Stock-based Compensation

12 Months Ended

Dec. 31, 2024

Stock-based Compensation

Stock-based Compensation

Note 23—Stock-based Compensation

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, 2024, the Company has 5.3 million units available for future awards.

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

	Year ended December 31,
	2024		2023		2022
	(in thousands)
Performance-based RSUs	$	1,490	$	9,740	$	18,096
Time-based RSUs		12,443		11,672		14,837
Stock options		6,935		6,170		9,619
	$	20,868	$	27,582	$	42,552

Performance-Based RSUs

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. No shares under the grants with performance periods ending December 31, 2024 are expected to vest as the performance goals were not achieved.

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 the expected outcome of the performance goal, and the number of shares to be forfeited during the vesting period. The Company applies 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 300% of the units granted, if the performance goals are meaningfully exceeded.

The table below summarizes performance-based RSU activity:

	Year ended December 31,
	2024		2023		2022
	(in thousands, except per unit amounts)
Number of units:
Outstanding at beginning of year		873		976		1,226
Granted		246		307		342
Vested (1)		(274)		(385)		(509)
Forfeited or cancelled		(62)		(25)		(83)
Outstanding at end of year		783		873		976
Weighted average grant date fair value per unit:
Outstanding at beginning of year	$	58.90	$	48.94	$	36.12
Granted	$	84.93	$	60.70	$	57.10
Vested	$	58.86	$	35.36	$	23.40
Forfeited	$	65.29	$	58.46	$	49.14
Outstanding at end of year	$	66.58	$	58.90	$	48.94

(1) The actual number of performance-based RSUs vested during the years ended December 31, 2024, 2023 and 2022 were 309,000, 617,000 and 654,000 shares, respectively, which is approximately 113%, 160% and 128% of the originally granted units, respectively, due to performance exceeding the established target for the respective grant.

Following is a summary of performance-based RSUs as of December 31, 2024:

Unamortized compensation cost (in thousands)	$	9,415
Number of shares expected to vest (in thousands)		467
Weighted average remaining vesting period (in months)		11

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 applies 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,
	2024		2023		2022
	(in thousands, except per unit amounts)
Number of units:
Outstanding at beginning of year		412		483		434
Granted		152		187		331
Vested		(215)		(247)		(246)
Forfeited		(27)		(11)		(36)
Outstanding at end of year		322		412		483
Weighted average grant date fair value per unit:
Outstanding at beginning of year	$	58.90	$	53.71	$	41.74
Granted	$	85.66	$	60.72	$	57.10
Vested	$	59.18	$	50.09	$	37.34
Forfeited	$	66.59	$	57.66	$	51.97
Outstanding at end of year	$	70.64	$	58.90	$	53.71

Following is a summary of RSUs as of December 31, 2024:

Unamortized compensation cost (in thousands)	$	4,982
Number of units expected to vest (in thousands)		303
Weighted average remaining vesting period (in months)		8

Stock Options

The stock option award agreements provide for the award of options to purchase 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.

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,
	2024	2023	2022
Expected volatility (1)	38%	38%	37%
Expected dividends	0.9%	1.3%	1.4%
Risk-free interest rate	4.2% - 5.0%	4.2% - 5.0%	1.1% - 2.1%
Expected grantee forfeiture rate	0% - 5.1%	0% - 5.1%	0% - 5.1%

(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,
	2024		2023		2022
	(in thousands, except per option amounts)
Number of stock options:
Outstanding at beginning of year		3,857		4,317		3,906
Granted		188		221		574
Exercised		(788)		(658)		(155)
Forfeited		(47)		(23)		(8)
Outstanding at end of year		3,210		3,857		4,317
Weighted average exercise price per option:
Outstanding at beginning of year	$	35.08	$	32.46	$	28.43
Granted	$	84.93	$	60.67	$	57.10
Exercised	$	25.68	$	25.66	$	21.09
Forfeited	$	64.97	$	58.10	$	53.10
Outstanding at end of year	$	39.87	$	35.08	$	32.46

Following is a summary of stock options as of December 31, 2024:

Number of options exercisable at end of year (in thousands)		2,738
Weighted average exercise price per exercisable option	$	34.94
Weighted average remaining contractual term (in years):
Outstanding		4.7
Exercisable		4.1
Aggregate intrinsic value:
Outstanding (in thousands)	$	199,893
Exercisable (in thousands)	$	184,011
Expected vesting amounts:
Number of options expected to vest (in thousands)		465
Weighted average vesting period (in months)		8