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Long-Term Incentive Employee Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Long-Term Incentive Employee Compensation
LONG-TERM INCENTIVE EMPLOYEE COMPENSATION
The 2011 Omnibus Incentive Plan (2011 Incentive Plan) was approved by shareholders and established in May of 2011 to provide for the awarding of options on common shares and full value restricted common shares or units to employees and non-employee directors. As of December 31, 2021, 36.9 shares were available for future grants under the 2011 Incentive Plan. The Company makes shares available for the exercise of stock options or vesting of restricted shares or units by purchasing shares in the open market.
Our long-term incentive plan (LTIP) awards are comprised of two components: restricted stock units (RSUs) and performance stock units (PSUs). The majority of RSUs settle in shares; however RSUs and PSUs granted to certain international employees are settled in cash. We account for equity-settled RSUs and PSUs as equity-based compensation awards. We account for cash-settled RSUs and PSUs as liability-based awards. PSUs contain equally weighted performance conditions for total shareholder return (TSR) and return on invested capital (ROIC). PSUs vest based on predetermined performance metrics that align with the Company's stock price and financial performance following a three-year performance period and are subject to a payout factor which includes a maximum and minimum payout. PSUs are accounted for as two distinct awards, a TSR award and a ROIC award.
LTIP costs are primarily recorded within general and administrative expenses in our Consolidated Statements of Operations, at fair value over the requisite service period (typically three years) on a straight-line basis and are reduced by forfeitures as they occur.
The following table summarizes our share-based compensation expense associated with our LTIP awards.
For the Year Ended December 31202120202019
Equity-based awards$16.5 $13.4 $15.7 
Liability-based awards1.3 0.8 2.8 
Total share-based compensation expense$17.8 $14.2 $18.5 
As of December 31, 2021, there was $21.4 of total unrecognized compensation cost related to non-vested equity awards. This cost is expected to be recognized ratably over a weighted-average period of 1.8 years. Additionally, unrecognized compensation cost related to liability-based awards was $1.3, which is expected to be recognized ratably over a weighted-average period of 1.9 years.
The fair value of equity-settled restricted stock units is determined using the closing price of the Company’s common stock on the date of grant. The fair value of cash-settled RSUs is remeasured using the closing price of ITT's common stock at the end of each reporting period. Recipients do not have voting rights and do not receive cash dividends during the restriction period. Dividend equivalents on RSUs, which are subject to forfeiture, are accrued and paid in cash upon vesting of the RSU. If a recipient retires or is terminated other than for cause, a pro rata portion of the RSU may vest.
For PSUs, the fair value of the ROIC award is based on the closing price of ITT common stock on the date of grant less the present value of expected dividend payments during the vesting period. For ROIC awards granted in 2021, a dividend yield of 1.04% was assumed based on ITT's annualized dividend payment of $0.88 per share and the March 4, 2021 closing stock price of $84.27. The fair value of the ROIC award is fixed on the grant date; however, a probability assessment is performed each reporting period to estimate the likelihood of achieving the ROIC targets and the amount of compensation to be recognized.
The fair value of the TSR award is measured using a Monte Carlo simulation on the date of grant, measuring potential total shareholder return for ITT relative to the other companies in the S&P 400 Capital Goods Index (the TSR Performance Group). The expected volatility of ITT's stock price is based on the historical volatility of a peer group while expected volatility for the other companies in the TSR Performance Group is based on their own stock price history. For TSR awards granted in 2021, all volatility and correlation measures were based on three years of daily historical price data through March 4, 2021, corresponding to the three-year performance period of the award. As the grant date occurs after the beginning of the performance period, actual TSR performance between the beginning of the performance period (December average closing stock price) and the grant date was reflected in the valuation. For TSR awards granted in 2021, a dividend yield of 1.04% was assumed based on ITT's annualized dividend payment of $0.88 per share and the March 4, 2021 closing stock price of $84.27.
The table below provides a rollforward of outstanding RSUs and PSUs for each of the years ended December 31, 2021, 2020 and 2019.
 202120202019
Restricted Stock and
Performance Units		SharesWeighted
Average
Grant Date
Fair Value		SharesWeighted
Average
Grant Date
Fair Value		SharesWeighted
Average
Grant Date
Fair Value
Outstanding – January 10.8 $59.25 1.0 $51.24 1.2 $42.94 
Granted0.3 90.14 0.3 61.13 0.3 60.91 
Performance adjustment(a)
— — 0.1 57.88 0.1 44.87 
Vested and issued(0.3)57.36 (0.5)44.86 (0.6)38.03 
Forfeited(0.1)68.18 (0.1)59.50 — — 
Outstanding – December 310.7 $71.21 0.8 $59.25 1.0 $51.24 
Vested pending issuance0.1 $65.25 0.2 $57.88 0.2 $44.87 
(a)Represents an adjustment for performance results achieved related to outstanding PSU shares that vested during the period and are pending issuance.
The table below provides the number of the outstanding shares by award type. Cash-settled PSUs outstanding were not material.
As of December 31202120202019
Equity-settled RSUs0.4 0.4 0.5 
Cash-settled RSUs— — 0.1 
Equity-settled PSUs0.3 0.4 0.4 
As of December 31, 2021, substantially all RSUs outstanding are expected to vest. As of December 31, 2021, the total number of PSUs expected to vest based on current performance estimates, including those vested but pending issuance, was 0.3.
Non-Qualified Stock Options
Prior to 2017, our LTIP award grants also included non-qualified stock options (NQOs). NQOs outstanding and exercisable were 0.1, 0.2 and 0.3 as of December 31, 2021, 2020 and 2019. As of December 31, 2021, there were no options "out-of-the-money" and all options outstanding were fully vested. NQOs exercised of 0.1, 0.1, and 0.4 during December 31, 2021, 2020 and 2019 resulted in cash proceeds of $1.2, $4.3 and $14.9, respectively.
The income tax benefit realized during 2021, 2020 and 2019 associated with exercised stock options and vested restricted stock was $3.2, $4.1 and $6.5, respectively. Excess tax benefits arising from exercised stock options and vested restricted stock were $3.2, $3.0 and $4.6 for 2021, 2020 and 2019, respectively.