from 0 to 200% of target. The performance goals are described in the Compensation Discussion and Analysis. The third tranche of the 2021 PAs and the second tranche of the 2022 PAs will be presented in the 2023 table. The third tranche of the 2022 PAs will be presented in the 2024 table. All three tranches of the 2020 PAs, 2021 PAs and 2022 PAs, if earned, vest in full on March 6, 2023, March 6, 2024, and March 6, 2025, respectively.
(3)
Columns (g) and (h) show the target and maximum payouts for each individual of their 2022 annual incentive award. The Committee has established threshold levels for each of the performance goals, but not for the overall award. All potential payouts are performance driven and can be earned from 0 to 200% of target. The performance goals are described in the Compensation Discussion and Analysis.
(4)
The amounts in column (i) represent the number of RSUs granted on February 25, 2022 as part of the 2022 long-term incentive awards. These RSUs vest one-third per year on March 6th in each of the three years following the grant date.
(5)
The amounts in column (j) represent the number of shares subject to nonqualified stock options granted on February 25, 2022. These options vest one-third per year in each of the first three years following the grant date.
(6)
The amounts in column (k) represent the exercise price of the nonqualified stock options, which was the closing price of the Company’s common stock on the NYSE on the date of grant.
(7)
This amount represents the grant date fair value of RSUs granted as part of 2022 long-term incentive awards. For those RSUs granted on February 25, 2022, the value is computed in accordance with ASC 718, using the grant price of $21.90 per share, which was the closing price of the Company’s common stock on the date of grant.
(8)
This amount represents the grant date fair value of nonqualified stock options granted. For those stock options granted on February 25, 2022, the value is computed in accordance with ASC 718, using a Black Scholes option pricing model value of $11.19 per option, based on the assumptions set forth in Note 19 to the financial statements included in our 2022 Annual Report on Form 10-K.
(9)
This amount represents the grant date fair value of the target number of shares subject to the second tranche of the 2021 PAs granted to the NEOs on February 16, 2022, using the grant price of $21.46 per unit, which was the closing price of the Company’s common stock on the NYSE on February 16, 2022, the date the performance goals for the 2022 tranche were established, plus an adjustment upward by 20% for the Relative TSR modifier based on performance to date and the time remaining in the measurement period.
The upward adjustment derived by a Monte Carlo valuation method simulates a range of possible future stock prices for Fluor and each company in the S&P 500 Index group over the PA’s three-year performance period using certain factual data and an assumed risk-free interest rate. The expected term was based on the 2.83-year remaining term of the 2021 PAs from the award date, the expected volatility of 82.6% was based on the daily historical stock price volatility over the 2.83 years prior to the award date to conform to the term of the awards for the Company and the S&P 500 Index Group, consistent with the methodology addressed in ASC 718, and an expected dividend rate on Fluor’s stock of 0%, as we do not currently pay cash dividends. In addition, the risk-free rate of interest used was 0.26% for PAs awarded, which is based on Daily Treasury Yield Curve rates. Based on this methodology, the valuation of the PAs awarded in 2021 was 114.09% of the closing price of the Company’s stock on the date of grant for 2021 PAs; however, the valuation was adjusted to 120% of the closing price of the Company’s stock on the date of grant for the second tranche of the 2021 PAs based on performance to date and the time remaining in the measurement period.
As noted above, only one-third of the shares subject to the 2021 PAs awarded to the NEOs have a 2022 grant date fair value under applicable accounting standards and, therefore, are reported as 2022 compensation in the Summary Compensation Table and this Grants of Plan Based Awards Table. The grant date fair value of the first tranche of the 2021 PAs was presented in the 2021 tables; and the grant date fair value of the remaining tranche of the 2021 PAs will be presented in the 2023 tables.
(10)
This amount represents the grant date fair value of the target number of shares subject to the first tranche of the 2022 PAs granted to the NEOs on February 25, 2022, using the grant price of $21.90 per unit, which was the closing price of the Company’s common stock on the NYSE on the date of grant, with the portion of the award based on the relative TSR metric adjusted upward by 49.59% to reflect the impact of the Relative TSR metric on those Performance Awards.
The upward adjustment derived by a Monte Carlo valuation method simulates a range of possible future stock prices for Fluor and each company in the S&P 500 Index group over the PA’s three-year performance period using certain factual data and an assumed risk-free interest rate. The expected term was based on the 2.85-year remaining term of the 2022 PAs from the award date, the expected volatility of 83.8% was based on the daily historical stock price volatility over the 2.85 years prior to the award date to conform to the term of the awards for the Company and the S&P 500 Index Group, consistent with the methodology addressed in ASC 718, and an expected dividend rate on Fluor’s stock of 0%, as we do not currently pay cash dividends. In addition, the risk-free rate of interest used was 1.73% for PAs awarded, which is based on Daily Treasury Yield Curve rates. Based on this methodology, the valuation of the Relative TSR metric portion of PAs awarded in 2022 was 149.59% of the closing price of the Company’s stock on the date of grant for 2022 PAs.
As noted above, only one-third of the shares subject to the 2022 PAs awarded to the NEOs have a 2022 grant date fair value under applicable accounting standards and, therefore, are reported as 2022 compensation in the Summary Compensation Table and this Grants of Plan Based Awards Table. The grant date fair value of the remaining two tranches of the 2022 PAs awarded to the NEOs will be presented in the 2023 and 2024 tables, respectively.