|TTEC HOLDINGS, INC. filed this Form 10-K on 03/06/2019|
TTEC HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
Equity Compensation Plans
In May 2010, the Company adopted the TeleTech Holdings, Inc. 2010 Equity Incentive Plan (the “2010 Plan”). An aggregate of 4.0 million shares of common stock has been reserved for issuance under the 2010 Plan, which permits the award of incentive stock options, non-qualified stock options, stock appreciation rights, shares of restricted common stock and RSUs. The 2010 Plan also provides for annual equity-based compensation grants to members of the Company’s Board of Directors. Options granted to employees generally vest over four to five years and have a contractual life of ten years. Options issued to Directors vest over one year and have a contractual life of ten years. As of December 31, 2018, a total of 4.0 million shares were authorized and 1.0 million shares were available for issuance under the 2010 Plan.
For the years ended December 31, 2018, 2017, and 2016, the Company recorded total equity-based compensation expense under all equity-based arrangements (stock options and RSUs) of $12.1 million, $11.9 million and $9.8 million, respectively. For 2018, 2017 and 2016, of the total compensation expense, $4.7 million, $4.1 million and $3.1 million was recognized in Cost of services and $7.4 million, $7.8 million and $6.7 million, was recognized in Selling, general and administrative in the Consolidated Statements of Comprehensive Income (Loss), respectively. For the years ended December 31, 2018, 2017, and 2016, the Company recognized a tax benefit under all equity-based arrangements (stock options and RSUs) of $3.7 million, $6.8 million and $5.0 million, respectively.
Restricted Stock Units
2016, 2017 and 2018 RSU Awards: The Company granted RSUs in 2016, 2017 and 2018 to new and existing employees that vest over four or five years. The Company also granted RSUs in 2016, 2017 and 2018 to members of the Board of Directors that vest over one year.
During 2015, the Company granted performance-based RSUs to an executive the amount of which is determinable based on a reporting segment of the Company achieving incremental operating income for each year from 2015-2017. During 2015 and 2016, based on operating income performance for reporting segment of the Company, approximately $0.4 million and $0.1 million of RSUs were earned. These RSUs were granted in March 2016 and March 2017, respectively, and will vest 12 months from the grant date. During 2017, the Company cancelled the 2017 performance grant.
Summary of RSUs: Settlement of the RSUs shall be made in shares of the Company’s common stock by delivery of one share of common stock for each RSU then being settled. The Company calculates the fair value for RSUs based on the closing price of the Company’s stock on the date of grant and records compensation expense over the vesting period using a straight-line method. The Company factors an estimated forfeiture rate in calculating compensation expense on RSUs and adjusts for actual forfeitures upon the vesting of each tranche of RSUs. The Company also factors in the present value of the estimated dividend payments that will have accrued as these RSUs are vesting.
The weighted average grant-date fair value of RSUs, including performance-based RSUs, granted during the years ended December 31, 2018, 2017, and 2016 was $35.15, $29.56, and $26.60, respectively. The total intrinsic value and fair value of RSUs vested during the years ended December 31, 2018, 2017, and 2016 was $12.5 million, $10.6 million, and $10.8 million, respectively.