The Company maintains an Incentive Compensation Program (the “Program”) for executives, certain other employees of the Company and its operating segments and subsidiaries and the Company’s non-employee directors. Members of the Company's Board of Directors (the "Board") who receive stock-based compensation are treated as employees for accounting purposes. The Program was approved by the Company's stockholders on May 6, 2015. The Program allows for up to 4.2 million awards to eligible employees of stock options, restricted stock, stock appreciation rights, performance shares and units or other awards based on Company common stock. As of December 31, 2021, 1.1 million shares were available for grant under the Program.

During the year ended December 31, 2021, the Company awarded 362 thousand stock options, 72 thousand restricted stock awards and 54 thousand performance share awards as part of the Program with an aggregate grant-date fair value of approximately $34.5 million to be recognized over the requisite service period for each award.


(in millions)	2021		2020		2019
Stock option awards	$	9.5	$	10.4	$	9.9
Restricted stock awards	7.3		8.6		6.9
Performance share awards	7.7		7.4		5.5
Restricted stock units	—		1.4		1.3
Stock appreciation rights	9.0		2.4		7.1
Total stock-based compensation cost incurred	33.5		30.2		30.7
Capitalized cost during the period	(9.3)		(3.5)		(9.0)
Amortization of capitalized cost during the period	14.3		1.2		6.7
Total stock-based compensation expense	$	38.5	$	27.9	$	28.4
Income tax benefit	$	25.2	$	8.8	$	11.9

In 2018, the Board authorized a grant of stock options to U.S. employees and stock appreciation rights to employees outside of the U.S. This grant contributed $9.5 million, $4.0 million and $9.8 million to stock-based compensation costs for the years ended December 31, 2021, 2020 and 2019, respectively. No compensation cost was capitalized to inventory as of December 31, 2021. Compensation cost of $4.9 million was capitalized as inventory as of December 31, 2020. Inventory is recognized in costs of goods sold when that related inventory is sold.

Stock options awarded under the Program generally vest on a straight-line basis over a three-year period on the anniversary date of the grant. All stock options have a maximum contractual term of 10 years. Shares issued to cover stock options issued under the Program may be issued from shares held in treasury, from new issuances of shares or a combination of the two. Unrecognized compensation cost from continuing operations related to stock options of $5.6 million as of December 31, 2021, is to be recognized over a weighted-average period of 1.5 years.

The Company utilizes the Black-Scholes-Merton (“BSM”) option pricing model to determine the fair value of its stock options. The BSM relies on certain assumptions to estimate an option’s fair value. The weighted average assumptions used in the determination of fair value for stock options follows:


(in millions, except per share amounts)	2021			2020			2019
Expected dividend yield	1.4		%	1.3		%	1.6		%
Expected term (in years)	4.9			4.8			4.9
Expected volatility	28.7		%	21.9		%	21.3		%
Risk-free interest rate	0.4		%	1.4		%	2.5		%
Weighted-average grant date fair value (per share)	$	32.51		$	29.29		$	21.07
Fair value of options granted	$	11.8		$	11.6		$	9.7

The expected term of a stock option is based on the assumption that all outstanding stock options will be exercised at the midpoint of the valuation date (if vested) or the vesting dates (if unvested) and the stock options’ expiration date. The expected volatility is based on historical volatility, as well as implied volatility of the Company’s call options. The risk-free interest rate is based on rates of U.S. Treasury issues with a remaining life equal to the expected term of the stock option. The expected dividend yield is based on the latest quarterly dividend payment per share, annualized, divided by the average three-month stock price as of the date of grant.


	Number of Units (in thousands)	Weighted-Average Exercise Price (per share)		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020	1,826	$	114.03
Options granted	362	152.37
Options exercised	(826)	103.82
Options forfeited / expired	(92)	136.83
Outstanding as of December 31, 2021	1,270	129.32		7.2	$	150.9
Vested and exercisable as of December 31, 2021	652	113.90		6.0	$	87.4

Restricted stock awarded under the Program is generally released to the recipient after a period of approximately three years. Unrecognized compensation cost from continuing operations related to restricted stock of $8.0 million as of December 31, 2021, is to be recognized over a weighted-average period of 1.8 years.


	Number of Shares (in thousands)	Weighted-Average Grant Date Fair Value (per share)		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020	166	$	122.88
Shares granted	72	154.23
Shares vested	(72)	113.35
Shares forfeited	(11)	138.96
Outstanding as of December 31, 2021	155	141.32		1.0	$	38.4


(in millions)	2021		2020		2019
Weighted-average grant date fair value (per share)	$	154.23	$	147.78	$	112.70
Intrinsic value of restricted stock exercised	11.8		9.6		5.6

Performance shares are granted for a three-year performance period, after which the actual number of performance shares earned by an employee is determined by the Company's attainment of a management objective which is based on the Company’s relative total stockholder return versus the S&P Midcap 400 Index® over a the three-year time period. Unrecognized compensation cost from continuing operations related to performance share awards of $8.8 million as of December 31, 2021, is to be recognized over a weighted-average period of 1.8 years.

For purposes of determining diluted earnings per share, the performance share awards are considered contingently issuable shares and are included in diluted earnings per share based upon the number of shares that would have been awarded had the conditions at the end of the reporting period continued until the end of the performance period. See Note 5 for further information regarding earnings per share computations.

The Company utilizes the Monte-Carlo simulation approach based on a three-year measurement period to determine the fair value of performance shares. Such approach entails the use of assumptions regarding the future performance of the Company’s stock and those of the S&P Midcap 400 Index®. Those assumptions include expected volatility, risk-free interest rates, correlation coefficients and dividend reinvestment. Dividends accrue on the performance shares during the performance period and are to be paid in cash based upon the number of awards ultimately earned.


	Number of Shares (in thousands)	Weighted-Average Grant Date Fair Value (per share)		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020	136	$	170.34
Awards granted	54	213.13
Awards vested	(85)	141.70
Awards converted	41	141.70
Awards forfeited	(8)	198.93
Outstanding as of December 31, 2021	138	196.15		1.0	$	34.1


(in millions)	2021		2020		2019
Weighted-average grant date fair value (per share)	$	213.13	$	222.50	$	149.27
Intrinsic value of performance share awards exercised	13.3		12.9		5.0

Up to and including February 4, 2020, restricted stock units were awarded to eligible directors which are fully vested and expensed upon grant date. The restricted stock units are paid in shares of Company common stock after the director ceases to serve as a member of the Board, or if earlier, upon a change in control of the Company. Effective May 6, 2020, eligible directors are no longer issued restricted stock units, but instead are awarded restricted stock awards that vest on the earlier of (i) one year from the date of grant; (ii) the director’s retirement from the Board upon reaching age 72 or after completing 18 consecutive years of service on the Board; or (iii) a change in control of the Company.


(in thousands, except per share amounts)	2020		2019
Restricted stock units granted	8		12
Weighted-average grant date fair value (per share) (1)	$	161.41	$	110.79


	Number of Shares (in thousands)	Weighted-Average Exercise Price (per share)		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020	281	$	106.85

Awards exercised	(262)	106.85
Awards forfeited	(19)	106.85
Outstanding as of December 31, 2021	—	—		N/A	$	—

Certain employees are eligible to participate in the Company’s Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). Participants may elect to defer all or part of their restricted and performance shares. Participants have elected to defer an aggregate of 84 thousand shares of Company common stock as of December 31, 2021 and 2020. Company stock held for future issuance of vested awards is classified as additional paid in capital in the Consolidated Balance Sheets and is recorded at vest date fair value. Such deferred shares are included in basic earnings per share.