Equity-Based Compensation

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Stock Purchase Plan and 401(k) Plan

Employee Stock Purchase Plan ("ESPP")

Effective July 20, 2015, we adopted the Black Knight Financial Services, Inc. Employee Stock Purchase Plan (the "BKFS ESPP ") that allows our eligible employees to voluntarily make after-tax contributions ranging from 3% to 15% of eligible earnings. We contribute varying matching amounts as specified in the BKFS ESPP document. On September 29, 2017, our Board of Directors approved, and BKI assumed the BKFS ESPP and renamed it the Black Knight, Inc. Employee Stock Purchase Plan (the "Black Knight ESPP"), which was amended and restated as of January 1, 2019. The terms of the Black Knight ESPP, as amended, are substantially similar to the terms of the BKFS ESPP.

We recorded expense of $7.8 million, $6.0 million and $5.8 million for the years ended December 31, 2018, 2017 and 2016, respectively, relating to the participation of our employees in the Black Knight ESPP and BKFS ESPP.

401(k) Profit Sharing Plan

Prior to the Distribution, our employees participated in a qualified 401(k) plan sponsored by FNF. Under the terms of the plan and subsequent amendments, eligible employees may contribute up to 40% of their pretax annual compensation, up to the amount allowed pursuant to the Internal Revenue Code ("IRC"). We generally match 37.5% of each dollar of employee contribution up to 6% of the employee's total eligible compensation. As a result of the Distribution, our employees no longer participate in this plan sponsored by FNF. Our indirect subsidiary, BKIS, adopted and established the Black Knight 401(k) Profit Sharing Plan (the “Black Knight 401(k) Plan”), effective September 29, 2017. The terms of the Black Knight 401(k) Plan are consistent with the terms of the 401(k) plan sponsored by FNF.

We recorded expense of $6.3 million, $5.8 million and $5.5 million for the years ended December 31, 2018, 2017 and 2016, respectively, relating to the participation of our employees in the 401(k) plans.

Profits Interests Plan

Under the Black Knight Financial Services, LLC 2013 Management Incentive Plan (the "Incentive Plan"), we were authorized to issue up to 11.1 million Class B units of BKFS LLC ("BKFS LLC profits interests") to eligible members of management and the Board of Managers. During the year ended December 31, 2014, we issued BKFS LLC profits interests to certain members of BKFS LLC management, the BKFS LLC Board of Managers and certain employees of FNF and ServiceLink, which vested over three years, with 50% vesting after the second year and 50% vesting after the third year.

Omnibus Incentive Plan

In 2015, we established the Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (the "BKFS Omnibus Plan") authorizing the issuance of up to 11.0 million shares of BKFS Class A common stock, subject to the terms of the BKFS Omnibus Plan. During 2017, the shares available for future awards was increased by 7.5 million shares. The BKFS Omnibus Plan has been renamed the “Black Knight, Inc. Amended and Restated 2015 Omnibus Incentive Plan” (the "Black Knight Omnibus Plan"). The BKFS board of directors adopted the Black Knight Omnibus Plan as of September 29, 2017, and the Black Knight Omnibus Plan was assumed by Black Knight, Inc. on September 29, 2017. The Black Knight Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other cash and stock-based awards and dividend equivalents. Awards granted are approved by the Compensation Committee of the Board of Directors.

In connection with our initial public offering, we converted the 10.7 million outstanding BKFS LLC profits interests units into 8.0 million restricted shares of BKFS Class A common stock. We accelerated the vesting of 4.4 million restricted shares of BKFS Class A common stock held by our directors and the remaining 3.6 million unvested restricted shares continued to vest on the same schedule as the former BKFS LLC profits interests.

A summary of restricted shares granted is as follows:



Date	Number of shares granted	Grant date fair value per share		Vesting period (in years)	Vesting criteria
December 21, 2015	318,000	$	32.37	3.0	Service and Performance
February 3, 2016	247,437	$	28.29	3.0	Service and Performance
February 3, 2016	552,311	$	28.29	4.0	Service and Performance
Various other 2016 dates	44,898	$ 32.74 - $34.84		4.0	Service
February 3, 2017	203,160	$	37.90	3.0	Service and Performance
February 3, 2017	681,410	$	37.90	4.0	Service and Performance
Various other 2017 dates	98,194	$ 41.90 - $42.25		2.0	Service
February 9, 2018	772,642	$	45.85	3.0	Service and Performance
April 2, 2018	159,915	$	46.90	3.0	Service and Performance
April 2, 2018	200,427	$	46.90	2.3	Service
Various other 2018 dates	13,602	$ 50.15 - $53.70		3.0	Service and Performance

Restricted stock transactions under the Black Knight Omnibus plan for the periods presented are as follows:



	Shares		Weighted average grant date fair value
Balance December 31, 2015	3,914,344		*
Granted	844,646		$	28.56
Forfeited	(57,484	)	*
Vested	(1,793,132	)	*
Balance December 31, 2016	2,908,374		*
Granted	982,764		$	38.31
Forfeited	(127,801	)	$	34.23
Vested	(2,181,626	)	*
Balance, December 31, 2017	1,581,711		$	34.48
Granted	1,146,586		$	46.27
Forfeited	(22,515	)	$	42.71
Vested	(628,517	)	$	34.90
Balance, December 31, 2018	2,077,265		$	40.77

_______________

The converted shares were originally BKFS LLC profits interests units with a weighted average grant date fair value of $2.10 per unit. The fair value of the restricted shares at the date of conversion, May 20, 2015, was $24.50 per share. The original grant date fair value of the forfeited and vested restricted shares, which were originally granted as profits interests units, ranges from $2.01 to $3.77 per unit.

On February 15, 2019, we granted 793,863 restricted shares of our common stock with a grant date fair value of $52.38 per share, which was based on the closing price of our common stock on the date of grant. These restricted shares vest over a three-year period; vesting is also based on certain operating performance criteria.

Equity-based compensation expense was $50.9 million, $18.9 million and $12.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Equity-based compensation includes accelerated recognition of $6.9 million and $1.3 million for the years ended December 31, 2018 and 2017, respectively. These expenses are included in Operating expenses in the Consolidated Statements of Earnings and Comprehensive Earnings

As of December 31, 2018, the total unrecognized compensation cost related to non-vested restricted shares of our common stock is $40.9 million, which is expected to be recognized over a weighted average period of approximately 1.6 years.