Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.22.2.2
Stock-Based Compensation
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
 
The Company has stock options, restricted stock units (“RSUs”) and performance-based stock units (“PSUs”) outstanding under the 2010 Long-Term Incentive Plan (the “2010 Plan”) and the Envestnet, Inc. 2019 Acquisition Equity Incentive Plan (the “2019 Equity Plan”).

As of September 30, 2022, the maximum number of common shares available for future issuance under the Company’s plans is 2,538,508.
 
Stock-based compensation expense under the Company’s plans was as follows:
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2022 2021 2022 2021
(in thousands)
Stock-based compensation expense $ 17,265  $ 18,512  $ 61,831  $ 49,934 
Tax effect on stock-based compensation expense (4,403) (4,720) (15,767) (12,733)
Net effect on income $ 12,862  $ 13,792  $ 46,064  $ 37,201 
 
The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 25.5% for each of the three and nine months ended September 30, 2022 and 2021.

Stock Options
 
The Company did not grant any stock options in the three and nine months ended September 30, 2021 or 2022. 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
(in thousands)
Outstanding as of December 31, 2021 365,241  $ 38.61  3.3 $ 14,878 
Exercised (78,802) 32.49   
Forfeited (4,904) 72.96   
Outstanding as of September 30, 2022
281,535  39.73  2.4 2,496 
Options exercisable 281,303  $ 39.69  2.4 $ 2,496 
 
Exercise prices of stock options outstanding as of September 30, 2022 range from $15.34 to $74.83. At September 30, 2022, there was an immaterial amount of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 0.8 years.
Restricted Stock Units
 
The Company has granted restricted stock units and performance-based stock units to employees that are unvested. Performance-based stock units 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 provide thresholds that dictate the number of shares to vest upon each evaluation date, which range from 0% 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-based 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, 2021
1,507,424  $ 71.50  359,184  $ 73.64 
Granted 1,385,937  73.31  113,269  68.51 
Vested (759,930) 70.79  (148,904) 66.33 
Forfeited (262,510) 73.05  (57,987) 77.53 
Outstanding as of September 30, 2022
1,870,921  72.91  265,562  74.70 

At September 30, 2022, there was $109.2 million of unrecognized stock-based compensation expense related to unvested restricted stock units, which the Company expects to recognize over a weighted-average period of 2.0 years. At September 30, 2022, there was $6.4 million of unrecognized stock-based compensation expense related to unvested performance-based restricted stock units, which the Company expects to recognize over a weighted-average period of 1.7 years.