Stock Incentive Plans

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

In March 2022, our Board of Directors approved the 2022 Long-Term Incentive Plan ("2022 Plan"), which authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board. Awards granted after March 28, 2022 are issued out of the 2022 Plan. The awards granted under the 2016 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2022 Plan. The 2022 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock units, deferred stock units, performance units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted stock units generally range from three to five years. Options expire ten years from the date of grant.

Under our long-term incentive plan, restricted stock awards are market, performance or time-based. For market and performance-based awards, we will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return and operating performance metrics, measured in each case over a measurement period of three to four years. Performance-based awards vest after the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for performance-based awards is measured based on the probability of achievement of certain performance goals and is recognized over the performance period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance-based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return ("TSR"), management used a Monte Carlo model to assess the fair value and compensation cost. For time-based awards, the fair value of the restricted stock is equal to the market price of our common stock on the date of grant and is amortized over the vesting periods. For purposes of measuring stock-based compensation expense, we consider whether an adjustment to the observable market price is necessary to reflect material nonpublic information that is known to us at the time the award is granted. No adjustments were deemed necessary for the years ended December 31, 2024, 2023 or 2022. Forfeitures are accounted for as they occur.

The following table summarizes compensation expense recognized for the periods presented (in thousands):


	Year Ended December 31,
	2024		2023		2022
Stock options	$	16,837	$	2,741	$	2,378
Restricted stock units	58,984		34,458		23,771
Total compensation expense	$	75,821	$	37,199	$	26,149

Stock Options

The following is a summary of time-based stock option activity in 2024:


	Amount	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Intrinsic Value ($000's)
Balance as of December 31, 2023	636,260	$	75.73
Options granted	30,111	87.13
Options exercised	(47,544)	72.26
Options forfeited	(5,598)	84.56

Balance as of December 31, 2024	613,229	$	76.47	7.0	$	30,390

Exercisable as of December 31, 2024	336,164	$	74.39	6.7	$	17,360

We used the Black-Scholes option pricing model to determine the grant date fair value of time-based options. The weighted average assumptions used are as follows:


			2024
Dividend yield			2.80%
Estimated volatility(1)			34.53%
Risk free rate			4.13%
Expected life of options (years)			4.3
Estimated fair value			$23.22

(1) Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.

As of December 31, 2024, there was $2,478,000 of total unrecognized compensation expense related to unvested time-based stock options that is expected to be recognized over a weighted average period of one year.

During December 2021, we granted special nonrecurring performance-based stock option awards to executives and key employees. The grant date fair value was estimated on the date of grant using the Black-Scholes option pricing model. These options have a performance condition based on a Funds From Operations goal measured over the performance period of January 1, 2022 to December 31, 2024. These awards vest over two years after the end of the performance period. Compensation expense is measured based on the probability of achievement of the performance goal and is recognized over both the performance period and the vesting period. During the year ended December 31, 2024, achievement of the performance goal became probable and then was met, resulting in the recognition of stock compensation expense of $14,073,000, including the cumulative catch up adjustment, in general and administrative expenses in the Consolidated Statements of Comprehensive Income.

The following is a summary of performance-based stock option activity as of December 31, 2024:


	Amount	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (years)	Intrinsic Value ($000's)
Outstanding as of December 31, 2023	815,121	$	83.44	$	20.31
Options granted	123,538	$	95.82	$	18.31
Options forfeited	(60,562)	$	83.44	$	20.31
Outstanding as of December 31, 2024	878,097	$	85.18	$	20.03	7.4	$	35,869
Exercisable as of December 31, 2024	—	$	—	$	—	—	$	—

As of December 31, 2024, there was $3,515,000 of total unrecognized compensation expense related to unvested performance-based stock options that is expected to be recognized over a weighted average period of two years.

Restricted Stock

During January 2022, we granted special nonrecurring performance-based restricted stock awards under the terms of an Outperformance Program ("2022-2025 OPP"). The grant date fair value was estimated on the date of grant using a Monte Carlo model. These awards have performance conditions based on a Funds From Operations goal and absolute and relative TSR goals measured over the performance period of January 1, 2022 to December 31, 2025. These awards vest after the end of the performance period. Compensation expense is measured based on the probability of achievement of the performance goals and is recognized over the performance period. During the year ended December 31, 2024, achievement of the performance goals

became probable, resulting in the recognition of stock compensation expense of $19,341,000, including the cumulative catch up adjustment, in general and administrative expenses in the Consolidated Statements of Comprehensive Income.

The following is a summary of our 2022-2025 OPP restricted stock activity as of December 31, 2024:


	Restricted Stock
	Amount	Weighted Average Grant Date Fair Value
Balance as of December 31, 2023	932,225	$	27.60
Granted	52,846	55.63
Forfeited or expired	(52,533)	27.60
Balance as of December 31, 2024	932,538	$	29.19

As of December 31, 2024, there was $7,893,000 of total unrecognized compensation expense related to unvested 2022-2025 OPP restricted stock that is expected to be recognized over a weighted average period of one year.

The following is a summary of our restricted stock activity (including market, performance and time-based awards, and excluding OPP awards) as of December 31, 2024:


	Restricted Stock
	Amount	Weighted Average Grant Date Fair Value
Balance as of December 31, 2023	1,746,015	$	98.03
Vested	(438,166)	115.05
Granted	508,056	84.16
Change in awards based on performance(1)	377,232	82.98
Forfeited or expired	(53,984)	105.77
Balance as of December 31, 2024	2,139,153	$	96.76

(1) Represents the change in number of market and performance-based awards earned as a result of performance achievement.

We used a Monte Carlo model to assess the compensation cost associated with the portion of the market awards granted for which achievement will be determined using TSR measures. The model also considers a post-vesting holding period. The weighted average assumptions used are as follows:


						2024
Dividend yield						2.80%
Estimated volatility over the life of the plan(1)						24.32% - 26.00%
Risk free rate						4.31% - 5.23%
Estimated market based performance award value based on total shareholder return measure						$82.74

(1) Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.

As of December 31, 2024, there was $45,944,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted average period of two years.