SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]



15.	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 March 31, 2020, 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 March 31, 2020, 1 million shares were available for grants under the ILG Stock Plan to Legacy-ILG employees.

Subsequent to the first quarter of 2020, our shareholders approved the Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW 2020 Equity Plan”), which supersedes both the MVW Stock Plan and the ILG Stock Plan (collectively, the “Prior Plans”) and no new awards will be granted under the Prior Plans. All awards that were granted under the Prior Plans will remain outstanding and continue to be governed by the Prior Plans. Approximately 2 million shares were available for grant under the MVW 2020 Equity Plan as of May 20, 2020.

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



	Three Months Ended
($ in millions)	March 31, 2020			March 31, 2019
Service-based RSUs	$	4		$	3
Performance-based RSUs	(2		)	1
ILG Acquisition Converted RSUs	1			4
	3			8
SARs	1			1
Stock options	—			—
	$	4		$	9

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



($ in millions)	At March 31, 2020		At December 31, 2019
Service-based RSUs	$	35	$	17
Performance-based RSUs	5		10
ILG Acquisition Converted RSUs	2		3
	42		30
SARs	4		1
Stock options	—		—
	$	46	$	31

Restricted Stock Units

We granted 248,172 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $91.08, to our employees and non-employee directors during the first quarter of 2020. During the first quarter of 2020, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management. A maximum of 177,208 RSUs may be earned under the performance-based RSU awards granted during the first quarter of 2020.

Stock Appreciation Rights

We granted 116,434 SARs, with a weighted average grant-date fair value of $29.63 and a weighted average exercise price of $96.82, to members of management during the first quarter of 2020. 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 quarter of 2020:



Expected volatility	38.81%
Dividend yield	2.13%
Risk-free rate	0.96%
Expected term (in years)	6.25