XML 29 R15.htm IDEA: XBRL DOCUMENT

Share-based Compensation

12 Months Ended

Dec. 31, 2020

8. SHARE-BASED COMPENSATION

Stock Options:

The Company has issued non-qualified and incentive stock options to employees and nonemployee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of December 31, 2020 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $26.52 to $171.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponds to the expected term of the option. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield is computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the years ended December 31, 2020 and 2019, the Company did not grant stock options. The weighted average input assumptions used for the year ended December 31, 2018 were as follows:


	2018

Expected term (in years)	6.4
Risk-free interest rate	2.64%
Expected volatility	33.30%
Dividend yield	2.87%

The number of stock options and weighted-average exercise prices as of December 31, 2020 and 2019 are as follows:


	2020			2019
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price
(awards in thousands)
Outstanding at beginning of period	97	$	52.53	107	$	49.26
Exercised	(28)		57.79	(10)		28.21
Forfeited	(8)		68.45	-		-
Outstanding at end of the period	61	$	48.19	97	$	52.53
Exercisable at end of the period	44	$	39.98	52	$	40.96

As of December 31, 2020, the weighted-average remaining contractual life was 5.7 years with an aggregate intrinsic value of $9.2 million for outstanding stock options and the weighted-average remaining contractual life was 5.2 years with an aggregate intrinsic value of $6.9 million for exercisable options. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of December 31, 2020 was $0.2 million and is expected to be recognized over a weighted average period of 2.1 years. The Company received $1.6 million, $0.3 million and $0.5 million in cash proceeds from the exercise of stock options during the years ended December 31, 2020, 2019 and 2018, respectively. The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $1.5 million, $1.0 million and $4.1 million, respectively.

Restricted Stock:

The Company has issued restricted stock to employees and nonemployee directors generally with vesting terms up to five years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. A summary of outstanding restricted stock activity as of December 31, 2020 and 2019 are as follows:


	2020			2019
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
(shares in thousands)
Outstanding at beginning of period	46	$	98.28	57	$	50.55
Granted	43		113.87	29		130.89
Vested	(32)		88.71	(37)		45.83
Forfeited	(7)		108.86	(3)		167.48
Outstanding at end of the period	50	$	116.06	46	$	98.28

The Company withheld 0.0 million, 0.1 million and 0.0 million shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the years ended December 31, 2020, 2019 and 2018. The total fair value of restricted stock awards vested during the years ended December 31, 2020, 2019 and 2018 was $3.7 million, $4.7 million and $8.6 million, respectively.

Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Consolidated Statements of Income. The total costs during the years ended December 31, 2020, 2019 and 2018 was $6.8 million, $4.5 million, and $3.1 million, respectively. The total costs of the options and restricted stock awards was $3.5 million, $2.9 million and $2.2 million during the years ended December 31, 2020, 2019 and 2018, respectively. Included for the years ended December 31, 2020 and 2019 was $1.6 million and $0.7 million, respectively, for 16,637 and 17,780 performance-based share awards for certain other key executives granted in 2019. Also included for the year ended December 31, 2020 was $1.7 million for 27,525 performance-based share awards for certain key executives granted in 2020. Additionally, included in the years ended December 31, 2019 and 2018 was $0.3 million, respectively, for 63,300 performance-based share awards for certain key executives, and $0.6 million, respectively for 210,000 performance-

based share awards granted to our Chief Executive Officer. These 273,300 performance-based shares were fully vested on December 31, 2019.

The total income tax benefit recognized in the accompanying Consolidated Statements of Income for restricted stock awards was $1.4 million, $7.5 million and $2.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

There was $3.7 million of total unrecognized compensation cost related to restricted stock awards as of December 31, 2020, which is expected to be recognized over a weighted-average period of 1.6 years. There was $5.4 million of unrecognized compensation cost related to the 44,162 performance-based shares discussed above as of December 31, 2020, which is expected to be recognized over 1.8 years.