The Company has adopted equity incentive plans that provide for grants of stock options, time-based and performance-based restricted stock units (“RSUs”), stock appreciation rights, performance units and stock grants. As of December 31, 2022, the Company has 4.6 million units available for future awards.

Following is a summary of the stock-based compensation expense by instrument awarded:

The performance based RSUs provide for the issuance of shares of the Company’s common stock based on the achievement of performance goals and job performance ratings. Approximately 612,000 shares under the grants with performance periods ending December 31, 2022 are expected to vest and be issued to the grantees in the first quarter of 2023.

The fair value of the performance-based RSUs is measured based on the fair value of the Company’s common stock at the grant date, taking into consideration management’s estimate of the expected outcome of the performance goal, and the number of shares to be forfeited during the vesting period. The Company assumes forfeiture rates of 0 – 20.3% per year based on the grantees’ employee classification. The actual number of shares that vest could vary from zero, if the performance goals are not met, to as much as 187.5% of the units granted, if the performance goals are meaningfully exceeded.

(1)

The actual number of performance-based RSUs vested during the years ended December 31, 2022, 2021 and 2020 was 654,000, 781,000 and 608,000 shares, respectively, which is approximately 128%, 123% and 94% of the 509,000, 634,000 and 645,000 originally granted units, respectively, due to the performance varying from the established target for the respective grant.

Following is a summary of performance-based RSUs as of December 31, 2022:

Time-Based RSUs

The RSU grant agreements provide for the award of time-based RSUs, entitling the award recipient to one share of the Company’s common stock for each RSU. In general, and except as otherwise provided by the agreement, one-third of the time-based RSUs vest on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary.

Compensation cost relating to time-based RSUs is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest. For purposes of estimating the cost of the time-based RSUs granted, the Company assumes forfeiture rates of 0% – 20.3% per year based on the grantees’ employee classification.

The table below summarizes time-based RSU activity:


	Year ended December 31,
	2022		2021		2020

	(in thousands, except per unit amounts)
Number of units:
Outstanding at beginning of year		434		587		642
Granted		331		173		311
Vested		(246)		(312)		(357)
Forfeited		(36)		(14)		(9)
Outstanding at end of year		483		434		587
Weighted average grant date fair value per unit:
Outstanding at beginning of year	$	41.74	$	29.37	$	22.40
Granted	$	57.10	$	58.90	$	34.98
Vested	$	37.34	$	28.08	$	21.75
Forfeited	$	51.97	$	39.48	$	28.14
Outstanding at end of year	$	53.71	$	41.74	$	29.37

Following is a summary of RSUs as of December 31, 2022:

Stock Options

The stock option award agreements provide for the award of stock options to purchase the optioned common stock. In general, and except as otherwise provided by the agreement, one-third of the stock option awards vests on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary.

During the year ended December 31, 2020, the Company awarded approximately 604,000 shares of stock options that vested on the grant date with a term of ten years from the date of grant, subject to certain transfer restrictions.

Each stock option has a term of ten years from the date of grant but expires (1) immediately upon termination of the holder’s employment or other association with the Company for cause, (2) one year after the holder’s employment or other association is terminated due to death or disability and (3) three months after the holder’s employment or other association is terminated for any other reason.

The fair value of each stock option award is estimated on the date of grant using a variant of the Black Scholes model based on the following inputs:


	Year ended December 31,
	2022	2021	2020
Expected volatility (1)	37%	38%	34%
Expected dividends	1.4%	1.4%	1.4%
Risk-free interest rate	1.1% - 2.1%	0.1% - 1.7%	0.1% - 1.5%
Expected grantee forfeiture rate	0% - 5.1%	0% - 6.7%	0% - 6.7%

(1)	Based on historical volatilities of the Company’s common stock.

The Company uses its historical employee departure behavior to estimate the grantee forfeiture rates used in its option-pricing model. The expected term of common stock options granted is derived from the Company’s option pricing model and represents the period that common stock options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual term of the common stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

The table below summarizes stock option award activity:


	Year ended December 31,
	2022		2021		2020

	(in thousands, except per option amounts)
Number of stock options:
Outstanding at beginning of year		3,906		4,040		3,699
Granted		574		249		876
Exercised		(155)		(377)		(530)
Forfeited		(8)		(6)		(5)
Outstanding at end of year		4,317		3,906		4,040
Weighted average exercise price per option:
Outstanding at beginning of year	$	28.43	$	28.01	$	18.40
Granted	$	57.10	$	58.85	$	52.00
Exercised	$	21.09	$	19.96	$	17.72
Forfeited	$	53.10	$	39.52	$	20.61
Outstanding at end of year	$	32.46	$	28.43	$	28.01

Following is a summary of stock options as of December 31, 2022:


Number of options exercisable at end of year (in thousands)		3,488
Weighted average exercise price per exercisable option	$	27.09
Weighted average remaining contractual term (in years):
Outstanding		5.2
Exercisable		4.4
Aggregate intrinsic value:
Outstanding (in thousands)	$	107,080
Exercisable (in thousands)	$	105,114
Expected vesting amounts:
Number of options expected to vest (in thousands)		825
Weighted average vesting period (in months)		11

Unamortized compensation cost (in thousands)

Number of shares expected to vest (in thousands)

Weighted average remaining vesting period (in months)