On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (as amended, “LTIP”) which provided an additional 3.3 million shares that could be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance units and performance awards, in addition to the shares from the previous plan, the 1992 Plan. Since inception of the LTIP, non-qualified stock options and restricted stock awards have been granted with a five year vesting schedule. Under the LTIP, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant.

On May 24, 2016, our stockholders adopted the 2016 Long-Term Incentive Plan (as amended, “2016 Plan”) which provides for approximately 8.9 million shares, comprised of 3.4 million new shares provided for under the 2016 Plan, approximately 0.4 million shares that were available for issuance under the previous LTIP that are now authorized for issuance under the 2016 Plan, approximately 2.6 million shares that were approved by the stockholders on May 15, 2018, and an additional 2.5 million shares that were approved by the stockholders on May 12, 2020.

Under the 2016 Plan, shares can be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, dividend equivalent rights, and other awards. Under the 2016 Plan, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant. The 2016 Plan is

administered by the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as is designated by the Board of Directors (the “Committee”). Membership on the Committee is limited to independent directors. The Committee may delegate certain duties to one or more officers of the Company as provided in the 2016 Plan. The Committee determines the persons to whom awards are to be made, determines the type, size and terms of awards, interprets the 2016 Plan, establishes and revises rules and regulations relating to the 2016 Plan and makes any other determinations that it believes necessary for the administration of the 2016 Plan.

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during December 31, 2021, 2020, and 2019 using a Black Scholes-Merton Model:


	2021			2020			2019

Directors and SLT1:
Expected dividend yield	$	0.38		$	0.33		$	0.32
Expected volatility	35.78		%	31.63		%	29.54		%
Risk-free interest rate	0.51		%	0.64		%	2.40		%
Expected life (in years)	4.00			5.00			5.00
Employees:
Expected dividend yield	$	0.38		$	0.32		$	0.32
Expected volatility	38.67		%	31.39		%	29.54		%
Risk-free interest rate	0.32		%	0.67		%	2.38		%
Expected life (in years)	3.00			5.00			5.00
1 Senior Leadership Team ("SLT") consists of officers and key members of management.

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.


		Weighted Average	Weighted
Range of	Number	Remaining	Average
Exercise	of	Contractual	Exercise		Intrinsic
Prices	Shares	Life	Price		Value
					(in thousands)
$8.17 - 40.87	538,335	4.84	$	30.32	$	26,440
$41.37 - 41.37	361,231	6.37	41.37		13,748
$42.42 - 79.81	124,098	8.17	45.60		4,198
Total	1,023,664	5.79	$	36.07	$	44,386


		Weighted Average	Weighted
Range of	Number	Remaining	Average
Exercise	of	Contractual	Exercise		Intrinsic
Prices	Shares	Life	Price		Value
					(in thousands)
$7.18 - 36.95	543,646	5.33	$	28.33	$	20,820
$37.00 - 40.87	1,978	7.09	38.50		56
$41.37 - 66.98	194,697	7.87	41.59		4,875
Total	740,321	6.00	$	31.85	$	25,751


		Weighted Average	Weighted
Range of	Number	Remaining	Average
Exercise	of	Contractual	Exercise		Intrinsic
Prices	Shares	Life	Price		Value
					(in thousands)
$7.18 - 34.10	451,077	5.44	$	23.47	$	11,702
$34.15 - 40.87	86,122	7.82	36.33		1,126
$41.37 - 50.68	1,750	1.81	41.59		14
Total	538,949	5.81	$	21.58	$	12,842

A summary of option activity under the plans is as follows:


		Weighted Average Exercise
Options	Shares	Price

Outstanding at December 31, 2020	3,752,945	$	39.00
Granted	368,501	72.95
Exercised	(595,057)	35.54
Forfeited or Expired	(160,920)	48.44
Outstanding at December 31, 2021	3,365,469	$	42.88
Exercisable at December 31, 2021	1,023,664	$	36.07

The total pre-tax compensation cost related to unvested stock options not yet recognized as of December 31, 2021 is $17.2 million and is expected to be recognized over a weighted-average period of 2.25 years.

The total intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $22.6 million, $15.5 million, and $8.1 million, respectively. The cash received from options exercised during the year ended December 31, 2021, 2020, and 2019 was $21.1 million, $21.4 million, and $12.6 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying consolidated statements of cash flows.

The fair value of restricted stock awards is based on the fair market value of AAON common stock on the respective grant dates, reduced for the present value of dividends.

A summary of the unvested restricted stock awards is as follows:


		Weighted Average Grant date
Restricted stock	Shares	Fair Value

Unvested at December 31, 2020	224,691	$	38.22
Granted	36,234	69.46
Vested	(91,923)	35.80
Forfeited	(7,777)	49.27
Unvested at December 31, 2021	161,225	$	46.08

At December 31, 2021, unrecognized compensation cost related to unvested restricted stock awards was approximately $4.3 million which is expected to be recognized over a weighted average period of 2.05 years.

The Company has awarded performance stock units ("PSUs") to certain officers and employees under our 2016 Plan. Unlike our restricted stock awards, the PSUs are not considered legally outstanding and do not accrue dividends during the vesting period. The PSUs vest based on the level of achievement with respect to the Company's three year total shareholder return ("TSR") benchmarked against similar companies included in the capital goods sector of the S&P SmallCap 600 Index. The TSR measurement period is the three years ending December 31, 2023. At the end of the measurement period, each award will be converted into common stock at 0% to 200% of the PSUs held, depending on overall TSR as compared to the S&P SmallCap 600 Index benchmark companies.

The total pre-tax compensation cost related to unvested PSUs not yet recognized as of December 31, 2021 is $1.0 million and is expected to be recognized over a weighted average period of approximately 1.9 years.

The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the year ended December 31, 2021 using a Monte Carlo Model:

The expected term of the PSUs is based on the remaining service period ending December 31, 2023. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2020	—	$	—
Granted	18,483	87.78
Vested	—	—
Forfeited	(1,632)	87.78
Unvested at December 31, 2021	16,851	$	87.78

Subject to the MIPA Agreement (Note 4), the Company granted awards to key employees of BasX ("Key Employee Awards"). Unlike our restricted stock awards under the 2016 Plan, the Key Employee Awards are not considered legally outstanding and do not accrue dividends during the vesting period. The potential future issuance of the Key Employee Awards is contingent upon BasX meeting certain post-closing earn-out milestones during each of the years ending 2021, 2022, and 2023 as defined by the MIPA Agreement and continued employment with the Company. At the end of the earn-out period, ending December 31, 2023, each eligible Key Employee Award will vest and be converted into common stock. The fair value of Key Employee Awards is based on the fair market value of AAON common stock on the grant date.

The total pre-tax compensation cost related to unvested Key Employee Awards not yet recognized as of December 31, 2021 is $1.5 million and is expected to be recognized over a weighted average period of approximately 2.0 years.


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2020	—	$	—
Granted	26,599	80.18
Vested	—	—
Forfeited	—	—
Unvested at December 31, 2021	26,599	$	80.18


	2021		2020		2019
Grant date fair value of awards during the period:	(in thousands)
Options	$	7,010	$	12,615	$	20,442
Restricted stock	2,517		3,316		4,631
PSUs	1,622		—		—
Key employee awards	1,572		—		—
Total	$	12,721	$	15,931	$	25,073


	2021		2020		2019
Share-based compensation expense:	(in thousands)
Options	$	8,724	$	8,312	$	9,145
Restricted stock	2,519		3,030		2,654
PSUs	525		—		—
Key employee awards	44		—		—
Total	$	11,812	$	11,342	$	11,799


	2021		2020		2019
Income tax benefit related to share-based compensation:	(in thousands)
Options	$	4,571	$	2,698	$	1,197
Restricted stock	837		519		575
Total	$	5,408	$	3,217	$	1,772