SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Long Term Incentive Plan

The Delphi Technologies PLC Long-Term Incentive Plan (the “PLC LTIP”) allows for the grant of share-based awards (up to 7,500,000 ordinary shares) for long-term compensation to the employees, directors, consultants and advisors of the Company. The awards can be in the form of shares, options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance awards, and other share-based awards.

Prior to the Separation, the Company had no share-based compensation plans; however certain of our employees participated in the Former Parent’s share-based compensation arrangement (the “Former Parent Plan”). Grants of RSUs to executives and non-employee directors were made under the Former Parent Plan in each year from 2012 to 2017.

Board of Director Awards

On April 26, 2018, Delphi Technologies granted 34,756 RSUs to the Board of Directors at a grant date fair value of approximately $2 million. The RSUs vested on April 24, 2019, and 33,944 ordinary shares, which included shares issued in connection with dividend equivalents, were issued to members of the Board of Directors, net of 1,426 ordinary shares that were withheld to cover withholding taxes, at a fair value of approximately $1 million

On April 25, 2019, Delphi Technologies granted 70,924 RSUs to the Board of Directors at a grant date fair value of approximately $2 million. The RSUs will vest on April 22, 2020, the day before the 2020 annual meeting of shareholders.

Executive Awards

The executive awards include a time-based vesting portion and a performance-based vesting portion, as well as continuity awards in certain years. The time-based RSUs vest ratably over three years beginning on the first anniversary of the grant date. The performance-based RSUs vest at the completion of a three-year performance period if certain targets are met. Each executive will receive between 0% and 200% of his or her target performance-based award based on the Company’s performance against established company-wide performance metrics, which are:

Metric	2019 Grant	2018 Grant	2016 - 2017 Former Parent Grants	2013 - 2015 Former Parent Grants
Average return on invested capital (1)	50%	N/A	N/A	N/A
Average Return on Net Assets (2)	N/A	50%	50%	50%
Cumulative Net Income	N/A	25%	25%	N/A
Cumulative Earnings Per Share (3)	N/A	N/A	N/A	30%
Relative Total Shareholder return (4)	50%	25%	25%	20%

(1) Average return on invested capital is measured by the Company’s tax-affected operating income divided by average net pension liabilities plus average debt plus average total equity (excluding noncontrolling interest) minus average cash and cash equivalents for each calendar year during the respective performance period.

(2) Average return on net assets is measured by the Company’s tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year during the respective performance period.

(3) Cumulative earnings per share is measured by net income attributable to Delphi Technologies divided by the weighted average number of diluted shares outstanding for the respective three-year performance period.

(4) Relative total shareholder return is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading days in the fourth quarter of the end of the performance period to the average closing price per share of the Company’s ordinary shares for all available trading days in the fourth quarter of the year preceding the grant, including dividends, and assessed against a comparable measure of competitor and peer group companies.

The details of the executive grant are as follows:

Grant Date	RSUs Granted	Grant Date Fair Value	Time-Based Award Vesting Dates	Performance-Based Award Vesting Date
	(in millions)
February 2019	1	$27	Annually on the anniversary grant date, 2020-2022	December 31, 2021
February 2018	0.3	$16	Annually on the anniversary grant date, 2019-2021	December 31, 2020

Any new executives hired after the annual executive RSU grant date may be eligible to participate in the PLC LTIP. Any off cycle grants made for new hires are valued at their grant date fair value based on the closing price of the Company’s ordinary shares on the date of such grant. The Company has competitive and market-appropriate ownership requirements. All of the RSUs granted under the PLC LTIP are eligible to receive dividend equivalents for any dividend paid from the grant date through the vesting date.

The grant date fair value of the RSUs is determined based on the target number of awards issued, the closing price of the Company’s ordinary shares on the date of the grant of the award, including an estimate for forfeitures, and a contemporaneous valuation performed by an independent valuation specialist with respect to the relative total shareholder return awards.

In February 2019, under the executive RSU grants 197,403 ordinary shares were issued to the Company’s executives at a fair value of approximately $4 million, of which 67,873 ordinary shares were withheld to cover minimum withholding taxes.

A summary of activity, including award grants, vesting and forfeitures for Delphi Technologies employees and non-employee members of the Board of Directors is provided below. All prior period award amounts disclosed within the following table were converted in accordance with the factor related to the conversion of the awards following the Separation as described above.

	RSUs		Weighted Average Grant Date Fair Value
	(in thousands)
Nonvested, January 1, 2017	220		$	76.54
Granted	312		63.71
Vested	(183	)	44.93
Forfeited	(25	)	76.18
Conversion and employee transfers (1)	388
Nonvested, December 31, 2017 (2)	712		37.34
Granted	591		47.56
Vested	(209	)	38.79
Forfeited	(415	)	48.50
Nonvested, December 31, 2018	679		42.70
Granted	1,255		23.29
Vested	(229	)	43.79
Forfeited	(97	)	31.91
Nonvested, December 31, 2019	1,608		26.48

(1) In connection with the Separation, outstanding equity awards to executives and non-employee directors under the Former Parent’s long-term incentive plan were adjusted and converted into Delphi Technologies equity awards using a formula designed to maintain the economic value of the awards immediately before and after the Separation. This activity reflects that conversion, along with the transfer of certain corporate employees to Delphi Technologies.

(2) Nonvested RSUs and the corresponding weighted average grant date fair value as of December 31, 2017 are presented on a Delphi Technologies basis using a formula that multiplied the number of RSUs underlying each unvested award outstanding as of the date of the Separation by a conversion factor of 2.02.

As of December 31, 2019, there were approximately 57,000 performance-based RSUs, with a weighted average grant date fair value of $44.93, that were vested but not yet distributed.

During the year ended December 31, 2019, the Company entered into an individual one-time award of non-qualified stock options to purchase ordinary shares of the Company, which options had a grant date fair value of $3 million based on a contemporaneous valuation performed by an independent valuation specialist. The options become exercisable in equal parts annually over a 5-year period commencing on the first anniversary of the grant. The options will be exercisable, subject to vesting, for a period of 10 years after the grant date.

Share-based compensation expense recorded within the consolidated statement of operations, which for periods prior to the Separation includes the cost of Delphi Technologies employees who participated in the Former Parent’s Plan as well as an allocated portion of the cost of the Former Parent’s senior management awards, was $17 million ($17 million, net of tax), $9 million ($9 million, net of tax) and $17 million ($14 million net of tax) based on the Company’s best estimate of ultimate performance against the respective targets during the years ended December 31, 2019, 2018 and 2017, respectively.

The Company will continue to recognize compensation expense, based on the grant date fair value of the awards applied to the Company’s best estimate of ultimate performance against the respective targets, over the requisite vesting periods of the awards. Based on the grant date fair value of the awards and the Company’s best estimate of ultimate performance against the respective targets as of December 31, 2019, unrecognized compensation expense on a pretax basis of approximately $23 million is anticipated to be recognized over a weighted average period of approximately 2 years.