Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.2
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
12. STOCK-BASED COMPENSATION

The Company has a stock-based compensation plan available to grant non-qualified stock options, incentive stock options, stock-settled appreciation rights (“SSARs”), RSUs, performance-vesting restricted stock units (“PSUs”) and other stock-based awards to key employees, non-employee directors, advisors and consultants. Under the Wyndham Hotels & Resorts, Inc. 2018
Equity and Incentive Plan (“Stock Plan”), which became effective on May 14, 2018, a maximum of 10.0 million shares of common stock may be awarded. As of June 30, 2020, 5.8 million shares remained available.
Incentive equity awards granted by the Company
Wyndham Hotels’ Board of Directors approved incentive equity award grants to employees of Wyndham Hotels in the form of RSUs, stock options and PSUs.
The activity related to the Company’s incentive equity awards for the six months ended June 30, 2020 consisted of the following:
 
RSUs
 
PSUs
 
Number of
RSUs
 
Weighted
Average
Grant Price
 
Number
of
PSUs
 
Weighted
Average
Grant Price
Balance as of December 31, 2019
0.8

 
$
55.75

 
0.1

 
$
52.44

Granted (a)
0.6

 
53.01

 
0.1

 
53.40

Vested
(0.3
)
 
56.15

 
—

 
—

Canceled
(0.2
)
 
54.81

 
—

 
—

Balance as of June 30, 2020
0.9

(b) 
$
54.15

 
0.2

(c) 
$
52.93

______________________
(a)
Represents awards granted by the Company primarily in February 2020.
(b)
RSUs outstanding as of June 30, 2020 are expected to vest over time and have an aggregate unrecognized compensation expense of $45 million, which is expected to be recognized over a weighted average period of 3.1 years.
(c)
PSUs outstanding as of June 30, 2020 are expected to vest over time and have an aggregate unrecognized compensation expense of $9 million, which may be recognized over a weighted average period of 2.9 years.
The activity related to stock options granted by the Company for the six months ended June 30, 2020 consisted of the following:
 
Number of Options
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Life (Years)
 
Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2019
0.9

 
$
56.96

 
 
 
 
Granted
0.6

 
53.40

 
 
 
 
Exercised
—

 
—

 
 
 
 
Canceled
(0.1
)
 
54.72

 
 
 
 
Expired
—

 
—

 
 
 
 
Outstanding as of June 30, 2020
1.4

 
$
55.57

 
6.0
 
$
—

Unvested as of June 30, 2020
1.0

(a) 
$
54.54

 
6.2
 
$
—

Exercisable as of June 30, 2020
0.4

 
$
57.94

 
5.6
 
$
—

______________________
(a)
Unvested options as of June 30, 2020 are expected to vest over time and have an aggregate unrecognized compensation expense of $9 million, which is expected to be recognized over a weighted average period of 3.1 years.

The fair value of stock options granted by the Company during 2020 and 2019 were estimated on the date of the grant using the Black-Scholes option-pricing model with the relevant assumptions outlined in the table below. Expected volatility is based on both historical and implied volatilities of the stock of comparable companies over the estimated expected life of the options. The expected life represents the period of time the options are expected to be outstanding. The risk-free interest rate is based on yields on U.S. Treasury strips with a maturity similar to the estimated expected life of the options. The projected dividend yield was based on the Company’s anticipated annual dividend divided by the price of the Company’s stock on the date of the grant.
 
2020
 
2019
Grant date fair value
$8.59
 
$10.46
Grant date strike price
$53.40
 
$52.44
Expected volatility
24.30%
 
22.24%
Expected life
4.25 years
 
6.25 years
Risk-free interest rate
1.21%
 
2.63%
Projected dividend yield
2.40%
 
2.21%

Stock-based compensation expense
Stock-based compensation expense was $6 million for the three months ended June 30, 2020 and 2019. For the three months ended June 30, 2020, $1 million was recorded within restructuring costs and for the three months ended June 30, 2019, $2 million was recorded within separation-related costs on the Condensed Consolidated Statements of Income. Further, stock-based compensation expense was $10 million and $11 million for the six months ended June 30, 2020 and 2019, respectively. For the six months ended June 30, 2020, $1 million was recorded within restructuring costs and for the six months ended June 30, 2019, $4 million was recorded within separation-related costs on the Condensed Consolidated Statements of Income.