Norwegian Cruise Line Holdings Ltd. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Employee Benefits and Compensation Plans

Employee Benefits and Compensation Plans

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Benefits and Compensation Plans

10. Employee Benefits and Compensation Plans

Share Option Awards

The following is a summary of option activity under NCLH’s Amended and Restated 2013 Performance Incentive Plan for the six months ended June 30, 2019:


										Weighted-
	Number of Share Option Awards			Weighted-Average Exercise Price						Average
	Time-	Performance-	Market-	Time-		Performance-		Market-		Contractual	Aggregate
	Based	Based	Based	Based		Based		Based		Term	Intrinsic Value
	Awards	Awards	Awards	Awards		Awards		Awards		(years)	(in thousands)
Outstanding as of January 1, 2019	5,686,793	410,499	208,333	$	50.65	$	45.67	$	59.43	6.22	$	13,946
Exercised	(197,076)	(99,924)	—		39.19		19.00		—
Forfeited and cancelled	(35,333)	(156,251)	—		56.83		59.43		—
Outstanding as of June 30, 2019	5,454,384	154,324	208,333	$	51.02	$	49.02	$	59.43	5.82	$	27,599

Restricted Ordinary Share Awards

The following is a summary of restricted NCLH ordinary share activity for the six months ended June 30, 2019:


	Number of
	Time-	Weighted-
	Based	Average Grant
	Awards	Date Fair Value
Non-vested as of January 1, 2019	429	$	58.41
Vested	(429)		58.41
Non-vested as of June 30, 2019	—	$	—

Restricted Share Unit Awards

On March 1, 2019, NCLH granted 1.9 million time-based restricted share unit awards to our employees, which vest in substantially equal annual installments over three years. Additionally, on March 1, 2019, NCLH granted 0.5 million performance-based restricted share units to certain members of our management team, which vest upon the achievement of certain pre-established performance targets established for the 2019 and 2020 calendar years and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2022.

The following is a summary of restricted share unit activity for the six months ended June 30, 2019:


	Number of	Weighted-		Number of		Weighted-		Number of	Weighted-
	Time-Based	Average Grant		Performance-		Average Grant		Market-	Average Grant
	Awards	Date Fair Value		Based Awards		Date Fair Value		Based Awards	Date Fair Value
Non-vested as of January 1, 2019	2,973,032	$	53.98	825,614		$	56.58	50,000	$	59.43
Granted	1,915,943		55.04	462,282	(1)		55.27	—		—
Vested	(1,425,290)		53.05	(121,000)			56.27	—		—
Forfeited or expired	(80,511)		54.89	(37,500)			56.27	—		—
Non-vested as of June 30, 2019	3,383,174	$	54.95	1,129,396		$	56.09	50,000	$	59.43

(1)	Number of performance-based restricted share units included assumes maximum achievement of performance targets.

The share-based compensation expense for the three months ended June 30, 2019 was $29.7 million of which $25.0 million was recorded in marketing, general and administrative expense and $4.7 million was recorded in payroll and related expense. The share-based compensation expense for the six months ended June 30, 2019 was $56.7 million of

which $48.2 million was recorded in marketing, general and administrative expense and $8.5 million was recorded in payroll and related expense.

The share-based compensation expense for the three months ended June 30, 2018 was $31.7 million of which $27.3 million was recorded in marketing, general and administrative expense and $4.4 million was recorded in payroll and related expense. The share-based compensation expense for the six months ended June 30, 2018 was $59.8 million of which $52.1 million was recorded in marketing, general and administrative expense and $7.7 million was recorded in payroll and related expense.