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 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, 2021, we issued an aggregate of 180,985 restricted shares of common stock to certain non-executive employees and non-employee members of our board of directors under the LTIP, consisting of 42,934 Market-Based Shares and 138,051 Time-Based Shares. The Market-Based Shares vested 50% on October 30, 2021, which was the first date 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”) equaled or exceeded $520 per share and the remaining 50% will vest on the first date, if any, that the Company’s VWAP Value equals or exceeds $600 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 employees generally vest over periods ranging from three to 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 restricted stock award agreement. We did not grant any Time-Based Shares to executive officers during 2021.

Of the 138,051 Time-Based Shares mentioned above, on May 3, 2021, we issued an aggregate of 3,558 Time-Based Shares to the non-employee members of our Board of Directors. Such shares of restricted stock will cliff-vest on the seventh day following the first anniversary of the date of grant, 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. In September 2021, Janet Haugen tendered her resignation from our Board of Directors. As a result of Ms. Haugen’s resignation, the compensation committee of the Board of Directors determined to accelerate the vesting of 297 of Ms. Haugen’s unvested shares of restricted stock, which was approximately one-half of the shares of restricted stock awarded to Ms. Haugen in 2021. Subsequent to Ms. Haugen’s resignation, the Board of Directors appointed Sharen Turney to serve as a Class I director to fill the resulting vacancy. Ms. Turney received a prorated portion of the standard compensation package for the Company’s non-management directors, which included 230 shares of restricted stock that will vest on May 10, 2022.

The following table presents a summary of the grant-date fair values of restricted stock granted during the years ended December 31, 2021, 2020 and 2019 and the related assumptions:

	Year Ended December 31,
	2021	2020	2019
Grant-date fair value of restricted stock	$315.95 - $521.17	$99.56 - $377.68	$99.07 - $269.04
Risk-free interest rate	0.95%	0.52% - 1.44%	2.62%
Estimated volatility	33.0%	30.0% - 32.0%	30.0%
Expected life (in years)	2.3	4.4	1.7

The following table summarizes restricted stock awards activity for the year ended December 31, 2021:

	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, 2020		559.8		$	156.48		1,748.5		$	115.91
Granted		138.1		$	426.76		42.9		$	331.35
Vested		(280.4	)	$	132.24		(157.2	)	$	208.55
Forfeited		(47.9	)	$	279.12		(5.9	)	$	330.35
Unvested shares of restricted stock outstanding at December 31, 2021		369.6		$	259.94		1,628.3		$	111.87

The following table summarizes vesting activity for Market-Based Shares during the year ended December 31, 2021, the associated compensation cost recognized in connection with each vesting event and the number of shares withheld to satisfy tax withholding obligations:

Vesting Condition

Date Vested

Number of Shares

Vested

Compensation

Cost Recognized

Upon Vesting

Shares Withheld

for Taxes¹

Market-based (TEV = $27.7 billion)

September 11, 2021

138.5

5,973

60.3

VWAP Value exceeded $520 per share

October 30, 2021

18.7

2,197

6.6

⁽¹⁾ All shares withheld to satisfy tax withholding obligations are held as treasury stock.

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

	2021		2020		2019
Time-Based Restricted Stock Awards	$	97,242	$	76,653	$	66,769
Market-Based Restricted Stock Awards	$	76,153	$	90,122	$	50,262

In February 2021, the Compensation Committee authorized the granting of performance-based restricted stock units (“PSUs”) to certain executive officers pursuant to the LTIP (the “2021 PSU Awards”). Each PSU granted under the LTIP represents a notional share of the Company’s common stock. The 2021 PSU Awards represented an aggregate of 52,470 target units that may increase to an aggregate of 131,176 awarded units based upon the Company’s performance over two separate performance periods. The 2021 PSU Awards will vest based on the Company’s performance over two separate performance periods: (i) a two-year performance period commencing on January 1, 2021 and ending on December 31, 2022 (the “Two-Year Performance Period”); and

(ii) a three-year performance period commencing on January 1, 2021 and ending on December 31, 2023 (the “Three-Year Performance Period”). Up to 25% of the PSUs will be eligible to vest no later than March 1, 2023, for the Two-Year Performance Period, and up to 75% of the PSUs will be eligible to vest no later than February 29, 2024, 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 2021 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, 2020, 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, 2020. The Company’s peer group includes 34 publicly traded companies, which are reflective of the S&P 500 Software & Services index and were selected by the Compensation Committee.

On April 2, 2021, Jeffrey D. York resigned from his position as Chief Sales Officer of the Company and accepted a new role as Leadership Strategist of the Company. In connection with the change in Mr. York’s role, the Company and Mr. York entered into a letter agreement that, among other things, (i) amended that certain Amended and Restated Executive Employment Agreement, dated March 9, 2020, by and between the Company and Mr. York, to, among other things, reflect the change in Mr. York’s role, eliminate certain executive-level benefits and remove the termination and severance provisions, and (ii) forfeited and released the 2021 PSU Award granted to Mr. York on February 10, 2021.

On April 2, 2021, the Board of Directors appointed Holly Faurot to succeed Mr. York as Chief Sales Officer of the Company. In connection with her appointment, Mrs. Faurot was granted an award of PSUs pursuant to the LTIP. Consistent with the 2021 PSU Awards granted to certain other executive officers of the Company on February 10, 2021, Mrs. Faurot received 5,445 target PSUs, subject to the terms and conditions of the LTIP and the PSU Award Agreement.

The following table presents a summary of the grant-date fair values of PSUs granted during the year ended December 31, 2021 and the related assumptions:

The following table summarizes the PSU activity for the year ended December 31, 2021:

	PSUs
	Units			Weighted Average Grant Date Fair Value
Unvested PSUs outstanding at December 31, 2020		—		$	—
Granted		57.9		$	564.68
Forfeited		(20.8	)	$	579.30
Unvested PSUs outstanding at December 31, 2021 ⁽¹⁾		37.1		$	556.50

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested restricted stock awards and unvested PSU awards as of December 31, 2021:

	Restricted Stock
	Awards		PSUs
Unrecognized compensation cost	$	204,364	$	13,596
Weighted average period for recognition (years)		3.7		1.8

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

	Year Ended December 31,
	2021		2020		2019
Operating expenses	$	4,570	$	5,185	$	4,376
Sales and marketing		13,801		14,376		7,955
Research and development		7,527		9,107		5,428
General and administrative		71,608		61,440		29,509
Total non-cash stock-based compensation expense	$	97,506	$	90,108	$	47,268

We capitalized stock-based compensation costs related to software developed for internal use of $7.1 million, $6.7 million and $4.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.