SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]



16.	SHARE-BASED COMPENSATION

We maintain the Marriott Vacations Worldwide Corporation Stock and Cash Incentive Plan (the “MVW Stock Plan”) for the benefit of our officers, directors and employees. Under the MVW Stock Plan, we are authorized to award: (1) restricted stock units (“RSUs”) of our common stock, (2) SARs relating to our common stock and (3) stock options to purchase our common stock. A total of 6 million shares are authorized for issuance pursuant to grants under the MVW Stock Plan. As of September 30, 2019, less than 1 million shares were available for grants under the MVW Stock Plan.

As part of the ILG Acquisition, we assumed the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan (the “ILG Stock Plan”) and equity based awards outstanding under the ILG Stock Plan. As of September 30, 2019, 1 million shares were available for grants under the ILG Stock Plan to Legacy-ILG employees.

The following table details our share-based compensation expense related to award grants to our officers, directors and employees:



	Three Months Ended				Nine Months Ended
($ in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Service-based RSUs	$	4	$	3	$	13	$	9
Performance-based RSUs	3		1		6		4
ILG Acquisition Converted RSUs	2		8		8		8
	9		12		27		21
SARs	—		1		2		2
Stock options	—		—		—		—
	$	9	$	13	$	29	$	23

The following table details our deferred compensation costs related to unvested awards:



($ in millions)	At September 30, 2019		At December 31, 2018
Service-based RSUs	$	21	$	16
Performance-based RSUs	14		7
ILG Acquisition Converted RSUs	5		15
	40		38
SARs	2		1
Stock options	—		—
	$	42	$	39

Restricted Stock Units

We granted 190,403 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $96.30, to our employees and non-employee directors during the first three quarters of 2019. During the first three quarters of 2019, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management. A maximum of 287,876 RSUs may be earned under the performance-based RSU awards granted during the first three quarters of 2019.

Stock Appreciation Rights

We granted 111,111 SARs, with a weighted average grant-date fair value of $28.89 and a weighted average exercise price of $100.52, to members of management during the first three quarters of 2019. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected life was calculated using the simplified method, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts.

The following table outlines the assumptions used to estimate the fair value of grants during the first three quarters of 2019:



Expected volatility	31.10%
Dividend yield	1.76%
Risk-free rate	2.59%
Expected term (in years)	6.25

Legacy-ILG Deferred Compensation Plan

Certain deferred share units (“DSUs”) of ILG common stock were outstanding on the Acquisition Date under the Interval Leisure Group, Inc. Deferred Compensation Plan for Non-Employee Directors. On the Acquisition Date, these DSUs were converted to equity-based awards with respect to MVW’s common stock and cash-based awards, resulting in 12,265 DSUs (“ILG DSUs”) and $1 million of cash-based awards. The ILG DSUs had a weighted average fair value of $114.31 on the Acquisition Date. The services associated with the ILG DSUs were completed as of the Acquisition Date, resulting in no deferred compensation costs. The ILG DSUs and related cash-based awards were paid in full during the first quarter of 2019 and there is no remaining obligation as of September 30, 2019.