was determined utilizing a Monte Carlo financial valuation model. Compensation expense determined utilizing the Monte Carlo simulation is recognized regardless of whether the common stock reaches the defined thresholds, provided that each grantee remains an employee at the end of the expected term. The range of assumptions used to estimate the fair value of performance-based restricted stock awards granted were as follows:



	2018	2017
Expected term (years)	0.7 - 0.9	0.6 - 0.9
Expected volatility	40.4%	36.9%
Risk-free interest rate	2.4%	1.7%
Vesting price⁽¹⁾	$91.10 - $99.10	$82.50 - $91.75
Weighted average grant date fair value per share	$48.14 - $52.81	$44.96 - $51.31


(1)	The vesting price is the average of the daily volume-weighted average share price of our common stock over any period of 20 consecutive trading days within the three-year period beginning on the date of grant.

During 2019, the total fair value of restricted stock awards vested was $6.2 million. The total fair value of restricted stock awards vested was $4.9 million for both 2018 and 2017.

Stock Options

There were no stock option grants or compensation expense for stock options in 2019, 2018 or 2017. We had 13,000 stock options with a weighted average exercise price of $17.23 outstanding at the beginning of 2019 that were all exercised in 2019. The intrinsic value of stock options exercised during each of 2019, 2018 and 2017 was $0.3 million. The aggregate intrinsic value of outstanding and exercisable stock options was $0.2 million at December 31, 2018 and $1.3 million at December 31, 2017.