Forward Air Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock Incentive Plans

Stock Incentive Plans

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

The Company recorded shared-based compensation expense as follows for the three and six months ended June 30, 2021 and 2020:


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Salaries, wages and employee benefits - continuing operations	$	2,463	$	2,154	$	4,732	$	4,971
Salaries, wages and employee benefits - discontinued operation	—		222		16		410
Total share-based compensation expense	$	2,463	$	2,376	$	4,748	$	5,381

In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 of common shares to employees. As of June 30, 2021, approximately 797 shares remain available for grant under the Omnibus Plan.

Stock Options

Share-based compensation expense associated with stock options is amortized ratably over the vesting period. The Company estimates the fair value of the grants using the Black-Scholes option-pricing model.

Stock option transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding as of January 1, 2021	359	$	55.79
Granted	39	75.05
Exercised	(52)	54.57
Forfeited	—	—
Outstanding as of June 30, 2021	346	$	58.30

As of June 30, 2021, the total share-based compensation expense related to unvested stock options net yet recognized was $1,002, and the weighted-average period over which it is expected to be recognized is approximately two years.

Stock option transactions during the six months ended June 30, 2021 on a discontinued operation basis were as follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding as of January 1, 2021	14	$	52.15
Granted	—	—
Exercised	(14)	52.15
Forfeited	—	—
Outstanding as of June 30, 2021	—	$	—

Restricted Shares

Restricted shares are restricted from sale or transfer until vesting, and restrictions lapse in three equal installments beginning one year after the date of grant. Share-based compensation expense associated with these awards is amortized ratably over the requisite service period. Restricted share transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	210	$	62.78
Granted	108	75.28
Vested	(98)	61.49
Forfeited	(15)	69.91
Outstanding as of June 30, 2021	205	$	69.31

As of June 30, 2021, the total share-based compensation expense related to restricted shares not yet recognized was $11,227, and the weighted-average period over which it is expected to be recognized is approximately two years.

Restricted share transactions during the six months ended June 30, 2021 on a discontinued operation basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	10	$	61.25
Granted	—	—
Vested	(5)	60.49
Forfeited	(5)	61.92
Outstanding as of June 30, 2021	—	$	—

Performance Awards

Performance awards are based on achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the Company’s total shareholder return as compared to the total shareholder return of a selected peer group, as determined by the Company’s Board of Directors. Performance targets are set at the beginning of each three-year measurement period. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. Depending on the financial target, the compensation expense is based on the projected assessment of the level of performance that will be achieved.

Performance award transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows assuming target levels of performance:


	Performance Awards	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	65	$	67.62
Granted	36	87.33

Earned	(11)	72.30
Forfeited or unearned	(11)	70.22
Outstanding as June 30, 2021	79	$	75.61

As of June 30, 2021, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was $4,621, and the weighted-average period over which it is expected to be recognized is approximately three years.

Employee Stock Purchase Plan

As of June 30, 2021, the Company is authorized to issue up to a remaining 330 shares of common stock to employees under the 2005 Employee Stock Purchase Plan (the “ESPP”). These shares may be issued at a price equal to 90% of the lesser of the market value on the first day or the last day of each six-month purchase period. Common stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions.

Employee stock purchase plan activity and related information was as follows on a continuing operations basis:


	Six Months Ended
	June 30, 2021		June 30, 2020
Shares purchased by participants under the ESPP	5		6
Average purchase price	$	68.76	$	44.84
Weighted-average fair value of each purchase right under the ESPP granted ¹	$	20.99	$	4.98
Share-based compensation for ESPP shares	$	118	$	30

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Employee stock purchase plan activity and related information was as follows on a discontinued operation basis:


	Six Months Ended
	June 30, 2021		June 30, 2020
Shares purchased by participants under the ESPP	—		1
Average purchase price	$	—	$	44.84
Weighted-average fair value of each purchase right under the ESPP granted ¹	$	—	$	4.98
Share-based compensation for ESPP shares	$	—	$	3

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Director Restricted Shares

Under the Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 of common shares may be issued. As of June 30, 2021, approximately 75 shares remain available for grant under the Amended Plan.

Director restricted share transactions during the six months ended June 30, 2021 were as follows:


	Director Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	24	$	42.88
Granted	17	93.39
Vested	(26)	47.12
Forfeited	—	—
Outstanding as of June 30, 2021	15	$	93.46

For the three and six months ended June 30, 2021, the Company recorded $400 and $728, respectively, of share-based compensation expense associated with these grants. For the three and six months ended June 30, 2020, the Company recorded $245 and $506, respectively, of share-based compensation expense associated with these grants. As of June 30, 2021, the total share-based compensation expense related to the restricted shares net yet recognized was $1,221, and the weighted-average period over which it is expected to be recognized is approximately less than one year.