83 / Schnitzer Steel Industries, Inc. Form 10-K 2021 The fair value of the ROCE awards granted is based on the market closing price of the underlying Class A common stock on the grant date. The Company accrues compensation cost for ROCE awards based on the probable outcome of achieving specified performance conditions, net of estimated forfeitures, over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period). The Company reassesses whether achievement of the ROCE performance conditions is probable at each reporting date. If it is probable that the actual performance results will exceed the stated target performance conditions, the Company accrues additional compensation cost for the additional performance shares to be awarded. If, upon reassessment, it is no longer probable that the actual performance results will exceed the stated target performance conditions, or that it is no longer probable that the target performance conditions will be achieved, the Company reverses any recognized compensation cost for shares no longer probable of being issued. If the performance conditions are not achieved at the end of the performance period, all related compensation cost previously recognized is reversed. Compensation cost for ROCE awards and other performance share awards with a non-market performance metric granted prior to fiscal 2018 was $7 million, $2 million, and $6 million for the years ended August 31, 2021, 2020, and 2019, respectively. During the years ended August 31, 2021, 2020, and 2019, the Compensation Committee granted a total of 316,649 (157,791 TSR and 158,858 ROCE), 337,770 (165,834 TSR and 171,936 ROCE), and 254,620 (123,812 TSR and 130,808 ROCE) performance share awards, respectively. The weighted average grant date fair value per share of performance share awards granted was $22.33, $21.32, and $28.37 for the years ended August 31, 2021, 2020, and 2019, respectively. A summary of the Company’s performance-based awards activity for the year ended August 31, 2021 is as follows: Number of Awards (in thousands) Weighted Average Grant Date Fair Value Outstanding as of August 31, 2020 798 $ 25.19 Granted 317 $ 22.33 Performance achievement(1) 90 $ 26.60 Vested (320) $ 27.12 Forfeited (12) $ 23.11 Outstanding as of August 31, 2021 873 23.62 (1) Reflects the net number of awards achieved above target levels based on actual performance measured at the end of the performance period. The total fair value of performance share awards which vested, based on the market closing price of the Company’s Class A common stock on the vesting date, was $7 million, $10 million, and $13 million for the years ended August 31, 2021, 2020, and 2019, respectively. As of August 31, 2021, total unrecognized compensation costs related to unvested performance share awards amounted to $11 million, which is expected to be recognized over a weighted average period of two years. Deferred Stock Units (“DSUs”) The Deferred Compensation Plan for Non-Employee Directors (“DSU Plan”) provides for the issuance of DSUs to non-employee directors to be granted under the DSU Plan. Each DSU gives the director the right to receive one share of Class A common stock at a future date. Immediately following the annual meeting of shareholders, each non-employee director will receive DSUs which will become fully vested on the day before the next annual meeting, subject to continued service on the Board. The compensation cost associated with the DSUs granted is recognized over the requisite service period of the awards. The Company will issue Class A common stock to a director pursuant to vested DSUs in a lump sum in January of the first year after the director ceases to be a director of the Company, subject to the right of the director to elect an installment payment program under the DSU Plan. DSUs granted during the years ended August 31, 2021, 2020, and 2019 totaled 28,042 units, 41,592 units, and 31,218 units, respectively. The compensation cost associated with DSUs and the total value of shares vested during each of the years ended August 31, 2021, 2020, and 2019, as well as the unrecognized compensation cost as of August 31, 2021, were not material.
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