Stock-based Compensation and Other Compensation

3 Months Ended

Mar. 31, 2025

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation and Other Compensation

Stock-based Compensation

On May 3, 2023, the stockholders of the Company approved the Air Lease Corporation 2023 Equity Incentive Plan (the “2023 Plan”). As of March 31, 2025, the number of shares of Class A Common Stock available for new award grants under the 2023 Plan is approximately 3,459,706. 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 year or two year period.

The Company recorded $17.6 million and $8.3 million of stock-based compensation expense related to RSUs for the three months ended March 31, 2025 and 2024, respectively. Of the $17.6 million of stock-based compensation expense recorded for the three months ended March 31, 2025, the Company recorded a $7.4 million expense related to the acceleration of certain RSUs resulting from the retirement of the Company’s Executive Chairman. The Company expects to record a $2.2 million expense for the second quarter of 2025 related to the retirement of the Company’s Executive Chairman. In addition, the Company also revised the underlying vesting estimates of certain book value RSUs due to increased probability of certain performance criteria being achieved which also contributed to the increase in stock-based compensation expense during the period.

Stock-based compensation cost for RSUs is measured at the grant date based on fair value and recognized over the vesting period. The fair value of time-based and book value 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 three months ended March 31, 2025, the Company granted 641,891 RSUs of which 103,223 were TSR RSUs and 239,286 were book value RSUs. The following table summarizes the activities for the Company’s unvested RSUs for the three months ended March 31, 2025:


	Unvested Restricted Stock Units
	Number of Shares	Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2024	1,720,950	$	44.30
Granted	641,891	$	48.89
Vested (1)	(644,380)	$	46.03
Forfeited/canceled	(24,613)	$	42.19
Unvested at March 31, 2025	1,693,848	$	45.68
Expected to vest after March 31, 2025	2,180,449	$	45.13


(1) During the three months ended March 31, 2025, 340,939 performance-based RSUs and 303,441 time-based RSUs vested.

As of March 31, 2025, there was $55.1 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 2.18 years.

Other Compensation

For the three months ended March 31, 2025, the Company recorded a $9.2 million payroll expense accrual resulting from the retirement of its Executive Chairman, which will be payable in substantially equal installments in accordance with the Company’s normal payroll practices through May 2027. The additional payroll expense is included in selling, general and administrative expenses in the Company’s Consolidated Statements of Income, while the liability is included in Accrued interest and other liabilities on the Company’s Consolidated Balance Sheets.