Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company has granted restricted common stock and restricted stock units (collectively, "restricted stock") and performance share units as long-term incentive awards to employees and non-employee directors under the BorgWarner Inc. 2014 Stock Incentive Plan, as amended ("2014 Plan") and the BorgWarner Inc. 2018 Stock Incentive Plan ("2018 Plan"). The Company's Board of Directors adopted the 2018 Plan as a replacement to the 2014 Plan in February 2018, and the Company's stockholders approved the 2018 Plan at the annual meeting of stockholders on April 25, 2018. After stockholders approved the 2018 Plan, the Company could no longer make grants under the 2014 Plan. The shares that were available for issuance under the 2014 Plan were cancelled upon approval of the 2018 Plan. The 2018 Plan authorizes the issuance of a total of 7 million shares, of which approximately 6 million shares were available for future issuance as of June 30, 2019.

Restricted stock In the first six months of 2019, the Company granted restricted stock in the amounts of 1,031,513 shares and 23,880 shares to employees and non-employee directors, respectively. Restricted stock granted to employees generally vests 50% after two years and the remainder after three years. Restricted stock granted to non-employee directors generally vests on the first anniversary of the date of grant. The Company recognizes the value of the restricted stock, which is equal to the market value of the Company’s common stock on the date of grant, as compensation expense ratably over the restricted stock's vesting period. As of June 30, 2019, the Company had $53 million of unrecognized compensation expense that will be recognized over a weighted average period of 2.1 years. The

Company recorded restricted stock compensation expense of $7 million and $5 million for the three months ended June 30, 2019 and 2018, respectively, and $14 million and $12 million for the six months ended June 30, 2019 and 2018, respectively.

A summary of the Company’s nonvested restricted stock for the six months ended June 30, 2019 is as follows:



	Shares subject to restriction (thousands)		Weighted average grant date fair value
Nonvested at December 31, 2018	1,516		$	42.97
Granted	930		$	41.92
Vested	(665	)	$	35.94
Forfeited	(6	)	$	45.41
Nonvested at March 31, 2019	1,775		$	44.77
Granted	125		$	40.78
Vested	(28	)	$	50.43
Forfeited	(37	)	$	45.13
Nonvested at June 30, 2019	1,835		$	44.40

Total Stockholder Return Performance Share Units The Company grants performance share units to members of senior management that vest at the end of three-year periods based on the Company's total stockholder return relative to a peer group of companies. The Company recorded compensation expense of $3 million and $2 million for the six months ended June 30, 2019 and 2018, respectively.

A summary of the status of the Company’s nonvested total stockholder return performance share units for the six months ended June 30, 2019 is as follows:



	Number of shares (thousands)		Weighted average grant date fair value
Nonvested at December 31, 2018	297		$	60.35
Granted	190		$	51.52
Forfeited	(9	)	$	55.30
Nonvested at March 31, 2019	478		$	56.93
Granted	5		$	51.59
Forfeited	(56	)	$	55.67
Nonvested at June 30, 2019	427		$	57.03

Relative Revenue Growth Performance Share Units The Company also grants performance share units to members of senior management that vest based on the Company's revenue growth relative to the vehicle market over three-year performance periods. The Company recorded compensation expense of $1 million for both of the three months ended June 30, 2019 and 2018 and $8 million for the six months ended June 30, 2018.

A summary of the status of the Company’s nonvested relative revenue growth performance share units for the six months ended June 30, 2019 is as follows:



	Number of shares (thousands)		Weighted average grant date fair value
Nonvested at December 31, 2018	297		$	47.03
Granted	190		$	41.90
Forfeited	(9	)	$	44.12
Nonvested at March 31, 2019	478		$	45.04
Granted	5		$	41.92
Forfeited	(56	)	$	44.24
Nonvested at June 30, 2019	427		$	45.11

In 2018, the Company modified the vesting provisions of restricted stock and performance share unit grants made to certain retiring executive officers to allow certain of the outstanding awards, that otherwise would have been forfeited, to vest upon retirement. This resulted in net restricted stock and performance share unit compensation expense of $2 million in the six months ended June 30, 2019 and a net reduction to expense of $4 million in the six months ended June 30, 2018, respectively.