Share-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock Plan

We issue restricted stock units (“Service RSUs”), nonqualified stock options (“Options”), and time and performance-vesting restricted stock units (“Performance RSUs”) to certain employees and directors. We recognized share-

based compensation expense of $10 million and $11 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, unrecognized compensation costs for unvested awards were approximately $70 million, which is expected to be recognized over a weighted average period of 1.8 years. As of March 31, 2023, there were 1,818,645 shares of common stock available for future issuance under this plan.

Service RSUs

During the three months ended March 31, 2023, we issued 491,426 Service RSUs with a grant date fair value of $49.14, which generally vest in equal annual installments over three years from the date of grant.

Options

During the three months ended March 31, 2023, we granted 301,215 Options with an exercise price of $49.14, which generally vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was $24.78, which was determined using the Black-Scholes-Merton option-pricing model with the assumptions included in the table below. Expected volatility is calculated using the historical volatility of our share price. Risk-free rate is based on the Treasury Constant Maturity Rate closest to the expected life as of the grant date. Expected term is estimated using the vesting period and contractual term of the Options.


Expected volatility	46.8	%
Dividend yield (1)	—	%
Risk-free rate	4.2	%
Expected term (in years)	6.0

(1)At the date of grant we had no plans to pay dividends during the expected term of these options.

As of March 31, 2023, we had 1,824,886 Options outstanding that were exercisable.

Performance RSUs

During the three months ended March 31, 2023, we issued 119,887 Performance RSUs with a grant date fair value of $49.14. The Performance RSUs are settled at the end of a 3-year performance period, with 50% 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% of the Performance RSUs are subject to the achievement of certain contract sales targets.

Compensation expense will be recorded through the end of the performance period if it is deemed probable that the performance goals will be met. If the performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed.

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% 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 months ended March 31, 2022, we recognized less than $1 million of compensation expense related to this plan.

During fourth quarter of 2022, the Board of Directors amended the ESPP plan to allow eligible employees to purchase shares of our common stock at a price per share not less than 85% of the fair market value per share of common stock on the first day of the Purchase Period or the last day of the Purchase Period, whichever is lower, up to a maximum threshold established by the plan administrator for the offering period. The amendment became effective in 2023. During the three months ended March 31, 2023, we recognized less than $1 million of compensation expense related to this plan.