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Stock-based Compensation
 6 Months Ended
Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based CompensationOn December 23, 2019, the Board of Directors of the Company approved the Beacon Roofing Supply, Inc. Second Amended and Restated 2014 Stock Plan (the “2014 Plan”). On February 11, 2020, the stockholders of the Company approved an additional 4,850,000 shares to be reserved for issuance under the 2014 Plan. The 2014 Plan, which was originally approved by the stockholders on February 12, 2014, provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights to selected employees and non-employee directors. The 2014 Plan mandates that all shares underlying lapsed, forfeited, expired, terminated, cancelled and withheld awards, including those from the predecessor plan, be returned to the 2014 Plan and made available for issuance. As of June 30, 2022, there were 3,751,778 shares of common stock available for issuance pursuant to the 2014 Plan. The 2014 Plan is the only plan maintained by the Company pursuant to which equity awards are granted.
All unvested equity awards contain a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public company in an equitable manner, such award shall become fully vested immediately prior to a change in control (in the case of a restricted stock unit award with performance conditions at 100% of the grant target, and in the case of a restricted stock unit award with market conditions at 100% of the award then earned but not then vested). If an award is so continued or assumed, vesting will continue in accordance with the terms of the award, unless there is a qualifying termination within one-year following the change in control, in which event the award shall immediately become fully vested (in the case of a restricted stock unit award with performance conditions at 100% of the grant target, and in the case of a restricted stock unit award with market conditions at 100% of the award then earned but not then vested).
Stock Options
Non-qualified stock options generally expire 10 years after the grant date and, except under certain conditions, the options are subject to continued employment and vest in three annual installments over the three-year period following the grant date.
The fair values of the options granted for the six months ended June 30, 2022 were estimated on the dates of grants using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Risk-free interest rate1.93 %
Expected volatility48.89 %
Expected life (in years)5.14
Dividend yield—
The following table summarizes all stock option activity for the six months ended June 30, 2022 (in millions, except per share amounts and time periods):
Options OutstandingWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (Years)
Aggregate Intrinsic Value1
Balance as of December 31, 20211.6$35.25 5.8$36.2 
Granted0.258.99 
Exercised(0.3)37.25 
Canceled/Forfeited—35.04 
Balance as of June 30, 20221.5$38.11 6.3$22.1 
Vested and expected to vest after June 30, 20221.5$37.85 6.2$21.9 
Exercisable as of June 30, 20221.0$35.02 5.1$16.8 
1.Aggregate intrinsic value represents the difference between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the date of measurement.
During the three months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense related to stock options of $1.1 million and $1.0 million, respectively. During the six months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense related to stock options of $1.9 million and $2.2 million, respectively. As of June 30, 2022, there was $6.6 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.2 years. The following table summarizes additional information on stock options (in millions, except per share amounts):
Six Months Ended June 30,
20222021
Weighted-average fair value per share of stock options granted1
$26.50 $— 
Total grant date fair value of stock options vested$0.2 $1.4 
Total intrinsic value of stock options exercised$7.6 $11.3 
1.Due to the Company’s change in its fiscal year end, the Company made annual grants to employees during the six months ended June 30, 2022.
Restricted Stock Units
Time-based restricted stock unit (“RSU”) awards granted to employees are subject to continued employment and generally vest on the third anniversary of the grant date. The Company also grants certain RSU awards to management that additionally may contain market or performance conditions. Market conditions are incorporated into the grant date fair value of the management awards with market conditions using a Monte Carlo valuation model. Compensation expense for management awards with market conditions is recognized over the service period and is not reversed if the market condition is not met. For awards with performance conditions, the actual number of awards that will vest can range from 0% to 200% of the original grant amount, depending upon actual Company performance below or above the established performance metric targets. At each reporting date, the Company estimates performance in relation to the defined targets when determining the projected number of management awards with performance conditions that are expected to vest and calculating the related stock-based compensation expense. Management awards with performance conditions are amortized over the service period if, and to the extent, it is determined that achievement of the performance condition is probable. If awards with market, performance and/or service conditions are forfeited due to failure to achieve performance conditions or failure to satisfy service conditions, any previously recognized expense for such awards is reversed.
RSUs granted to non-employee directors are subject to continued service and vest on the first anniversary of the grant date (except under certain conditions). Generally, the common shares underlying the RSUs are not eligible for distribution until the non-employee director’s service on the Board has terminated, and for non-employee director RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of service on the board. Any non-employee directors who have Beacon equity holdings (defined as common stock and outstanding vested equity awards) with a total fair value that is greater than or equal to five times the annual Board cash retainer may elect to have any future RSU grants settle simultaneously with vesting.
The following table summarizes all RSU activity for the six months ended June 30, 2022 (in millions, except grant date fair value amounts):
RSUs OutstandingWeighted-Average Grant Date Fair Value
Balance as of December 31, 20210.7$35.99 
Granted0.750.94 
Released—33.78 
Canceled/Forfeited—38.75 
Balance as of June 30, 20221.4$43.64 
Vested and expected to vest after June 30, 20221
1.5$42.64 
1.As of June 30, 2022, outstanding awards with performance conditions were expected to vest at greater than 100% of their original grant amount.
The above table represents regular annual RSU awards granted during the six months ended June 30, 2022, as well as a special grant, made in connection with the Company’s Ambition 2025 strategic plan to approximately 115 employees, consisting of the Company’s executive officers (other than the Chief Executive Officer who is not eligible for the program), other members of senior management, and key operations and sales leaders. A total of 0.4 million RSUs with market conditions were awarded. The latter awards were granted in order to align executives and managers at various levels of the Company with the initiatives implemented to achieve the Company's long-term stockholder return goals set forth in the Ambition 2025 strategic plan.
During the three months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense related to RSUs of $6.9 million and $4.4 million, respectively. During the six months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense related to RSUs of $11.2 million and $7.4 million, respectively. As of June 30, 2022, there was $37.6 million of unrecognized compensation expense related to unvested RSUs (including unrecognized expense for RSUs with performance conditions at their estimated value as of June 30, 2022), which is expected to be recognized over a weighted-average period of 2.3 years.
The following table summarizes additional information regarding RSUs (in millions, except per share amounts):
Six Months Ended June 30,
20222021
Weighted-average fair value per share of RSUs granted$50.94 $51.89 
Total grant date fair value of RSUs vested$2.1 $5.3 
Total intrinsic value of RSUs released$2.0 $5.7