The Company grants stock options, RSUs, RSAs and PSUs to certain employees and directors of the Company under the 2015 Equity and Incentive Award Plan, and previously did so under the 2001 Stock Option and Incentive Award Plan (the "2015 Plan" and "2001 Plan"). The 2001 Plan was originally approved by the Company's shareholders in May 2001 and was amended and restated with shareholder approval in May 2009 and discontinued with the approval of the 2015 Plan on May 6, 2015. The 2015 Plan was subsequently amended and restated with shareholder approval in February 2019. In May 2021, the 2015 Plan was amended, with shareholder approval, to increase the number of shares of common stock authorized for issuance under the 2015 Plan from 8,000,000 shares to 10,980,000 shares. Beginning in 2015, as part of the Company's long-term incentive compensation program ("LTIP Plan") and pursuant to the Company's 2001 Plan and 2015 Plan, the Company granted a mix of stock options, time-based restricted stock and performance share units to key executives and managers and also granted time-based restricted stock units to directors of the Company. As of December 31, 2023, the aggregate number of common stock shares that may be issued or transferred under the 2015 Plan is 4,039,103.

The total income tax benefit recognized in the consolidated statements of earnings for stock-based compensation arrangements was $6.2 million, $5.9 million and $5.5 million in the years ended December 31, 2023, 2022 and 2021, respectively. Deficits of recognized compensation costs in excess of tax deductions were $0.4 million and $1.7 million for the years ended December 31, 2023 and 2022, respectively. Benefits of tax deductions in excess of recognized compensation cost was $0.2 million for the year ended December 31, 2021. Deficits and benefits related to tax deductions for compensation cost are included in operating cash flows and as a component of income tax expense in the consolidated statements of earnings.

Under the Company's 2001 Plan, options granted become exercisable after a period of one to five years and unexercised options lapse 10 years after the date of grant. Under the Company's 2015 Plan, options granted to date become exercisable after a period of one to three years and unexercised options lapse 10 years after the date of the grant. Unvested options are subject to forfeiture upon termination of service for both plans. The Company recognizes compensation expense for options that have a graded vesting schedule on a straight-line basis over the requisite service period. Shares are issued from the Company's treasury shares upon share option exercises.

The Company determines the fair value of stock options on the grant date using a Black-Scholes-Merton option pricing model that incorporates expected volatility, expected option life, risk-free interest rates and expected dividend yields. The expected volatility is based on implied volatilities from traded options on the Company's stock and the historical volatility of the Company's common stock subsequent to the separation and distribution of The Aaron's Company in combination with the volatility of the Company's comparable peer group prior to the separation and distribution for the most recent period generally commensurate with the expected estimated life of each respective grant. The expected lives of options are based on the Company's historical option exercise experience. The Company believes that the historical experience method is the best estimate of future exercise patterns. The risk-free interest rates are determined using the implied yield available for zero-coupon United States government issues with a remaining term equal to the expected life of the grant. The expected dividend yields are based on the approved annual dividend rate in effect and the market price of the underlying common stock at the time of grant. Beginning in 2021, the annual dividend rate is assumed to be zero, and no assumption for a future dividend rate has been included, as the Company did not anticipate paying any dividends at the time of grant.

The Company granted 208,000, 264,000 and 150,000 stock options during the years ended December 31, 2023, 2022 and 2021, respectively. The weighted-average fair value of options granted and the weighted-average assumptions used in the Black-Scholes-Merton option pricing model for such grants were as follows:


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding December 31, 2023	Weighted Average Remaining Contractual Life (in Years)	Weighted Average Exercise Price		Number Exercisable December 31, 2023	Weighted Average Exercise Price
$20.00-30.00	551,340	7.06	$	26.31	207,140	$	25.84
30.01-40.00	94,100	5.94	35.06		94,100	35.06
40.01-50.00	263,366	5.64	46.71		224,156	46.66
50.01-60.00	5,304	7.35	53.55		3,536	53.55
20.00-60.00	914,110	6.54	33.25		528,932	36.49


	Options (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)		Weighted Average Fair Value
Outstanding at January 1, 2023	727	$	35.55
Granted	208	24.70
Forfeited/Expired	(18)	28.16
Exercised	(3)	29.16
Outstanding at December 31, 2023	914	33.25		6.54	$	2,536	$	12.45
Expected to Vest	375	28.88		8.57	1,429		11.98
Exercisable at December 31, 2023	529	36.49		5.05	1,050		12.81

The aggregate intrinsic value amounts in the table above represent the closing price of the Company's common stock on December 31, 2023 in excess of the exercise price, multiplied by the number of in-the-money stock options as of that same date. Options outstanding that are expected to vest are net of estimated future option forfeitures.

The aggregate intrinsic value of options exercised, which represents the value of the Company's common stock at the time of exercise in excess of the exercise price, was $0.1 million and $1.0 million during the years ended December 31, 2023 and 2021, respectively. The total grant-date fair value of options exercised was $0.1 million and $1.0 million during the years ended December 31, 2023 and 2021, respectively. There were no options exercised during 2022.

Restricted stock units or restricted stock awards (collectively, "restricted stock") may be granted to employees and directors under the 2015 Plan and typically vest over approximately one to three-year periods. Restricted stock grants are settled in stock and may be subject to one or more objective employment, performance or other forfeiture conditions as established at the time of grant. The Company recognizes compensation expense for restricted stock with a graded vesting schedule on a straight-line basis over the requisite service period as restricted stock is not subject to Company performance metrics. Shares are issued from the Company's treasury shares upon vesting. Any shares of restricted stock that are forfeited may again become available for issuance.

The Company granted 574,000, 630,000 and 521,000 shares of restricted stock at weighted-average fair values of $25.69, $26.05 and $44.44 in the years ended December 31, 2023, 2022 and 2021, respectively. The following table summarizes information about restricted stock activity during 2023:


	Restricted Stock (In Thousands)	Weighted Average Fair Value
Non-vested at January 1, 2023	1,028	$	33.84
Granted	574	25.69
Forfeited	(115)	26.30
Vested	(307)	30.53
Non-vested at December 31, 2023	1,180	31.47

For performance share units, which are settled in stock, the number of shares earned is determined at the end of the one to three-year performance periods based upon achievement of specified performance conditions. The performance criteria vary by agreement and have included the following performance conditions: (i) adjusted pre-tax profit, (ii) return on investment capital, (iii) consolidated revenues, (iv) segment or business unit revenues, (v) certain business development and technology initiatives and/or (vi) business unit customer count. When the performance criteria are met, the award is earned and vests assuming continued employment through the specified service period(s). Shares are issued from the Company's treasury shares upon vesting. The number of performance-based shares which could potentially be issued ranges from 0% up to a maximum of 100%, 200%, 260%, or 400% of the target award depending on the specified terms and conditions of the target award.

The fair value of performance share units is based on the fair market value of the Company's common stock on the date of grant. The compensation expense associated with these awards is amortized on an accelerated basis over the vesting period based on the Company's projected assessment of the level of performance that will be achieved and earned. In the event the Company determines it is no longer probable that the minimum performance criteria specified in the plan will be achieved, all previously recognized compensation expense is reversed in the period such a determination is made.

Effective May 9, 2018, the Company's Board of Directors and shareholders approved the Employee Stock Purchase Plan ("ESPP"), which is a tax-qualified plan under Section 423 of the Internal Revenue Code. The purpose of the Company's ESPP is to encourage ownership of the Company's common stock by eligible employees of PROG Holdings, Inc. and certain subsidiaries. Under the ESPP, eligible employees are allowed to purchase common stock of the Company during six-month offering periods at the lower of: (i) 85% of the closing trading price per share of the common stock on the first trading date of an offering period in which a participant is enrolled; or (ii) 85% of the closing trading price per share of the common stock on the last day of an offering period. Employees participating in the ESPP can contribute up to an amount not exceeding 10% of their base salary and wages up to an annual maximum of $25,000 in total fair market value of the common stock (determined at the time the ability to purchase shares of common stock is granted) and may not purchase more than 500 shares in each offering period.

The compensation cost related to the ESPP is measured on the grant date based on eligible employees' expected withholdings and is recognized over each six-month offering period. Total compensation cost recognized in connection with the ESPP was $0.4 million, $0.4 million and $0.4 million for years ended December 31, 2023, 2022 and 2021, respectively.

The Company issued 67,720, 81,784 and 38,044 shares under the ESPP at weighted average purchase prices of $18.72, $14.06 and $39.62 during the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the aggregate number of shares of common stock that may be issued under the ESPP was 387,766.