SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock Plan

On May 3, 2023, the 2023 Omnibus Incentive Plan (“2023 Plan”) was approved by our shareholders to replace the 2017 Omnibus Incentive Plan and the 2017 Plan for Non-Employee Directors (the “2017 Plans”). The 2023 Plan authorizes the issuance of restricted stock units (“Service RSUs” or “RSUs”), nonqualified stock options (“Options”), time and performance-vesting restricted stock units (“Performance RSUs” or “PSUs”), and stock appreciation rights (“SARs”) to certain employees and directors. Pursuant to the 2023 Plan, 5,240,000 shares of our common stock are reserved for issuance. The 2017 Plans remain in place until all of the awards previously granted thereunder have been paid, forfeited or expired. Shares underlying awards that are canceled or forfeited under the 2017 Plans without the issuance of any shares are added to the 2023 Plan share pool. However, the shares which remained available for issuance under the 2017 Plans are no longer available for issuance, and all future awards will be granted pursuant to the 2023 Plan. As of December 31, 2023, there were 5,279,236 shares of common stock available for future issuance under the 2023 plan.

We recognized share-based compensation expense of $39 million, $46 million and $48 million during the years ended December 31, 2023, 2022 and 2021, respectively. The total tax benefit recognized related to this compensation was $6 million, $6 million and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively. In addition, we withheld common stock shares associated with net share settlements to cover tax withholding obligations upon the vesting of awards under our employee equity incentive program. For the years ended December 31, 2023, 2022 and 2021, we withheld approximately 264,000, 147,000 and 131,000 shares at a total cost of $14 million, $8 million and $6 million, respectively, through net share settlements. Shares withheld to cover tax withholding obligations are retired.

As of December 31, 2023, unrecognized compensation cost for unvested awards was approximately $29 million, which is expected to be recognized over a weighted average period of 1.8 years.

Service RSUs

Service RSUs vest in annual installments over three years from the date of grant, subject to the individual’s continued employment through the applicable vesting date. Vested Service RSUs generally will be settled for common

stock. The grant date fair value is equal to closing stock price on the date of grant. The following table provides information about our Service RSU grants for the last three fiscal years:


	Year Ended December 31,
	2023		2022		2021
Number of shares granted	537,964		800,378		588,930
Weighted average grant date fair value per share	$	48.60	$	44.12	$	38.50
Fair value of shares vested (in millions)	$	23	$	25	$	19

The following table summarizes the activity of our RSUs during the year ended December 31, 2023:


	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding, beginning of period	1,300,584	40.09
Granted	537,964	48.60
Vested	(624,972)	37.40
Forfeited	(68,723)	45.87
Outstanding, end of period	1,144,853	45.21

Options

Options vest over three years in annual installments from the date of grant, subject to the individual’s continued employment through the applicable vesting date and will terminate 10 years from the date of grant or earlier on the unvested portion of an individual whose service was terminated. The exercise price is equal to the closing price of the common stock on the date of grant. The following table provides information about our option grants for the last three fiscal years:


	Year Ended December 31,
	2023		2022		2021
Number of options granted	301,215		389,536		542,793
Weighted average exercise price per share	$	49.14	$	44.09	$	38.22
Weighted average grant date fair value per share	$	24.78	$	20.08	$	18.41

The weighted-average grant date fair value of each of these options were determined using the Black-Scholes-Merton option-pricing model with the following assumptions. 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:


	Year Ended December 31,
	2023		2022		2021
Expected volatility	46.8	%	45.8	%	50.5	%
Dividend yield(1)	—	%	—	%	—	%
Risk-free rate	4.2	%	1.7	%	1.1	%
Expected term (in years)	6.0		6.0		6.0

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

The following table summarizes the activity of our options during the year ended December 31, 2023:


	Number of Shares	Weighted Average Exercise Price Per Share
Outstanding, beginning of period	2,412,232	$	34.35
Granted	301,215	49.14
Exercised	(263,570)	28.86
Forfeited, canceled or expired	(32,159)	45.29
Outstanding, end of period	2,417,718	36.65
Exercisable, end of period	1,705,249	33.26

As of December 31, 2023, we had 1,705,249 options outstanding that were exercisable with an aggregate intrinsic value of $13 million and weighted average remaining contractual term of approximately 6 years. The intrinsic value of all options exercised during the year was $4.9 million.

Performance RSUs

In March 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.

The following table provides information about our Performance RSU grants, which is based on our Adjusted EBITDA metric described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K, further adjusted by net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction for the last three fiscal years:


	Year Ended December 31,
	2023		2022		2021
Number of shares granted	59,944		46,532		178,224
Weighted average grant date fair value per share	$	49.14	$	44.09	$	39.55
Fair value of shares vested (in millions)	4		—		—

The following table provides information about our Performance RSU grants, which is based on contract sales for the last three fiscal years:


	Year Ended December 31,
	2023		2022		2021
Number of shares granted	59,944		46,532		62,356
Weighted average grant date fair value per share	$	49.14	$	44.09	$	38.22
Fair value of shares vested (in millions)	4		—		—

During fiscal 2021, 235,249 Performance RSU grants, which are based on achieving certain run rate cost savings initiatives, were granted with a weighted average grant date fair value per share of $40.27. There were no Performance RSU grants based on achieving certain run rate cost savings initiatives for the 2023 and 2022 fiscal years.

The following table summarizes the activity of our Performance RSUs during the year ended December 31, 2023:


	Number of Shares	Weighted Average Exercise Price Per Share
Outstanding, beginning of period	726,710	$	37.26
Granted	119,887	49.14
Performance achievement shares adjustment (1)	90,162	38.22
Vested	(214,873)	38.22
Forfeited, canceled or expired	(161,719)	26.27
Outstanding, end of period	560,167	42.77

(1)Reflects the number of shares achieved above target, based on actual performance as determined at the completion of the performance period for the March 2021 Performance RSU grant

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 Plan, we reserved 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. For the year ended December 31, 2022,

and 2021, we issued 121,095 and 39,985 shares, respectively, and recognized less than $1 million of compensation expense in both periods related to this plan.

During the 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 year ended December 31, 2023, we issued 221,562 shares and recognized $1 million of compensation expense related to this plan.