Shareholders' Equity

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Shareholders’ Equity

Stock-Based Compensation

The Company has only non-qualified stock options outstanding under its equity compensation plans. All outstanding stock options have performance-based vesting provisions specific to each option grant that tie the vesting of the applicable stock options to the Company’s financial performance. The Company’s stock options vest at a rate of 50% when a specified financial vesting target is achieved, and the remaining 50% when a second, higher specified financial vesting target is achieved. Options do not vest due to the passage of time but solely as a result of achievement of the financial vesting targets. Options granted in December 2017 and thereafter include a service condition which requires a minimum two or four year waiting period from the grant date along with the attainment of the applicable financial vesting target. The targets are measured annually on December 31. The amount of stock-based compensation expense recognized in the period is based upon management’s estimate of when the financial vesting targets may be achieved. Any change in management’s estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect the Company’s earnings.

The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three and nine months ended September 30, 2020 and 2019, respectively, as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Stock-based compensation expense	$	6,467	$	5,453	$	20,458	$	15,555
Less: Deferred tax benefit	(1,229)		(1,042)		(3,932)		(2,959)
Stock-based compensation expense, net of tax	$	5,238	$	4,411	$	16,526	$	12,596

In September 2020, the Company revised its estimate of when some vesting targets are expected to be achieved which resulted in the amount of stock-based compensation expense to be spread out over a longer period than its initial estimate made at December 31, 2019. This change in management's estimate did not result in a material change to the Company's stock-based compensation expense recognized during the three or nine month periods ended September 30, 2020.

As of September 30, 2020, there was approximately $59,056 of unrecognized compensation cost remaining related to unvested employee stock options that management expects will vest and is being amortized.

The Company issues new common shares associated with the exercise of stock options. The total intrinsic value of options exercised during the nine months ended September 30, 2020 was $25,788. The total options exercisable as of September 30, 2020 had an intrinsic value of $96,715. The total intrinsic value for options exercisable is calculated as the difference between the market value of the Company’s common stock as of September 30, 2020 and the weighted average exercise price of the options. The market value of the Company’s common stock as of September 30, 2020 was $50.72 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of September 30, 2020 was $38.11. Total options that were outstanding as of September 30, 2020 were 14,767,000. Total options that were exercisable as of September 30, 2020 were 7,352,000.

Common Stock Buyback

The Company’s Board of Directors, under multiple authorizations, has authorized the repurchase of the Company’s common stock on the open market or through private transactions. The Company purchased 6,185,000 shares at a total cost of $325,644 during the nine months ended September 30, 2020, which reduced the total shares outstanding of common stock. The cost of stock purchases during the period includes the cost of certain transactions that settled in the following quarter. As of September 30, 2020, the Company had approximately $41,885 of authorization remaining for the purchase of common stock under the program. On October 20, 2020 the Company's Board of Directors approved an increase in the stock repurchase program by an additional $250,000, increasing the available authorization to approximately $291,885.

The Company immediately retires its common stock when purchased. Upon retirement, the Company reduces Capital in excess of par value for the average capital per share outstanding and the remainder is charged against Retained earnings. If the Company reduces its Retained earnings to zero, any subsequent purchases of common stock will be charged entirely to Capital in excess of par value.

Cash Dividend

On June 3, 2020, the Board of Directors declared a cash dividend of $0.35 per share on the Company's common stock, which was paid on June 23, 2020, to shareholders of record on June 15, 2020. Cash dividends declared during the nine months ended September 30, 2020 and 2019 were $51,462 and $49,984, respectively.