Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

We have a principal share-based compensation plan (the “Long-Term Incentive Compensation Plan”). The compensation cost charged against income for the plan was $11.9 million and $7.8 million for the three months ended June 30, 2019 and 2018, respectively, and $20.8 million and $15.8 million for the six months ended June 30, 2019 and 2018, respectively. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting is to expense the costs ratably over the vesting periods.

Additionally, HEP maintains a share-based compensation plan for Holly Logistic Services, L.L.C.’s non-employee directors and certain executives and employees. Compensation cost attributable to HEP’s share-based compensation plan was $0.6 million and $0.7 million for the three months ended June 30, 2019 and 2018, respectively, and $1.2 million and $1.5 million for the six months ended June 30, 2019 and 2018, respectively.

Restricted Stock and Restricted Stock Units

Under our Long-Term Incentive Compensation Plan, we grant certain officers and other key employees restricted stock unit awards with awards generally vesting over a period of three years. We previously granted restricted stock to certain officers and key employees with awards vesting over a period of three years. Certain restricted stock unit award recipients have the right to receive dividends, however, restricted stock units do not have any other rights of absolute ownership. Restricted stock award recipients are generally entitled to all the rights of absolute ownership of the restricted shares from the date of grant including the right to vote the shares and to receive dividends. Upon vesting, restrictions on the restricted stock and restricted stock units lapse at which time they convert to common shares or cash. In addition, we grant non-employee directors restricted stock unit awards, which typically vest over a period of one year and are payable in stock. The fair value of each restricted stock and restricted stock unit award is measured based on the grant date market price of our common shares and is amortized over the respective vesting period. We account for forfeitures on an estimated basis.

A summary of restricted stock and restricted stock unit activity during the six months ended June 30, 2019 is presented below:



Restricted Stock and Restricted Stock Units	Grants		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value ($000)

Outstanding at January 1, 2019 (non-vested)	1,196,914		$	46.81
Granted	40,056		53.27
Vesting (transfer/conversion to common stock)	(10,723	)	49.58
Forfeited	(21,119	)	45.76
Outstanding at June 30, 2019 (non-vested)	1,205,128		47.02		$	55,773

For the six months ended June 30, 2019, restricted stock and restricted stock units vested having a grant date fair value of $0.5 million. As of June 30, 2019, there was $20.7 million of total unrecognized compensation cost related to non-vested restricted stock and restricted stock unit grants. That cost is expected to be recognized over a weighted-average period of 1.1 years.

Performance Share Units

Under our Long-Term Incentive Compensation Plan, we grant certain officers and other key employees performance share units, which are payable in stock or cash upon meeting certain criteria over the service period, and generally vest over a period of three years. Under the terms of our performance share unit grants, awards are subject to “financial performance” and “market performance” criteria. Financial performance is based on our financial performance compared to a peer group of independent refining companies, while market performance is based on the relative standing of total shareholder return achieved by HollyFrontier compared to peer group companies. The number of shares ultimately issued under these awards can range from zero to 200% of target award amounts.

A summary of performance share unit activity during the six months ended June 30, 2019 is presented below:



Performance Share Units	Grants

Outstanding at January 1, 2019 (non-vested)	662,431
Granted	6,086
Forfeited	(4,516	)
Outstanding at June 30, 2019 (non-vested)	664,001

As of June 30, 2019, there was $10.7 million of total unrecognized compensation cost related to non-vested performance share units having a grant date fair value of $47.24 per unit. That cost is expected to be recognized over a weighted-average period of 1.2 years.