In December 2010, we adopted the Targa Resources Corp. 2010 Stock Incentive Plan for employees, consultants and non-employee directors of the Company. In May 2017, the 2010 TRC Plan was amended and restated (the “2010 TRC Plan”). Total authorized shares of common stock under the plan is 15,000,000, comprised of 5,000,000 shares originally available and an additional 10,000,000 shares that became available in May 2017. The 2010 TRC Plan allows for the grant of (i) incentive stock options qualified as such under U.S. federal income tax laws (“Incentive Options”), (ii) stock options that do not qualify as Incentive Options (“Non-statutory Options,” and together with Incentive Options, “Options”), (iii) stock appreciation rights granted in conjunction with Options or Phantom Stock Awards, (iv) restricted stock awards, (v) phantom stock awards, (vi) bonus stock awards, (vii) performance unit awards, or (viii) any combination of such awards.

Unless otherwise specified, the compensation costs for the awards listed below were recognized as expenses over related vesting periods based on the grant-date fair values, reduced by forfeitures incurred.

Restricted Stock Awards - Restricted stock entitles the recipient to cash dividends. Dividends on unvested restricted stock will be accrued when declared and recorded as short-term or long-term liabilities, dependent on the time remaining until payment of the dividends, and paid in cash when the award vests. Upon issuance, the restricted stock awards will be included in the outstanding shares of our common stock.

Director Grants – The Compensation Committee of the Targa board of directors (the “Compensation Committee”) awarded our common stock to our outside directors. In 2021, 2020 and 2019, we issued 67,591, 31,621 and 25,344 shares of director grants with the weighted average grant-date fair value of $30.33, $39.85 and $42.83, respectively.

Restricted Stock Units Awards – Restricted Stock Units (“RSUs”) are similar to restricted stock, except that shares of common stock are not issued until the RSUs vest. The vesting periods generally vary from one year to six years. In 2021, 2020 and 2019, we issued 848,630, 1,299,592 and 1,042,344 shares of RSUs with the weighted average grant-date fair value of $37.94, $24.64 and $39.95. The 2020 and 2019 issuances include, 16,134 and 85,547 shares of RSUs for our retention program. These shares will vest in October 2022.

Restricted Stock Units in Lieu of Bonus – In 2020 and 2019, we granted 81,336 and 95,687 shares of RSUs in lieu of cash bonuses for our executives at the weighted average grant-date fair value of $41.39 and $42.83. These awards cliff vest over one to three years.

The following table summarizes the restricted stock and RSUs under the 2010 TRC Plan in shares and in dollars for the year indicated.

	Number of shares			Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2020		3,835,856		$	40.81
Granted		916,221			37.38
Forfeited		(77,251	)		35.57
Vested		(983,998	)		50.72
Outstanding at December 31, 2021		3,690,828			37.42

During 2021, 2020 and 2019, we granted 319,320, 291,365 and 261,245 performance share units (“PSUs”) to executive management for the 2021, 2020 and 2019 compensation cycle that will vest/have vested in January 2024, January 2023 and January 2022. The PSUs granted under the 2010 TRC Plan are three-year equity-settled awards linked to the performance of shares of our common stock. The awards also include dividend equivalent rights (“DERs”) that are based on the notional dividends accumulated during the vesting period.

The vesting of the PSUs is dependent on the satisfaction of a combination of certain service-related conditions and the Company’s total shareholder return (“TSR”) relative to the TSR of the members of a specified comparator group of publicly-traded midstream companies (the “LTIP Peer Group”) measured over designated periods. For the PSUs granted in 2019, the TSR performance factor is determined by the Compensation Committee at the end of the overall performance period based on relative performance over the designated weighting periods as follows: (i) 25% based on annual relative TSR for the first year; (ii) 25% based on annual relative TSR for the second year; (iii) 25% based on annual relative TSR for the third year; and (iv) the remaining 25% based on cumulative three-year relative TSR over the entirety of the performance period. For the PSUs granted in 2020 and 2021, the TSR performance factor is determined by the Compensation Committee based on relative TSR over a cumulative three-year performance period.

With respect to the PSUs granted in 2019, the weighting period(s), the Compensation Committee determines a guideline performance percentage, which could range from 0% to 250%, based upon the Company’s relative TSR performance for the applicable period. The TSR performance factor will be calculated by averaging the guideline performance percentage for each weighting period, and the average percentage may then be decreased or increased by the Compensation Committee at its discretion. With respect to the three year performance period of the PSUs granted in 2020 and 2021, the Compensation Committee determines a guideline performance percentage for the performance period and the percentage may then be decreased or increased by the Compensation Committee at its discretion. The grantee will become vested in a number of PSUs equal to the target number awarded multiplied by the TSR performance factor, and vested PSUs will be settled by the issuance of Company common stock. The value of dividend equivalent rights will be paid in cash when the awards vest.

Compensation cost for equity-settled PSUs was recognized as an expense over the performance period based on fair value at the grant date. The compensation cost will be reduced if forfeitures occur. Fair value was calculated using a simulated share price that incorporates peer ranking. DERs associated with equity-settled PSUs were accrued over the performance period as a reduction of owners’ equity. We evaluated the grant date fair value using a Monte Carlo simulation model and historical volatility assumption with an expected term of three years. The expected volatilities were 83%, 73% and 32% - 37% for PSUs granted in 2021, 2020 and 2019.

The following table summarizes the PSUs under the 2010 TRC Plan in shares and in dollars for the years indicated.

	Number of shares			Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2020		719,054		$	70.53
Granted		319,320			56.36
Vested		(171,165	)		81.02
Outstanding at December 31, 2021		867,209			63.24

During 2019, we issued 7,836 shares of cash-settled awards for our retention program. These awards are liability awards and vest each quarter for one year. The fair value of the awards is evaluated based on the average of TRC stock prices for the last ten trading days at the end of each quarter. All cash-settled awards vested in 2019. Payments for the cash-settled awards are classified within operating activities in the Consolidated Statements of Cash Flows.

Stock compensation expense under our plans totaled $59.2 million, $66.3 million, and $61.8 million for the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021, we have $69.2 million of unrecognized compensation expense associated with share-based awards and an approximate remaining weighted average vesting periods of 1.9 years related to our various compensation plans.

The fair values of share-based awards vested in 2021, 2020 and 2019 were $73.8 million, $62.7 million and $55.4 million. Cash dividends paid for the vested awards were $8.7 million, $9.4 million and $15.0 million for 2021, 2020 and 2019.

In relation to our equity compensation plans, we recognized $1.6 million and $2.0 million of tax deficiencies for the years ended December 31, 2021 and December 31, 2020, respectively, and $7.7 million in windfall tax benefits for the year ended December 31, 2019.

In January 2022, the Compensation Committee made the following awards under the 2010 TRC Plan.

In January 2022, 63,907 shares of director grants vested with no shares withheld to satisfy tax withholding obligations.

In January 2022, 513,048 shares of 2019 PSUs vested with 203,759 shares withheld to satisfy tax withholding obligations.

In January 2022, 508,266 shares of RSUs vested with 181,835 shares withheld to satisfy tax withholding obligations.

We have a 401(k) plan whereby we match 100% of up to 5% of an employee’s contribution (subject to certain limitations in the plan). We also contribute an amount equal to 3% of each employee’s eligible compensation to the plan as a retirement contribution and may make additional contributions at our sole discretion. All Targa contributions are made 100% in cash. As part of our cost reduction measures in response to the COVID-19 pandemic, we temporarily suspended our matching contributions in the second quarter of 2020, and reinstated such contributions on January 1, 2021. We made contributions to the 401(k) plan totaling $21.8 million, $16.2 million and $23.7 million during 2021, 2020 and 2019.