STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

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 was amended effective February 22, 2021 (the “Amendment”) to reserve an additional 880,000 shares of common stock for future issuance as equity-based awards to management and employees. Stock-based compensation may include stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled equity awards and performance awards. As of June 30, 2021, there were approximately 485,000 shares remaining for future issuance under the LTI Plan.

2021 Restricted Stock Unit Grant

On March 1, 2021, the Compensation Committee of the Board of Directors approved grants of 367,720 restricted stock units (the “2021 Grant”), conditioned upon obtaining stockholder approval of the Amendment. The Amendment was approved by the Company's stockholders at the Company's annual meeting on May 13, 2021, and the stockholder approval condition related to the 2021 Grant was satisfied. The 2021 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 2021 Grant subject only to time-based vesting restrictions was determined based upon the $55.72 closing price of our common stock on the effective date of the grant. Based on stock performance following the contingent grant in March, the stock price thresholds for the target number of performance stock units had been met, and the fair value for that 40% portion of the 2021 Grant was also determined to be the $55.72 closing price of our common stock on the effective date of the grant, and the entire $8.1 million fair value for this portion of the target performance stock units was recognized during the three months ended June 30, 2021.

The fair value of the above-target portion of the 2021 Grant subject to additional 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 assumptions used to value the above-target portion of the 2021 Grant were as follows:


						Value
Expected term (years)(1)						0.3 - 0.4
Expected volatility						72.9%
Risk-free interest rate						0.3%
Vesting price(1)(2)						$69.23 - $74.95
Average grant date fair value per share						$49.65 - $47.97

(1)The $69.23 stock price hurdle for the 2021 Grant was met during June 2021, the related performance stock units vested, and the related expense that would have been recognized over 0.3 years was accelerated and recognized during the three months ended June 30, 2021.

(2)The vesting price is the average of the daily volume-weighted average share price of USCR Stock over any period of 20 consecutive trading days within the three-year period beginning on the date of grant, based on hurdles established on March 1, 2021.

Stock-Based Compensation Cost

We recognized stock-based compensation expense of $14.7 million and $17.6 million during the three and six months ended June 30, 2021, respectively, and $2.5 million and $6.2 million during the three and six months ended June 30, 2020, respectively. Stock-based compensation expense is reflected in selling, general and administrative expenses in our condensed consolidated statements of operations. Stock-based compensation expense was higher during the three and six months ended June 30, 2021 than it otherwise would have been due to the general increase in stock price from the date of the conditional grant through June 30, 2021, which resulted in higher fair value per share when valued as of the stockholder approval date, as well as the acceleration of expense when certain stock price thresholds were met and performance stock units vested.