XML 62 R20.htm IDEA: XBRL DOCUMENT v3.21.2
EQUITY COMPENSATION
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
EQUITY COMPENSATION
13. EQUITY COMPENSATION
Equity Incentive Plan
Equity-based compensation is granted under the Company's 2014 Equity Incentive Plan (as amended, the "Equity Incentive Plan"). The total number of shares available to be issued under the Equity Incentive Plan resets based on a formula defined in the Equity Incentive Plan and may increase on January 1 of each year. On January 1, 2021, the total number of shares available for issuance under the Equity Incentive Plan reset to 44,510,451 shares and as of September 30, 2021, 38,972,964 shares remain available for issuance.
Generally, unvested restricted units are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.
Equity-based compensation expense, net of forfeitures, recorded by the Company is included in the following table:
Three months ended September 30,Nine months ended September 30,
 2021202020212020
Restricted units$36,390 $30,036 $127,219 $86,804 
Restricted units with a market condition29,601 300 63,925 4,729 
Options— — — 43 
Equity-based compensation expense$65,991 $30,336 $191,144 $91,576 
Restricted Units
Each restricted unit represents an unfunded, unsecured right of the holder to receive a share of the Company's Class A common stock on a specific date. The restricted units generally vest and are settled in shares of Class A common stock either (i) at a rate of one-third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, (iii) at a rate of one quarter per year, beginning on the second anniversary of the grant date or the holder's employment commencement date, or (iv) at a rate of one third per year, beginning on the first anniversary of the grant date in each case generally subject to the holder’s continued employment as of the applicable vesting date (subject to accelerated vesting upon certain qualifying terminations of employment or retirement eligibility provisions). Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

Restricted units are delivered net of the holder's payroll related taxes upon vesting. For the nine months ended September 30, 2021, 8.2 million restricted units vested and 4.4 million shares of Class A common stock were delivered to the holders. For the nine months ended September 30, 2020, 4.7 million restricted units vested and 2.6 million shares of Class A common stock were delivered to the holders.

The holders of restricted units, other than awards that have not yet been issued as described in the subsequent sections, generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). During the nine months ended September 30, 2021, the Company declared dividends of $0.47 per share to Class A common stockholders at the close of business on March 17, 2021, June 16, 2021 and September 16, 2021. For the three and nine months ended September 30, 2021, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $6.4 million and $21.7 million, respectively, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When units are forfeited, the cumulative amount of Dividend Equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

During the first quarter of 2021, in addition to grants awarded in 2021, the Company approved the future grant of restricted units to certain senior executives in each of 2022, 2023 and 2024, subject to the holder’s continued employment and acceleration in certain instances. The vesting period of these awards are at a rate of 25% per year, beginning on the second anniversary of the grant date. Given that these future restricted units have been communicated to the recipient, the Company accounts for these awards as if they have been granted and recognizes the compensation expense on a straight-line basis over the service period. The restricted units that have been approved and communicated but not yet granted are not eligible to receive a Dividend Equivalent until the grant date.

The following table presents unvested restricted units' activity:
 Restricted UnitsWeighted Average
Grant Date Fair
Value Per Unit
Balance - January 1, 202116,299,664 $24.30 
Granted9,667,989 46.16 
Vested(6,278,948)20.70 
Forfeited(1,255,502)30.48 
Balance - September 30, 202118,433,203 $36.33 

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $504.8 million as of September 30, 2021 and is expected to be recognized over the remaining weighted average period of 3.5 years.
Performance-Based Restricted Unit Awards with a Market Condition
During the first quarter of 2021, the Company granted certain restricted units with a vesting condition contingent upon the volume-weighted, average closing price of the Company’s Class A common stock meeting or exceeding a stated price for 30 consecutive calendar days on or prior to January 22, 2029, referred to as the market condition. 537,500 restricted units with a market condition of $55.00 per share (“Tranche I”), 537,500 restricted units with a market condition of $60.00 per share (“Tranche II”), 537,500 restricted units with a market condition of $65.00 per share (“Tranche III”) and 537,500 restricted units with a market condition of $75.00 per share (“Tranche IV”) were granted. Vesting is also generally subject to continued employment at the time such market condition is achieved, subject to certain exceptions upon certain qualifying terminations of employment. Under the terms of the awards, if the target price of the applicable market condition is not achieved by the close of business on January 22, 2029, the unvested market condition awards will be automatically canceled and forfeited for no consideration. Restricted units subject to a market condition are not eligible to receive a Dividend Equivalent.
The grant date fair values for Tranche I, Tranche II, Tranche III and Tranche IV awards were $37.28, $34.47, $31.92 and $27.75 per unit, respectively, based on a probability distributed Monte-Carlo simulation. Due to the existence of the market condition, the vesting period for the awards is not explicit, and as such, compensation expense is recognized on a straight-line basis over the median vesting period derived from the positive iterations of the Monte Carlo simulation where the market condition was achieved. The median vesting period is 0.7 years, 1.2 years, 1.6 years and 2.3 years for Tranche I, Tranche II, Tranche III and Tranche IV, respectively.

Below is a summary of the significant assumptions used to estimate the grant date fair value of market condition awards:

Closing price of the Company's common shares as of valuation date$45.76
Risk-free interest rate0.88%
Volatility35.0%
Dividend yield3.5%
Cost of equity10.0%

The following table presents the market condition awards' activity:
 Market Condition Awards UnitsWeighted Average
Grant Date Fair
Value Per Unit
Balance - January 1, 2021— $— 
Granted2,150,000 32.86 
Vested(1,925,000)33.21 
Forfeited(225,000)29.84 
Balance - September 30, 2021— $— 

During the nine months ended September 30, 2021, the market-priced vesting condition was met for all four tranches of the market condition awards and resulted in the acceleration of $43.4 million of compensation expense. Tranche I was met during the second quarter of 2021 and Tranche II, III and IV were met during the third quarter of 2021, and the compensation expense was accelerated during each of the quarters of $14.0 million and $29.4 million, respectively.
Options
A summary of options activity during the nine months ended September 30, 2021 is presented below:
 OptionsWeighted Average Exercise PriceWeighted Average
Remaining Life
(in years)		Aggregate Intrinsic Value
Balance - January 1, 20218,312,203 $18.99 3.4$233,251 
Granted— — — — 
Exercised(1,489,789)18.94 — — 
Expired— — — — 
Forfeited— — — — 
Balance - September 30, 20216,822,414 $19.00 2.6$374,073 
Exercisable at September 30, 20216,822,414 $19.00 2.6$374,073 
Net cash proceeds from exercises of stock options were $27.4 million for the nine months ended September 30, 2021. The Company realized tax benefits of approximately $9.6 million from those exercises.