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

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

The Company recorded share-based compensation expense as follows for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Salaries, wages and employee benefits - continuing operations	$	2,283	$	2,085	$	7,015	$	7,056
Salaries, wages and employee benefits - discontinued operation	—		162		16		572
Total share-based compensation expense	$	2,283	$	2,247	$	7,031	$	7,628

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 September 30, 2021, approximately 799 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 nine months ended September 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 September 30, 2021	346	$	58.30

As of September 30, 2021, the total share-based compensation expense related to unvested stock options not yet recognized was $800, and the weighted-average period over which it is expected to be recognized is approximately two years.

Stock option transactions during the nine months ended September 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 September 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 nine months ended September 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	109	75.35
Vested	(108)	61.67
Forfeited	(17)	69.78
Outstanding as of September 30, 2021	194	$	69.84

As of September 30, 2021, the total share-based compensation expense related to restricted shares not yet recognized was $9,495, and the weighted-average period over which it is expected to be recognized is approximately two years.

Restricted share transactions during the nine months ended September 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 September 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 nine months ended September 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 of September 30, 2021	79	$	75.61

As of September 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 $4,120, and the weighted-average period over which it is expected to be recognized is approximately two years.

Employee Stock Purchase Plan

As of September 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:


	Nine Months Ended
	September 30, 2021		September 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 granted¹	$	20.99	$	4.98
Share-based compensation expense for ESPP	$	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:


	Nine Months Ended
	September 30, 2021		September 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 granted¹	$	—	$	4.98
Share-based compensation expense for ESPP	$	—	$	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 September 30, 2021, approximately 75 shares remain available for grant under the Amended Plan.

Director restricted share transactions during the nine months ended September 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 September 30, 2021	15	$	93.46

For the three and nine months ended September 30, 2021, the Company recorded $318 and $1,046, respectively, of share-based compensation expense associated with these grants. For the three and nine months ended September 30, 2020, the Company recorded $260 and $766, respectively, of share-based compensation expense associated with these grants. As of September 30, 2021, the total share-based compensation expense related to the restricted shares not yet recognized was $875, and the weighted-average period over which it is expected to be recognized is approximately less than one year.