Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.1
Stock-Based Compensation
 3 Months Ended
Mar. 31, 2021
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 March 31, 2021, 5.3 million shares remained available.
Incentive equity awards granted by the Company
The Company's Board of Directors approved incentive equity award grants to the Company's employees in the form of RSUs, stock options and PSUs.
The activity related to the Company’s incentive equity awards for the three months ended March 31, 2021 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, 2020 0.9  $ 54.15  0.2  $ 52.93 
Granted (a)
0.6  65.21  0.1  65.21 
Vested
 (0.2) 53.23  —  — 
Canceled
 (0.1) 56.08  —  — 
Balance as of March 31, 2021 1.2 
(b)
 $ 59.74  0.3 
(c)
 $ 57.51 
______________________
(a)Represents awards granted by the Company primarily in February 2021.
(b)RSUs outstanding as of March 31, 2021 are expected to vest over time and have an aggregate unrecognized compensation expense of $68 million, which is expected to be recognized over a weighted average period of 3.1 years.
(c)PSUs outstanding as of March 31, 2021 are expected to vest over time and have an aggregate unrecognized compensation expense of $16 million, which may be recognized over a weighted average period of 2.0 years based on attainment of targets.
The activity related to stock options granted by the Company for the three months ended March 31, 2021 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, 2020 1.4  $ 55.57 
Granted
 0.1  65.21 
Exercised
 (0.1) 54.76 
Canceled
 —  — 
Expired
 —  — 
Outstanding as of March 31, 2021
 1.4  $ 56.18  5.3 $ 18 
Unvested as of March 31, 2021
 0.8 
(a)
 $ 56.05  5.3 $ 10 
Exercisable as of March 31, 2021
 0.6  $ 56.35  5.2 $ 8 
______________________
(a)Unvested options as of March 31, 2021 are expected to vest over time and have an aggregate unrecognized compensation expense of $19 million, which is expected to be recognized over a weighted average period of 2.5 years.
The fair value of stock options granted by the Company during 2021 and 2020 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 for both Wyndham Hotels and 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.
2021 2020
Grant date fair value $19.58 $8.59
Grant date strike price $65.21 $53.40
Expected volatility 40.18% 24.30%
Expected life 4.25 years 4.25 years
Risk-free interest rate 0.40% 1.21%
Projected dividend yield 0.98% 2.40%

Stock-based compensation expense
Stock-based compensation expense was $5 million and $4 million for the three months ended March 31, 2021 and 2020, respectively.