In May 2017, the Company’s Board approved the 2017 Plan. Additionally, in February 2020, the Company’s stockholders approved the amendment and restatement of the 2017 Plan. Under the terms of the Plan, the Company’s Board may grant up to 19.6 million stock based and other incentive awards. Any shares of common stock subject to outstanding awards granted under the Company’s 2013 plan that, after the effective date of the 2017 Plan, expire or are otherwise forfeited or terminated in accordance with their terms are also available for grant under the 2017 Plan. All stock options were granted to employees, directors and advisors with an exercise price equal to the fair value of the Company’s per share common stock at the date of grant. Stock option awards typically vest over four or five years and expire ten years from the date of grant.

The Company adopted the 2013 Plan on October 14, 2013 as amended on April 27, 2015 under which the Company had the ability to grant stock-based compensation awards to employees, directors and advisors. The total number of shares available for grant under the 2013 Plan and reserved for issuance was 20.9 million shares. All stock options were granted to employees, directors and advisors with an exercise price equal to the fair value of the Company’s per share common stock at the date of grant. Stock option awards vested over either five, four, or three years with 50% of each award vesting based on time and 50% of each award vesting based on the achievement of certain financial targets.

As of the acquisition date of February 29, 2020, Ingersoll Rand Industrial employees’ unvested equity awards and a limited number of vested awards were converted into equity awards denominated in shares of the Company’s common stock based on a defined exchange ratio. Ingersoll Rand Industrial employees’ equity awards were converted into Ingersoll Rand stock options and restricted stock units.

For converted restricted stock units, the fair value of the equity award is based on the market price of the common stock on the grant date. The replacement restricted stock units will generally be governed by the same terms and conditions as those applicable prior to the acquisition. The portion of fair value of the replacement awards related to services provided prior to the acquisition was accounted for as consideration transferred. The remaining portion of the fair value is associated with future service and is recognized as compensation expense over the vesting period.

For converted stock options, the exercise price per share of the converted award was equal to the exercise price per share of the stock option award immediately prior to the completion of the acquisition divided by the exchange ratio. The replacement options will generally be governed by the same terms and conditions as those applicable prior to the acquisition. The portion of fair value of the replacement awards related to services provided prior to the acquisition was accounted for as consideration transferred. The remaining portion of fair value is associated with future service and is recognized as compensation expense over the vesting period. The fair value of stock options that the Company assumed in connection with the acquisition of Ingersoll Rand Industrial was estimated using the Black-Scholes model with the following assumptions.


Converted Stock Option Awards Assumptions:
Expected life of options (in years)	2.0 - 3.6
Risk-free interest rate	0.9	%
Assumed volatility	34.2	%
Expected dividend rate	0.0	%

Stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 are included in “Cost of sales” and “Selling and administrative expenses” in the Consolidated Statements of Operations and are as follows.


	2021		2020		2019
Stock-based compensation expense recognized in:
Continuing operations	$	87.2	$	47.5	$	18.7
Discontinued operations	10.9		3.8		0.5
Total stock-based compensation expense	$	98.1	$	51.3	$	19.2

For the year ended December 31, 2021, the $87.2 million of stock-based compensation expense included expense for equity awards granted under the 2013 Plan and 2017 Plan of $85.8 million and an increase in the liability for stock appreciation rights (“SAR”) of $1.4 million. Of the $85.8 million of expense for equity awards granted under the 2013 Plan and 2017 Plan, $57.4 million related to the $150 million equity grant to nearly 16,000 employees worldwide announced in the third quarter of 2020.

For the year ended December 31, 2020, the $47.5 million of stock-based compensation expense included expense for modifications of equity awards for certain former employees of $2.9 million, expense for equity awards granted under the 2013 Plan and 2017 Plan of $43.3 million and an increase in the liability for SARs of $1.3 million. The $2.9 million of stock-based compensation expense for modifications provided continued vesting through scheduled vesting dates of certain equity awards for certain former employees. These costs are included in “Selling and administrative expenses” in the Consolidated Statements of Operations. Of the $43.3 million of expense for equity awards granted under the 2013 Plan and 2017 Plan, $23.4 million related to the $150 million equity grant to nearly 16,000 employees worldwide announced in the third quarter of 2020.

For the year ended December 31, 2019, the $18.7 million of stock-based compensation expense included expense for modifications of equity awards for certain former employees of $1.0 million, expense for equity awards granted under the 2013 Plan and 2017 Plan of $9.7 million and an increase in the liability for SARs of $8.0 million. The $1.0 million of stock-based compensation expense for modifications provided continued vesting through scheduled vesting dates and extended expiration dates for certain former employees. These costs are included in “Cost of sales” and “Selling and administrative expenses” in the Consolidated Statement of Operations.

As of December 31, 2021, there was $85.5 million of total unrecognized compensation expense related to outstanding stock option, restricted stock unit and performance share unit awards.

SARs, granted under the 2013 Plan, are expected to be settled in cash and are accounted for as liability awards. As of December 31, 2021 and 2020 a liability of approximately $4.5 million and $3.5 million, respectively, for SARs was included in “Accrued liabilities” in the Consolidated Balance Sheets.

For the year ended December 31, 2021, the $10.9 million of stock-based compensation expense included expense for modifications of equity awards of $3.8 million and expense for equity awards granted under the 2013 and 2017 Plan of $7.1 million. The modifications allowed for the vesting of the first tranche of the All-Employee Equity Grant awarded to HPS and SVT employees despite their termination due to the divestitures. Of the $7.1 million of expense for equity awards granted under the 2013 Plan and 2017 Plan, $5.4 million related to the All-Employee Equity Grant.

A summary of the Company’s stock option (including SARs) activity for the year ended December 31, 2021 is presented in the following table (underlying shares in thousands).



	Shares	Weighted-Average Exercise Price (per share)		Wtd. Avg. Remaining Contractual Term (years)	Aggregate Intrinsic Value of In-The-Money Options (in millions)
Outstanding at December 31, 2020	7,742	$	18.47

Granted	795	45.78
Exercised or Settled	(1,530)	16.11
Forfeited	(255)	30.77
Expired	(6)	13.01
Outstanding at December 31, 2021	6,746	21.76		5.7	$	268.7

Vested at December 31, 2021	4,351	15.89		4.4	$	198.2

The per-share weighted average grant date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $18.06, $9.29 and $10.16, respectively.


	2021	2020		2019

Expected life of options (in years)	6.3	6.3		6.3
Risk-free interest rate	0.9% - 1.3%	0.4% - 1.5%		1.7% - 2.6%
Assumed volatility	38.6% - 39.4%	24.6% - 41.1%		24.8% - 31.8%
Expected dividend rate	0.0% - 0.1%	0.0	%	0.0	%

Restricted stock units are typically granted in the first quarter of the year to employees and non-employee directors based on the market price of the Company’s common stock on the grant date and recognized in compensation expense over the vesting period. Eligible employees were also granted restricted stock units, during the third quarter of 2020, that vest ratably over two years, subject to the passage of time and the employee’s continued employment during such period. In some instances, such as death, awards may vest concurrently with or following an employee’s termination.


	Shares	Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2020	5,546	$	33.09

Granted	340	45.76
Vested	(2,542)	33.44
Forfeited	(667)	34.27
Non-vested as of December 31, 2021	2,677	34.08

Performance share units are granted to certain key employees and are subject to a three year performance period. The number of shares issued at the end of the performance period is determined by the Company’s total shareholder return percentile rank versus the S&P 500 index for the three year performance period. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation cost is recognized straight-line over a three year period.


	Shares	Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2020	255	$	29.72
Granted	158	55.84
Vested	—	—
Forfeited	(20)	36.36
Non-vested as of December 31, 2021	393	39.89

The following assumptions were used to estimate the fair value of performance share units granted during the year ended December 31, 2021 and 2020 using the Monte Carlo simulation pricing model.