Quarterly report pursuant to Section 13 or 15(d)

Employee Benefits and Compensation Plans

v3.8.0.1
Employee Benefits and Compensation Plans
 9 Months Ended
Sep. 30, 2017
Post employment Benefits [Abstract]  
Employee Benefits and Compensation Plans
7. Employee Benefits and Compensation Plans

 

Share-Based Compensation

 

As a result of NCLH’s adoption of ASU No. 2016-09, beginning in the first quarter of 2017, NCLH began accounting for forfeitures as they occur, rather than estimating expected forfeitures. Pursuant to the modified-retrospective application, the net cumulative effect of this change was recognized as a $2.2 million increase to retained earnings as of January 1, 2017 (we refer you to our consolidated statements of changes in shareholders’ equity).

 

Share Option Awards

 

The following is a summary of option activity under NCLH’s Amended and Restated 2013 Performance Incentive Plan for the nine months ended September 30, 2017 (excludes the impact of 208,335 previously awarded performance-based options as no grant date has been established):

 

    Number of Share Option
Awards		     Weighted-Average Exercise
Price		     Weighted-
Average
Contractual Term		    

Aggregate
Intrinsic Value

  
    Time-
Based
Awards		     Performance-
Based
Awards		     Market-
Based
Awards		     Time-
Based
Awards		     Performance-
Based
Awards		     Market-
Based
Awards		     (years)     (in thousands)  
Outstanding as of January 1, 2017     7,775,058       432,978       208,333     $ 48.04     $ 23.86     $ 59.43       7.81     $ 35,429  
Granted     —       156,249       —       —       59.43       —       —       —  
Exercised     (704,339 )     (83,288 )     —       33.92       19.00       —       —       —  
Forfeited and cancelled     (385,070 )     (93,749 )     —       54.42       59.43       —       —       —  
Outstanding as of September 30, 2017     6,685,649       412,190       208,333     $ 49.16     $ 30.24     $ 59.43       7.22     $ 54,689  

 

Restricted Ordinary Share Awards

 

The following is a summary of restricted NCLH ordinary share activity for the nine months ended September 30, 2017:

 

    Number of
Time-Based
Awards		     Weighted-
Average Grant
Date Fair
Value		  
Non-vested as of January 1, 2017     16,872     $ 7.63  
Granted     —       —  
Vested     (15,702 )     4.94  
Forfeited or expired     —       —  
Non-vested and expected to vest as of September 30, 2017     1,170     $ 43.70  

 

Restricted Share Unit Awards

 

On March 1, 2017, NCLH granted 1.7 million time-based restricted share unit awards to our employees which vest equally over three years. Additionally, on March 1, 2017, NCLH awarded 121,000 performance-based restricted share units to certain members of our management team which vest upon the achievement of certain pre-established performance targets.

 

The following is a summary of restricted share unit activity for the nine months ended September 30, 2017 (excludes the impact of 329,146 previously awarded performance-based restricted share units as no grant date was established):

 

    Number of
Time-Based
Awards		     Weighted-
Average Grant
Date Fair
Value		     Number of
Performance-
Based
Awards		     Weighted-
Average Grant
Date Fair Value		     Number of
Market-
Based
Awards		     Weighted-
Average Grant
Date Fair Value		  
Non-vested as of January 1, 2017     1,305,335     $ 50.38       —     $ —       50,000     $ 59.43  
Granted     1,803,327       51.13       37,500       49.76       —       —  
Vested     (447,503 )     50.55       (15,000 )     49.76       —       —  
Forfeited or expired     (70,179 )     50.71       (22,500 )     49.76       —       —  
Non-vested and expected to vest as of September 30, 2017     2,590,980       50.86       —       —       50,000       59.43  

 

The share-based compensation expense for the three months ended September 30, 2017 was $21.5 million of which $18.6 million was recorded in marketing, general and administrative expense and $2.9 million was recorded in payroll and related expense. The share-based compensation expense for the nine months ended September 30, 2017 was $63.7 million of which $57.1 million was recorded in marketing, general and administrative expense and $6.6 million was recorded in payroll and related expense.