Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

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 $4.8 million and $8.7 million for the three months ended March 31, 2020 and 2019, 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. The Long-Term Incentive Compensation Plan expires pursuant to its terms on December 31, 2020. We have adopted, subject to the approval of our stockholders, the HollyFrontier Corporation 2020 Long Term Incentive Plan, which will allow us to grant new equity compensation awards until February 12, 2030. Upon the adoption of the new plan, the Long-Term Incentive Compensation Plan will continue to govern outstanding equity awards granted thereunder, but it will no longer be used to grant new awards.

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 $0.5 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively.

Restricted Stock Units

Under our Long-Term Incentive Compensation Plan, we grant certain officers and other key employees restricted stock unit awards, which are payable in stock or cash and generally vest 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. Upon vesting, restrictions on the 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 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 unit activity during the three months ended March 31, 2020 is presented below:



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

Outstanding at January 1, 2020	1,101,781		$	53.30
Granted	2,853		52.59
Vested	(62,617	)	41.38
Forfeited	(18,329	)	52.43
Outstanding at March 31, 2020	1,023,688		54.04		$	25,091

For the three months ended March 31, 2020, restricted stock units vested having a grant date fair value of $2.6 million. As of March 31, 2020, there was $27.4 million of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted-average period of 1.4 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 or cash paid under these awards can range from zero to 200% of target award amounts. Holders of performance share units have the right to receive dividend equivalents and other distributions with respect to such performance share units based on the target level of payout.

A summary of performance share unit activity and changes during the three months ended March 31, 2020 is presented below:



Performance Share Units	Grants

Outstanding at January 1, 2020	375,588
Forfeited	(13,597	)
Outstanding at March 31, 2020	361,991

As of March 31, 2020, there was $9.8 million of total unrecognized compensation cost related to non-vested performance share units having a grant date fair value of $58.72 per unit. That cost is expected to be recognized over a weighted-average period of 1.8 years.