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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation STOCK-BASED COMPENSATION
Non-Qualified Employee Stock Award Plan
The United Fire Group, Inc. 2008 Stock Plan (the "2008 Stock Plan") authorized the issuance of restricted and unrestricted stock awards, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 1,900,000 shares of United Fire common stock to employees. In May 2014, the Registrant's shareholders approved an additional 1,500,000 shares of UFG common stock issuable at any time and from time to time pursuant to the 2008 Stock Plan, among other amendments, and renamed such plan as the United Fire Group, Inc. Stock Plan. In May 2021, the Registrant's shareholders approved an additional 650,000 shares of UFG common stock issuable at any time and from time to time pursuant to the Stock Plan, and among other amendments, renamed such plan as the United Fire Group, Inc. 2021 Stock and Incentive Plan (as amended, the "Stock Plan"). At December 31, 2022, there were 1,342,119 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees who are in positions of substantial responsibility with United Fire.
Options granted pursuant to the Stock Plan are granted to buy shares of United Fire's common stock at the market value of the stock on the date of grant. Options granted prior to March 2017 vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. Options granted after March 2017 vest and are exercisable in installments of 33.3 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of our common stock on the date of the grant. Restricted stock awards fully vest after three years or five years from the date of issuance, unless accelerated upon the approval of the Board of Directors, at which time United Fire common stock will be issued to the awardee. All awards are generally granted free of charge to the eligible employees of United Fire as designated by the Board of Directors.
The activity in the Stock Plan is displayed in the following table:
Year Ended From Inception to
Authorized Shares Available for Future Award GrantsDecember 31, 2022December 31, 2022
Beginning balance1,317,819  1,900,000 
Additional shares authorized— 2,150,000 
Number of awards granted(171,385) (3,622,141)
Number of awards forfeited or expired195,685  914,260 
Ending balance1,342,119  1,342,119 
Number of option awards exercised51,363  1,533,336 
Number of unrestricted stock awards granted— 10,090 
Number of restricted stock awards vested49,984  267,845 

Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan
The United Fire Group, Inc. Non-Employee Director Stock Plan (formerly known as the 2005 Non-Qualified Non- Employee Director Stock Option and Restricted Stock Plan) (the "Director Stock Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of UFG's common stock to non-employee directors. On May 20, 2020, the Company’s shareholders approved amendments to the Director Stock Plan, previously approved by the Company’s Board of Directors, to (i) increase the number of shares available for future awards under the Director Stock Plan from 300,000 to 450,000, (ii) extend the expiration date of the Director Stock Plan from December 31, 2020 to December 31, 2029, (iii) allow for the grant of awards of restricted stock units, and
(iv) rename the Director Stock Plan as the "United Fire Group, Inc. Non-Employee Director Stock Plan." At December 31, 2022, the Company had 123,397 authorized shares available for future issuance.
The Board of Directors has the authority to determine which non-employee directors receive awards, when options and restricted stock shall be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options or whether the options shall be immediately vested, the terms and conditions of options and restricted stock (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option agreement or restricted stock agreement (subject to limits set forth in the plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Stock Plan.
The activity in the Director Stock Plan is displayed in the following table:
Year EndedFrom Inception to
Authorized Shares Available for Future Award GrantsDecember 31, 2022December 31, 2022
Beginning balance144,352  300,000 
Additional authorization— 150,000 
Number of awards granted(22,860) (355,238)
Number of awards forfeited or expired1,905  28,635 
Ending balance123,397  123,397 
Number of option awards exercised8,580  150,581 
Number of restricted stock awards vested18,510 117,001 

Stock-Based Compensation Expense
In 2022, 2021 and 2020, we recognized stock-based compensation expense of $2,827, $3,441 and $4,991, respectively. Stock-based compensation expense is recognized over the vesting period of the stock options.
As of December 31, 2022, we had $3,090 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized in subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.
20231,871 
20241,031 
2025188 
2026— 
Total$3,090 
Analysis of Award Activity
The analysis below details the option award activity for 2022 and the awards outstanding at December 31, 2022, for both of our plans and ad hoc options, which were granted prior to the adoption of the other plans:
OptionsSharesWeighted-Average Exercise Price
Weighted-Average Remaining Life (in years)
Aggregate Intrinsic Value
Outstanding at January 1, 2022862,688 $36.71 
Granted62,782 29.51 
Exercised(59,943)26.48 
Cancelled/Forfeited(52,906)39.22 
Expired(36,283)42.60 
Outstanding at December 31, 2022776,338 $36.47 3.06$104 
Exercisable at December 31, 2022695,341 $37.02 2.41$103 
Intrinsic value is the difference between our share price on the last day of trading (i.e., December 31, 2022) and the price of the options when granted and represents the value that would have been received by option holders had they exercised their options on that date. These values change based on the fair market value of our shares. The intrinsic value of options exercised totaled $261, $133 and $299 in 2022, 2021 and 2020, respectively.
The analysis below details the award activity for the restricted stock and restricted stock unit awards outstanding at December 31, 2022:
Restricted stock awardsSharesWeighted-Average Grant Date Fair Value
Non-vested at January 1, 2022202,819 $36.92 
Granted131,463 29.96 
Vested(108,401)35.22 
Forfeited(68,494)40.87 
Non-vested at December 31, 2022157,387 $30.56 
In 2022, 2021 and 2020 we recognized $2,048, $2,610 and $3,734, respectively, in compensation expense related to the restricted stock and restricted stock unit awards. At December 31, 2022, we had $2,572 in compensation expense that has yet to be recognized through our results of operations related to the restricted stock and restricted stock unit awards. The intrinsic value of the non-vested restricted stock and restricted stock unit awards outstanding totaled $4,306 and $4,703 at December 31, 2022 and 2021, respectively.
Assumptions
The weighted-average grant-date fair value of the options granted under our plans has been estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
December 31,202220212020
Risk-free interest rate2.18 %0.98 %1.4 %
Expected volatility40.56 %56.49 %22.26 %
Expected option life (in years)
777
Expected dividends (in dollars)
$0.61 $0.60 $1.32 
Weighted-average grant-date fair value of options granted during the year (in dollars)
$10.49 $13.48 $6.96 
The following table summarizes information regarding the stock options outstanding and exercisable at December 31, 2022:
 Options OutstandingOptions Exercisable
Range of Exercise Prices
Number Outstanding (in shares)
Weighted-Average Remaining Contractual Life (in years)
Weighted-Average Exercise Price
Number Exercisable (in shares)
Weighted-Average Exercise Price
$23.96 29.28190,485 1.88$28.23 188,703 $28.25 
29.29 29.59112,002 6.5529.47 44,667 29.45 
29.60 40.61187,133 1.8835.41 187,133 35.41 
40.62 44.88154,093 2.7142.84 154,093 42.84 
44.89 54.26132,625 3.8948.28 120,745 48.61 
$23.96 54.26776,338 3.06$36.47 695,341 $37.02