Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
 
The Company has stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) outstanding under the 2004 Stock Incentive Plan (the “2004 Plan”), the 2010 Long-Term Incentive Plan (the “2010 Plan”) and the Envestnet, Inc. 2019 Acquisition Equity Incentive Plan (the “2019 Equity Plan”).

As of March 31, 2020, the maximum number of common shares available for future issuance under the Company’s plans is 1,355,235.  
 
Stock-based compensation expense under the Company’s plans was as follows:
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Stock-based compensation expense
 
$
13,765

 
$
12,864

Tax effect on stock-based compensation expense
 
(3,510
)
 
(3,256
)
Net effect on income

$
10,255

 
$
9,608


 
The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 25.5% and 25.3% for the three months ended March 31, 2020 and 2019, respectively.

Stock Options
 
The following weighted average assumptions were used to value options granted during the periods indicated:
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Grant date fair value of options
 
$

 
$
21.55

Volatility
 
%
 
40.0
%
Risk-free interest rate
 
%
 
2.5
%
Dividend yield
 
%
 
%
Expected term (in years)
 
0

 
6.5


 
The following table summarizes option activity under the Company’s plans:
 
 
 
 
 
 
Weighted-Average
 
 
 
 
 
 
Weighted-
 
Remaining
 
 
 
 
 
 
Average
 
Contractual Life
 
Aggregate
 
 
Options
 
Exercise Price
 
(Years)
 
Intrinsic Value
Outstanding as of December 31, 2019
 
1,150,586

 
$
25.66

 
3.4
 
$
50,590

Granted
 

 

 
 
 
 
Exercised
 
(357,974
)
 
16.57

 
 
 
 
Forfeited
 
(7,213
)
 
48.70

 
 
 
 
Outstanding as of March 31, 2020
 
785,399

 
29.60

 
3.6
 
19,010

Options exercisable
 
745,220

 
$
28.55

 
3.4
 
$
18,819


 
Exercise prices of stock options outstanding as of March 31, 2020 range from $9.00 to $55.29. At March 31, 2020, there was $539 of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 1.8 years.
 
Restricted Stock Units and Restricted Stock Awards
 
Periodically, the Company grants restricted stock units and awards and performance-based stock units and awards to employees. Performance-based stock units and awards vest upon the achievement of certain pre-established business and financial metrics as well as a subsequent service condition. The business and financial metrics governing the vesting of these performance-based stock units and awards provide thresholds that dictate the number of shares to vest upon each evaluation date, which range from 50% to 150%. If these metrics are achieved, as defined in the individual grant terms, these shares would cliff vest three years from the grant date.

The following is a summary of the activity for unvested restricted stock units and performance stock units granted under the Company’s plans:
 
 
RSUs
 
PSUs
 
 
Number of
Shares
 
Weighted-
Average Grant
Date Fair Value
per Share
 
Number of
Shares
 
Weighted-
Average Grant
Date Fair Value
per Share
Outstanding as of December 31, 2019
 
1,318,870

 
$
58.88

 
254,118

 
$
67.96

Granted
 
907,042

 
75.53

 
67,793

 
81.42

Vested
 
(398,881
)
 
55.93

 

 

Forfeited
 
(41,175
)
 
59.74

 
(33,010
)
 
64.70

Outstanding as of March 31, 2020
 
1,785,856

 
67.98

 
288,901

 
71.49



At March 31, 2020, there was $112,196 of unrecognized stock-based compensation expense related to unvested restricted stock units and awards, which the Company expects to recognize over a weighted-average period of 2.4 years. At March 31, 2020, there was $14,656 of unrecognized stock-based compensation expense related to unvested performance-based restricted stock units and awards, which the Company expects to recognize over a weighted-average period of 2.3 years.