Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

On May 3, 2023, the stockholders of the Company approved the Air Lease Corporation 2023 Equity Incentive Plan (the “2023 Plan”). Upon approval of the 2023 Plan, no new awards under the Air Lease Corporation 2014 Equity Incentive Plan (the “2014 Plan”) could be granted. As of June 30, 2023, the number of shares of Class A Common Stock available for new award grants under the 2023 Plan is approximately 4,133,835. The Company has issued restricted stock units (“RSUs”) with four different vesting criteria: those RSUs that vest based on the attainment of book-value goals, those RSUs that vest based on the attainment of Total Shareholder Return (“TSR”) goals, time based RSUs that vest ratably over a time period of three years and RSUs that cliff vest at the end of a one or two year period.

As of June 30, 2023, the Company had no outstanding stock options (“Stock Options”) and no unrecognized compensation costs related to outstanding Stock Options. For the three and six months ended June 30, 2023 and 2022, there were no stock-based compensation expenses related to Stock Options.

The Company recorded $8.7 million and $6.6 million of stock-based compensation expense related to RSUs for the three months ended June 30, 2023 and 2022, respectively.

The Company recorded $14.6 million and $4.0 million of stock-based compensation expense related to RSUs for the six months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2022, the Company recorded a net reversal of previously recognized stock-based compensation of $2.5 million. Such net reversal was a result of reductions in the underlying vesting estimates of certain book value RSUs as the performance criteria were no longer considered probable of being achieved during the six months ended June 30, 2022.

Restricted Stock Units

Compensation cost for RSUs is measured at the grant date based on fair value and recognized over the vesting period. The fair value of book value and time based RSUs is determined based on the closing market price of the Company’s Class A common stock on the date of grant, while the fair value of RSUs that vest based on the attainment of TSR goals is determined at the grant date using a Monte Carlo simulation model. Included in the Monte Carlo simulation model were certain assumptions regarding a number of highly complex and subjective variables, such as expected volatility, risk-free interest rate and expected dividends. To appropriately value the award, the risk-free interest rate is estimated for the time period from the valuation date until the vesting date and the historical volatilities were estimated based on a historical timeframe equal to the time from the valuation date until the end date of the performance period.

During the six months ended June 30, 2023, the Company granted 704,565 RSUs of which 121,608 are TSR RSUs and 243,206 are book value RSUs. The following table summarizes the activities for the Company’s unvested RSUs for the six months ended June 30, 2023:


	Unvested Restricted Stock Units
	Number of Shares	Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2022	1,514,875	$	45.90
Granted	704,565	$	44.73
Vested	(229,187)	$	44.19
Forfeited/canceled	(373,567)	$	42.43
Unvested at June 30, 2023	1,616,686	$	46.44
Expected to vest after June 30, 2023	1,767,130	$	46.18

As of June 30, 2023, there was $49.6 million of unrecognized compensation expense related to unvested stock-based payments granted to employees. Total unrecognized compensation expense will be recognized over a weighted-average remaining period of 2.01 years.