ENERGY HARBOR CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions)
13. Stock-Based Compensation Plans
Energy Harbor grants stock-based awards through the Energy Harbor Corp. 2020 Equity Incentive Plan (the
Plan), primarily in the form of restricted stock units and restricted stock grants. Vesting periods for stock-based awards range, with the majority of awards having a vesting period of three to
four years. With respect to the restricted stock units, upon settlement, the participant may elect that up to fifty percent (50%) of such vested restricted stock units to be settled in a cash payment equal to the fair value of one share of common
stock for each such restricted stock unit (the Cash-Settled Restricted Stock Units) and the remaining percentage of such vested restricted stock units shall be settled in one share of common stock
for each such restricted stock unit. Energy Harbor records the compensation costs for stock-based compensation awards that will be paid in stock over the vesting period based on the fair value on the grant
date. Energy Harbor accounts for forfeitures as they occur.
As of December 31, 2022, and 2021, Energy Harbor had 574 thousand and 657 thousand,
respectively, non-vested restricted common stock units with a weighted-average grant date fair value of $35.26 and $23.18, respectively. As of December 31, 2022, and
2021, Energy Harbor had 400 and 800, respectively, non-vested restricted preferred stock units with a weighted-average grant date fair value of $14.85 for both years.
Stock-Based Compensation Expense
The Company adjusts the compensation costs for stock-based compensation awards that are expected to be paid in cash
based on changes in the fair value of the award as of each reporting date. Energy Harbor records the actual tax benefit realized from tax deductions when awards are exercised or settled. The income tax effects of awards are recognized in the income
statement when the awards vest, are settled or are forfeited.
Stock-based compensation expense of awards
recognized in the statements of income was $53 and $22 for the years ended December 31, 2022 and 2021, respectively.
The
weighted-average fair value of common stock awards vesting in 2022 and 2021 was $47.31 and $23.54, respectively, per unit. The weighted-average fair value of preferred
stock awards vesting in 2022 and 2021 was $14.85. For the years ended December 31, 2022 and 2021, the fair value of common stock restricted stock units vested was $46 and $13, respectively. For the years ended December 31, 2022 and 2021, the fair
value of preferred stock restricted stock units vested was $7 thousand and $7 thousand, respectively. As of December 31, 2022, there was approximately $11 of total unrecognized compensation cost related to
non-vested share-based compensation arrangements granted for restricted stock units, which is expected to be recognized over a period of approximately two years.
Non-Qualified Deferred Compensation Plan
Under the Non-Qualified Deferred Compensation Plan (NQDCP), certain employees may elect to defer payment of
a portion of their basic compensation, cash incentive compensation, and/or equity compensation, to the extent permitted by the Board of Directors for any given plan year, such amount to be credited to his or her personal account under the Plan. An
account shall be established for each participant by the Company as of the effective date of such participants first deferral election. The Company may credit, from time to time, as a discretionary Company contribution to the account of a
participant such amount, if any, as the Board of Directors shall determine. Such contributions may vary by individual participant or by group as determined by the Board of Directors in its sole discretion.
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