10-Q
TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018
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Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(14)EQUITY-BASED COMPENSATION PLANS

All equity-based awards to employees are recognized in the Consolidated Statements of Comprehensive Income (Loss) at the fair value of the award on the grant date. During the three and nine months ended September 30, 2018 and 2017, the Company recognized total equity-based compensation expense of $3.1 million and $9.3 million and $3.5 million and $8.4 million, respectively. Of this total compensation expense, $1.1 million and $3.5 million were recognized in Cost of services and $2.0 million and $5.8 million were recognized in Selling, general and administrative during the three and nine months ended September 30, 2018, respectively.  During the three and nine months ended September 30, 2017, the Company recognized compensation expense of $1.4 million and $2.9 million in Cost of services and $2.1 million and $5.5 million in Selling, general and administrative, respectively.

Restricted Stock Unit Grants

During the nine months ended September 30, 2018 and 2017, the Company granted 480,582 and 724,951 RSUs, respectively, to new and existing employees, which vest in equal installments over four or five years. The Company recognized compensation expense related to RSUs of $3.1 million and $9.3 million for the three and nine months ended September 30, 2018, respectively. The Company recognized compensation expense related to RSUs of $3.5 million and $8.7 million for the three and nine months ended September 30, 2017, respectively. As of September 30, 2018, there was approximately $26.2 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans.

Stock Options

The Company recognized no compensation expense related to subsidiary performance options for the three and nine months ended September 30, 2018, respectively. The Company recognized compensation expense related to subsidiary performance options of zero and $(0.3) million for the three and nine months ended September 30, 2017, respectively. The option benefit for 2017 resulted from the Company concluding that the performance targets of the subsidiary will not be achieved.

 

(15)RELATED PARTY

The Company entered into an agreement under which Avion, LLC (“Avion”) and Airmax LLC (“Airmax”) provide certain aviation flight services as requested by the Company. Such services include the use of an aircraft and flight crew. Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company, has a direct 100% beneficial ownership interest in Avion and Airmax. During the nine months ended September 30, 2018 and 2017, the Company expensed $0.9 million and $0.6 million, respectively, to Avion and Airmax for services provided to the Company. There was $142 thousand in payments due and outstanding to Avion and Airmax as of September 30, 2018.

During 2014, the Company entered into a vendor contract with Convercent Inc. to provide learning management and web and telephony based global helpline solutions. This contract was renewed, after an arms-length market pricing review, in the fourth quarter of 2016. The majority owner of Convercent is a company which is owned and controlled by Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company. During the nine months ended September 30, 2018 and 2017, the Company expensed $45  thousand and $55 thousand, respectively.

During 2015, the Company entered into a contract to purchase software from CaféX, is a company in which TTEC holds a 17.2% equity investment in. During the nine months ended September 30, 2018 and 2017, the Company purchased $44 thousand and $60 thousand, respectively, of software from CaféX. See Note 2 for further information regarding this investment.

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