We have historically issued shares of restricted stock under the Paycom Software, Inc. 2014 Long-Term Incentive Plan (as amended, the “LTIP”) that are subject to either time-based vesting conditions (“Time-Based Shares”) or market-based vesting conditions (“Market-Based Shares”). The maximum number of shares that may be delivered pursuant to awards under the LTIP is 13,350,881 shares. The market-based vesting conditions are based on the Company’s total enterprise value (“TEV”) or volume weighted average stock price over a specific period exceeding certain specified thresholds. Compensation expense related to the issuance of Time-Based Shares is measured based on the fair value of the award on the grant date and recognized over the requisite service period on a straight-line basis. Compensation expense related to the issuance of Market-Based Shares is measured based upon the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period based upon the probability that the vesting conditions will be met.

During the year ended December 31, 2022, we issued an aggregate of 451,737 restricted shares of common stock under the LTIP, consisting of 59,503 Market-Based Shares and 392,234 Time-Based Shares. Market-Based Shares will vest 50% on the first date, if any, that the arithmetic average of the Company’s volume weighted average price on each of the twenty consecutive trading days immediately preceding such date (the “VWAP Value”) equals or exceeds $484 per share and 50% on the first date, if any, that the Company’s VWAP Value equals or exceeds $559 per share, in each case provided that (i) such date occurs on or before the eighth anniversary of the grant date and (ii) the recipient is employed by, or providing services to, the Company on the applicable vesting date, and subject to the terms and conditions of the LTIP and the applicable restricted stock award agreement. The Time-Based Shares granted to non-executive employees will vest over periods ranging from three to five years, provided that the recipient is employed by, or providing services to, the Company on the applicable vesting date, and subject to the terms and conditions of the LTIP and the applicable restricted stock award agreement.

The 392,234 Time-Based Shares mentioned above include an aggregate of 5,210 Time-Based Shares issued to the non-employee members of our Board of Directors in May 2022, all of which will cliff-vest on May 9, 2023, provided that such director is providing services to the Company through the applicable vesting date, and subject to the terms and conditions of the LTIP and the applicable restricted stock award agreement.

On April 14, 2022, the Company announced the departure of Jon Evans from the position of Chief Operating Officer of the Company, effective April 14, 2022. Justin Long, the Company’s Executive Vice President of Operations, assumed Mr. Evans’s responsibilities. In connection with Mr. Evans’s departure, 5,663 of the Time-Based Shares previously granted to Mr. Evans accelerated in vesting.

The following table presents a summary of the grant-date fair values of restricted stock granted during the years ended December 31, 2022, 2021 and 2020 and the related assumptions:


	Year Ended December 31,
	2022	2021	2020
Grant-date fair value of restricted stock	$259.65 - $348.19	$315.95 - $521.17	$99.56 - $377.68
Risk-free interest rate	1.75%	0.95%	0.52% - 1.44%
Estimated volatility	40.0%	33.0%	30.0% - 32.0%
Expected life (in years)	2.5	2.3	4.4

The following table summarizes restricted stock awards activity for the year ended December 31, 2022:


	Time-Based					Market-Based
	Restricted Stock Awards					Restricted Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested shares of restricted stock outstanding at December 31, 2021		369.6		$	259.94		1,628.3		$	111.87
Granted		392.2		$	304.28		59.5		$	269.00
Vested		(219.8	)	$	202.40		(0.1	)	$	347.62
Forfeited		(62.9	)	$	317.73		(10.7	)	$	279.87
Unvested shares of restricted stock outstanding at December 31, 2022		479.1		$	315.04		1,677.0		$	116.36

The following table presents the aggregate fair value of awards that vested during the indicated period.


	2022		2021		2020
Time-Based Restricted Stock Awards	$	63,970	$	97,242	$	76,653
Market-Based Restricted Stock Awards	$	—	$	76,153	$	90,122

In February 2022, the Compensation Committee of the Board of Directors authorized the granting of performance-based restricted stock units (“PSUs”) to certain executive officers pursuant to the LTIP (the “2022 PSU Awards”). Each PSU granted under the LTIP represents a notional share of the Company’s common stock. The 2022 PSU Awards represented an aggregate of 51,494 target units that may increase to an aggregate of 128,735 awarded units based upon the Company’s performance over two separate performance periods: (i) a two-year performance period commencing on January 1, 2022 and ending on December 31, 2023 (the “Two-Year Performance Period”); and (ii) a three-year performance period commencing on January 1, 2022 and ending on December 31, 2024 (the “Three Year Performance Period”). Up to 25% of the PSUs will be eligible to vest no later than February 29, 2024, for the Two-Year Performance Period, and up to 75% of the PSUs will be eligible to vest no later than March 1, 2025, for the Three-Year Performance Period, provided that the grantee remains employed by or providing services to the Company on the applicable vesting date, and subject to the terms and conditions of the LTIP and the Restricted Stock Unit Award Agreement – Performance Based Vesting (the “PSU Award Agreement”). The number of PSUs that will vest and be converted into shares of common stock will depend on the Company’s relative total stockholder return (“Relative TSR”), expressed as a percentile ranking of the Company’s total stockholder return (“TSR”) as compared to the Company’s peer group set forth in the PSU Award Agreement.

For purposes of the 2022 PSU Awards, TSR is determined by dividing (i) the sum of (A) the average daily volume weighted average price (or “VWAP” as defined in the PSU Award Agreement) of a share of the Company’s common stock or the common stock of a peer company, as applicable, during the final 60 trading day period of the applicable performance period, less (B) the average VWAP of a share of the Company’s common stock or the common stock of a peer company, as applicable, during the 60 trading day period ending on December 31, 2021, plus (C) the sum of all dividends which are paid by the Company (or the member of the peer group) to its stockholders, assuming such dividends are reinvested in the applicable company through the applicable performance period, by (ii) the average VWAP of a share of the Company’s common stock or the common stock of a peer company, as applicable, during the 60 trading day period ending on December 31, 2021. The Company’s peer group includes 35 publicly traded companies, which were reflective of the S&P 500 Software & Services index on the grant date.

In connection with the departure of Jon Evans described above, the PSUs granted to Mr. Evans in 2021 and 2022 will remain eligible for vesting based on the Company’s actual performance, but pro-rated for the number of days Mr. Evans was employed during the applicable two-year performance periods and three-year performance periods.

During the year ended December 31, 2022, we issued 500 time-based restricted stock units (“Time RSUs”) under the LTIP. The Time RSUs will vest over four years, provided that the recipient is employed by, or providing services to, the Company on the applicable vesting date, and subject to the terms and conditions of the LTIP and the applicable Time RSU award agreement.

The following table summarizes restricted stock unit activity for the year ended December 31, 2022:


	Year Ended December 31,
	2022	2021	2020
Grant-date fair value of restricted stock	$252.16 - $377.01	$382.78 - $587.97	—
Risk-free interest rate	1.25% - 1.51%	0.11% - 0.34%	—
Estimated volatility	49.2%	50.3% - 51.2%	—
Expected life (in years)	2.7	2.6	—


	Time RSUs				PSUs
	Units		Weighted Average Grant Date Fair Value Per Unit		Units			Weighted Average Grant Date Fair Value Per Unit
Unvested restricted stock units outstanding at December 31, 2021		—	$	—		37.1		$	556.50
Granted		0.5	$	377.01		51.5		$	296.07
Vested		—	$	—		—		$	—
Forfeited		—	$	—		(10.8	)	$	376.69
Unvested restricted stock units outstanding at December 31, 2022 (1)		0.5	$	377.01		77.8		$	409.13

(1)

A maximum of 194,478 shares could be delivered upon settlement of PSUs based upon Paycom’s Relative TSR over the applicable performance periods.

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested restricted stock awards and unvested restricted stock unit awards as of December 31, 2022:


	Restricted Stock		Restricted Stock
	Awards		Units
Unrecognized compensation cost	$	217,409	$	13,210
Weighted average period for recognition (years)		3.0		1.5

The following table presents our total non-cash stock-based compensation expense resulting from restricted stock awards and restricted stock unit awards in the aggregate, which is included in the following line items in the accompanying consolidated statements of comprehensive income:


	Year Ended December 31,
	2022		2021		2020
Operating expenses	$	4,671	$	4,570	$	5,185
Sales and marketing		18,659		13,801		14,376
Research and development		11,063		7,527		9,107
General and administrative		60,505		71,608		61,440
Total non-cash stock-based compensation expense	$	94,898	$	97,506	$	90,108

We capitalized stock-based compensation costs related to software developed for internal use of $9.0 million, $7.1 million and $6.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.