Stock-Based Compensation Plans

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

As part of its long-term compensation plans, the Company has granted stock options, performance awards and restricted stock. Details of the outstanding awards and activity are presented below.

Information with respect to stock options granted under the Company's Second Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan") for the three months ended March 31, 2020, is as follows:

	2009 Plan shares		Weighted average exercise price per share
Options Outstanding, December 31, 2019	14,408		$	124.05
Exercised	(1,902	)	89.17
Granted	—		—
Forfeited	—		—
Options Outstanding, March 31, 2020	12,506		$	129.35
Options Exercisable, March 31, 2020	12,506		$	129.35

Information with respect to performance awards granted is as follows:

	Performance awards		Weighted average grant date fair value per award
Outstanding at December 31, 2019	253,432		$	176.27
Granted (1)	76,164		238.86
Change in awards based on performance (2)	18,112		177.26
Converted to restricted stock	(96,317	)	177.26
Forfeited	(8,004	)	183.45
Outstanding at March 31, 2020	243,387		$	195.31

__________________________________

(1) The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company's common stock for 38,314 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 37,850 performance awards.

(2) Represents the change in the number of performance awards earned based on performance achievement for the performance period.

The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted in 2020 for which achievement will be determined by using total shareholder return measures. The assumptions used are as follows:

	2020
Dividend yield	2.8%
Estimated volatility over the life of the plan (1)	11.1% - 15.5%
Risk free rate	1.45% - 1.62%
Estimated performance award value based on total shareholder return measure	$254.72

__________________________________

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

For the portion of the performance awards granted in 2020 for which achievement will be determined by using financial metrics, the compensation cost was based on a grant date value of $225.59, and the Company's estimate of corporate achievement for the financial metrics.

Information with respect to restricted stock granted is as follows:

	Restricted stock shares		Restricted stock shares weighted average grant date fair value per share		Restricted stock shares converted from performance awards
Outstanding at December 31, 2019	148,326		$	181.29	163,111
Granted - restricted stock shares	64,912		225.54		96,317
Vested - restricted stock shares	(76,012	)	178.29		(109,758	)
Forfeited	(3,337	)	191.25		(594	)
Outstanding at March 31, 2020	133,889		$	204.20	149,076

Total employee stock-based compensation cost recognized in income was $5,039,000 and $5,471,000 for the three months ended March 31, 2020 and 2019, respectively, and total capitalized stock-based compensation cost was $3,178,000 and $2,096,000 for the three months ended March 31, 2020 and 2019, respectively. At March 31, 2020, there was a total unrecognized compensation cost of $49,041,000 for unvested restricted stock and performance awards, which does not include forfeitures, and is expected to be recognized over a weighted average period of 2.4 years.