Share-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock Plan

We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. We recognized share-based compensation expense of $15 million and $14 million for the three months ended June 30, 2022 and 2021, respectively, and $26 million and $18 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, unrecognized compensation costs for unvested awards was approximately $57 million, which is expected to be recognized over a weighted average period of 1.9 years. As of June 30, 2022, there were 2,649,317 shares of common stock available for future issuance under this plan.

Service RSUs

During the six months ended June 30, 2022, we issued 793,561 Service RSUs with a grant date fair value of $44.18, which generally vest in equal annual installments over three years from the date of grant.

Options

During the six months ended June 30, 2022, we issued 389,536 Options with an exercise price of $44.09, which generally vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was $20.08, which was determined using the Black-Scholes-Merton option-pricing model with the assumptions included in the table below. Expected volatility is calculated using our historical and implied volatility of our share price. Dividend yield is calculated based on our expected future

payout at the time of issuance. Risk-free rate is based on the yields of U.S. Department of Treasury instruments with similar maturities. Expected term is estimated using the vesting period and contractual term of the Options.


Expected volatility	45.8	%
Dividend yield	—	%
Risk-free rate	1.7	%
Expected term (in years)	6.0

As of June 30, 2022, we had 1,544,120 Options outstanding that were exercisable.

Performance RSUs

During the three and six months ended June 30, 2022, we issued 93,064 Performance RSUs with a grant date fair value of $44.09. The Performance RSUs are settled at the end of a two-year performance period, with 50 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 50 percent of the Performance RSUs are subject to the achievement of certain contract sales targets.

We determined that the performance conditions for our Performance RSUs are probable of achievement and, for the three and six months ended June 30, 2022, we recognized compensation expense based on the number of Performance RSUs we expect to vest.

Employee Stock Purchase Plan

In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the ESPP, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 percent of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. During the three and six months ended June 30, 2022 and 2021, we recognized less than $1 million of compensation expense related to this plan.