Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

The Company issues stock-based compensation in the form of nonvested restricted stock and stock appreciation rights (SARs). Historically, most of the awards have been issued during the first quarter of each year. The stock-based compensation expense charged against income was $4.3 million and $4.2 million in the three months ended September 30, 2023 and 2022 respectively, and $12.6 million in the nine months ended September 30, 2023 and 2022, respectively.

Nonvested stock awards granted generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period. Dividend and voting rights are conferred upon grant. A summary of the status of the Company’s nonvested share awards as of September 30, 2023, and changes during the nine month period then ended, is presented below.


	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2023	1,148,873	$58.20
Granted	311,275	62.29
Vested	(315,761)	50.67
Forfeited	(25,539)	60.44

Nonvested at September 30, 2023	1,118,848	$61.41

SARs are granted with exercise prices equal to the market price of the Company’s stock at the date of grant. SARs vest ratably over 4 years of continuous service and have contractual terms of 10 years. All SARs must be settled in stock under provisions of the plan. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of SARs on date of grant. The current year per share average fair value and the model assumptions are shown in the table below.


Weighted per share average fair value at grant date	$18.65
Assumptions:
Dividend yield	1.6	%
Volatility	27.9	%
Risk-free interest rate	3.9	%
Expected term	5.8 years

A summary of SAR activity during the first nine months of 2023 is presented below.


(Dollars in thousands, except per share data)	Rights	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2023	948,727	$46.82
Granted	89,829	65.64
Forfeited	(4,337)	63.62
Expired	(5,781)	52.13
Exercised	(49,866)	26.83
Outstanding at September 30, 2023	978,572	$49.46	5.1 years	$4,468