Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2020

SHARE-BASED COMPENSATION PLANS

Our non-employee directors and key employees have been granted share-based awards through our SICP. We record these share-based awards as compensation costs over the respective service period for which services are received in exchange for an award of equity or equity-based compensation. The compensation cost is based primarily on the fair value of the shares awarded, using the estimated fair value of each share on the date it was granted and the number of shares to be issued at the end of the service period. We have 415,412 shares of common stock reserved for issuance under the SICP.

The table below presents the amounts included in net income related to share-based compensation expense for the awards granted under the SICP for the years ended December 31, 2020, 2019 and 2018:


	For the Year Ended December 31,
	2020		2019		2018
(in thousands)
Awards to non-employee directors	$	733	$	620	$	539
Awards to key employees	4,096		3,659		2,871
Total compensation expense	4,829		4,279		3,410
Less: tax benefit	(1,254)		(1,117)		(934)
Share-based compensation amounts included in net income	$	3,575	$	3,162	$	2,476

Stock Options

There were no stock options outstanding or issued during the years 2018 through 2020.

Non-employee Directors

Shares granted to non-employee directors are issued in advance of these directors’ service periods and are fully vested as of the date of the grant. We record a prepaid expense equal to the fair value of the shares issued and amortize the expense equally over a service period of one year. In May 2019, each of our non-employee directors received an annual retainer of 751 shares of common stock under the SICP for board service through the 2020 Annual Meeting of Stockholders; accordingly, 6,759 shares, with a weighted average fair value of $93.14 per share, were issued and vested in 2019. In May 2020, each of our non-employee directors received an annual retainer of 887 shares of common stock under the SICP for service as a director through the 2021 Annual Meeting of Stockholders; accordingly, 8,870 shares, with a weighted average fair value of $84.47 per share, were issued and vested in 2020.

In January 2020, a newly appointed member of our Board of Directors received a pro-rated retainer of 254 shares of common stock under the SICP to serve as a non-employee director through the 2020 Annual Meeting of Stockholders. The shares awarded to the non-employee director immediately vested upon issuance in January 2020, had a weighted average fair value of $95.83 per share, and the expense was recognized over the remaining service period ending on the date of the 2020 Annual Meeting of Stockholders

At December 31, 2020, there was $0.3 million of unrecognized compensation expense related to shares granted to non-employee directors. This expense will be recognized over the remaining service period ending on the date of 2021 Annual Meeting of Stockholders.

Our Compensation Committee is authorized to grant our key employees the right to receive awards of shares of our common stock, contingent upon the achievement of established performance goals and subject to SEC transfer restrictions once awarded.

We currently have several outstanding multi-year performance plans, which are based upon the successful achievement of long-term goals, growth and financial results and comprise both market-based and performance-based conditions and targets. The fair value per share, tied to a performance-based condition or target, is equal to the market price per share on the grant date. For the market-based conditions, we used the Monte Carlo valuation to estimate the fair value of each share granted.

The table below presents the summary of the stock activity for awards to key employees:


	Number of Shares	Weighted Average Fair Value
Outstanding — December 31, 2018	131,741	$	67.24
Granted (1)	88,048	92.74
Vested	(25,831)	67.08
Expired	(15,086)	69.28
Forfeited (2)	(21,055)	71.67
Outstanding — December 31, 2019	157,817	80.28
Granted	70,014	91.89
Vested	(35,651)	66.48
Expired	(5,302)	65.32
Outstanding — December 31, 2020	186,878	$	87.06

(1) Includes 43,032 shares that were granted to certain key employees in December 2019 associated with their promotion.

(2) In conjunction with the retirement of two key employees during 2019, these shares were forfeited for the remainder of the service periods associated with awards granted during their employment with the Company.

The intrinsic value of these awards was $20.2 million, $15.1 million and $10.7 million in 2020, 2019 and 2018, respectively. At December 31, 2020, there was $3.9 million of unrecognized compensation cost related to these awards, which is expected to be recognized through 2022.

In 2020, 2019 and 2018, we withheld shares with a value at least equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities with the executives electing to receive the net shares. The below table presents the number of shares withheld and amounts remitted to taxing authorities:


	For the Year Ended December 31,
	2020		2019		2018
(amounts except shares, in thousands)
Shares withheld to satisfy tax obligations	10,319		7,635		16,918
Amounts remitted to tax authorities to satisfy obligations	$	977	$	692	$	1,210