Shareholders' Equity and Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Shareholders' Equity and Share-Based Compensation

Share Repurchase Program and Treasury Shares

On May 25, 2022, the Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million (i.e., the 2022 Program) to begin following the completion of the $50 million repurchase plan which was authorized on September 30, 2015 (i.e., the 2015 Program). Both Programs authorize the repurchase of the Company's common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The Programs do not have expiration dates and may be limited or terminated at any time without notice. The 2015 Program was completed in July 2022 and the Company began repurchasing shares under the 2022 Program.

During 2023, the Company repurchased 196,934 shares of its common stock, or 0.5% of the shares outstanding as of December 31, 2022, at an aggregate cost of $6.5 million, or an average price of $32.85 per share. During 2022, the Company repurchased 670,816 shares of its common stock, or 1.6% of the shares outstanding as of December 31, 2021, at an aggregate cost of $24.0 million, or an average price of $35.82 per share. In total and through December 31, 2023, 439,035 shares were repurchased under the Programs at an average price of $34.49 per share. The repurchase of shares was funded through use of cash. As of December 31, 2023, $34.9 million remained authorized for future share repurchases under the 2022 Program.

As of December 31, 2023, the Company held 25,911,087 shares in treasury.

Authorization of Preferred Stock

In 1996, the shareholders of HMEC approved authorization of 1,000,000 shares of 0.001 par value preferred stock. The Board is authorized to (1) direct the issuance of the preferred stock in one or more series, (2) fix the dividend rate, conversion or exchange rights, redemption price and liquidation preference, of any series of the preferred stock, (3) fix the number of shares for any series and (4) increase or decrease the number of shares of any series. No shares of preferred stock were issued or outstanding as of December 31, 2023 and 2022.

2010 Comprehensive Executive Compensation Plan

In 2010, the shareholders of HMEC approved the 2010 Comprehensive Executive Compensation Plan (the Comprehensive Plan). The purpose of the Comprehensive Plan is to aid the Company in attracting, retaining, motivating and rewarding employees and non-employee Directors; to provide for equitable and competitive compensation opportunities, including deferral opportunities; to encourage long-term service; to recognize individual contributions and reward achievement of Company goals; and to promote the creation of long-term value for the Company's shareholders by closely aligning the interests of plan participants with those of shareholders. The Comprehensive Plan authorizes share-based and cash-based incentives for plan participants. In 2012, the shareholders of HMEC approved the implementation of a fungible share pool under which grants of full value shares will count against the share limit as two and one half shares for every share subject to a full value award. In May 2021, the shareholders of HMEC approved an amendment and restatement of the Comprehensive Plan which included an increase of 2,500,000 in the number of shares of common stock reserved for issuance under the Comprehensive Plan. As of December 31, 2023, approximately 1,067,611 shares were available for grant under the Comprehensive Plan. Shares of common stock issued under the Comprehensive Plan may be either authorized and unissued shares of HMEC or shares that have been reacquired by HMEC; however, new shares have been issued historically.

As further described in the paragraphs below, CSUs, stock options and RSUs under the Comprehensive Plan were as follows:


	December 31,
	2023	2022	2021
CSUs related to deferred compensation for Directors	14,458	15,372	26,313
CSUs related to deferred compensation for employees	12,972	12,437	16,571
Stock options	1,402,514	1,194,352	1,032,128
RSUs related to incentive compensation	925,230	816,759	834,981
Total	2,355,174	2,038,920	1,909,993

Director Common Stock Units

Deferred compensation for Directors is in the form of CSUs, which represent an equal number of common shares to be issued in the future. The outstanding units of Directors serving on the Board accrue dividends at the same rate as dividends paid to HMEC's shareholders. These dividends are reinvested into additional CSUs.

Employee Common Stock Units

Deferred compensation for employees is in the form of CSUs, which represent an equal number of common shares to be issued in the future. Distributions of employee deferred compensation are allowed to be either in common shares or cash. Through December 31, 2023, all distributions have been in cash. The outstanding units accrue dividends at the same rate as dividends paid to HMEC's shareholders. These dividends are reinvested into additional CSUs.

Stock Options

Options to purchase shares of HMEC common stock may be granted to executive officers, other employees and Directors. The options become exercisable in installments based on service generally beginning in the first year from the date of grant and generally become fully vested 4 years from the date of grant. The options generally expire 10 years from the date of grant. The exercise price of the option is equal to the market price of HMEC's common stock on the date of grant resulting in a grant date intrinsic value of $0.

Changes in outstanding options were as follows:


	Weighted Average Option Price per Share	Range of Option Prices per Share	Options
			Outstanding	Vested and Exercisable
December 31, 2022	$39.41	$28.88-$42.95	1,194,352	766,444
Granted	$35.62	$32.13-$35.98	209,028	—
Vested	$40.56	$38.99-$41.83	—	176,954
Exercised	$28.88	$28.88-$28.88	(866)	(866)
Forfeited	$—	$—	—	—
Expired	$—	$—	—	—
December 31, 2023	$38.85	$28.88-$42.95	1,402,514	942,532

Option information segregated by ranges of exercise prices were as follows:



	December 31, 2023
		Total Outstanding Options			Vested and Exercisable Options
	Range of Option Prices per Share	Options	Weighted Average Option Price per Share	Weighted Average Remaining Term	Options	Weighted Average Option Price per Share	Weighted Average Remaining Term
	28.88-32.35	213,890	$30.94	2.31	194,326	$30.82	1.60
	35.98-38.99	388,544	$37.51	7.10	199,080	$38.96	5.12
	40.10-42.95	800,080	$41.62	5.91	549,126	$41.87	5.19
Total		1,402,514	$38.85	5.69	942,532	$38.98	4.44

The weighted average exercise prices of vested and exercisable options as of December 31, 2022 and 2021 were $38.60 and $37.94, respectively.

As of December 31, 2023, based on a closing stock price of $32.70 per share, the aggregate intrinsic (in-the-money) values of vested options and all options outstanding were $0.4 million and $0.4 million, respectively.

Restricted Stock Units

RSUs may be granted to executive officers, other employees and Directors and represent an equal number of common shares to be issued in the future. The RSUs vest in installments based on service or attainment of performance criteria generally beginning in the first year from the date of grant and generally become fully vested 1 to 3 years from the date of grant. The outstanding units accrue dividends at the same rate as dividends paid to HMEC's shareholders. These dividends are reinvested into additional RSUs.

Changes in outstanding RSUs were as follows:


	Total Outstanding Units		Vested Units
	Units	Weighted Average Grant Date Fair Value per Unit	Units	Weighted Average Grant Date Fair Value per Unit
December 31, 2022	816,759	$36.58	416,082	$28.93

Granted(1)	286,648	$35.78	—	—
Adjustment for performance achievement	6,174	$44.49	—	—
Vested	—	—	176,082	$41.93
Forfeited	(5,323)	$42.25	—	—
Distributed(2)	(179,028)	$41.65	(179,028)	$41.65

December 31, 2023	925,230	$35.43	413,136	$29.04

(1) Includes dividends reinvested into additional RSUs.

(2) Includes distributed units which were utilized to satisfy withholding taxes due on the distribution.