On December 31, 2023, the Company had outstanding stock options, performance shares, RSUs and SARs awarded under its 2011 Incentive Compensation Plan (2011 Plan) and 2022 Equity Incentive Compensation Plan (2022 Plan). Equity incentive awards are granted to Company executives and other key employees. In addition, stock awards are granted to non-employee directors of the Company. As of April 26, 2022, no additional stock options, performance shares, RSUs or SARs may be granted under the 2011 Plan. As of the effective date of the 2022 Plan, 500,000 shares of the Company’s common stock, plus the number of shares that remained available for awards under the 2011 Plan as of April 26, 2022, were available for equity awards under the 2022 Plan. At December 31, 2023, there were 716,012 shares available for grant under the 2022 Plan.

Compensation expense recorded in the consolidated statements of income for all plans was $5,741,000, $13,851,000, and $11,716,000 for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in stock-based compensation expense in 2023 versus 2022 was primarily attributable to the Company not achieving threshold net income performance levels for performance shares granted in 2023 and such performance shares being forfeited; and the non-recurrence of accelerated vesting in 2022 of certain equity grants for the Company’s former Chief Executive Officer, who retired on April 25, 2022.

The total income tax benefit recognized in the income statement for share-based compensation arrangements was $1,452,000, $3,537,000, and $2,867,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

Stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The market price is defined and calculated as the average of the opening and closing prices for Company common stock on the grant date as reported in the New York Stock Exchange – Composite Transactions. Stock option awards granted prior to 2017 generally cliff vested after two years. Starting in 2017, stock options have a three-year graded vesting feature, with one-third of the award vesting each year. The Company has elected the straight-line method of expense attribution for the stock options with graded vesting feature. These options have a 10-year contractual term. The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model incorporating the weighted-average assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s common stock. The Company also uses historical data to estimate the expected term of options granted. The risk-free rate is the U.S. Treasury note rate that corresponds to the expected option term at the date of grant. The following are the weighted-average assumptions used to calculate the grant-date fair values of stock option awards granted in the years ended December 31, 2023, 2022 and 2021:


	For the Years Ended December 31
	2023	2022	2021
Expected dividend yield	1.19%	1.18%	1.30%
Expected volatility	31.29%	32.27%	31.81%
Expected term	7.2 years	6.0 years	7.3 years
Risk-free interest rate	4.03%	1.93%	0.96%

A summary of stock option activity for the year ended December 31, 2023 is presented below:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options
Outstanding at January 1, 2023		427,161		$	82.53
Granted		2,777			106.85
Exercised		(52,999	)		54.24
Forfeited		(8,800	)		113.81
Outstanding at December 31, 2023		368,139			86.03		4.72	$	3,135
Vested or expected to vest at December 31, 2023		368,139			86.03		4.72		3,135
Exercisable at December 31, 2023		363,949			85.79		4.68		3,186

The weighted-average grant-date fair values of options awarded during the years ended December 31, 2023, 2022 and 2021, were $38.72, $32.21, and $36.49, respectively. The total intrinsic values of options exercised during the years ended December 31, 2023, 2022, and 2021 were $2,364,000, $475,000, and $1,287,000, respectively.

As of December 31, 2023, the total unrecognized compensation cost for unvested stock options was $127,000. That cost is expected to be recognized over a weighted-average period of 1.7 years.

Cash received from stock option exercises under the Company’s stock option plans for the years ended December 31, 2023, 2022, and 2021 was $2,795,000, $782,000, and $1,369,000, respectively. The actual tax benefit realized for the tax deductions from stock option exercises totaled $330,000, $36,000, and $172,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

In 2021 and 2022, the Company granted stock awards under the 2011 Plan and, starting in April 2022, the Company also granted stock awards under the 2022 Plan. The Company grants stock awards to employees in the form of performance shares and RSUs. The performance shares vest only upon the Company’s achievement of certain levels of financial performance in specified measurement periods as approved by the Human Capital and Compensation Committee of the Board of Directors. The number of shares of the Company’s common stock ultimately distributed, if any, is contingent upon the Company’s actual financial performance attained in the measurement period relative to the targets approved by the Human Capital and Compensation Committee. The fair value of performance shares equals the grant-date market price of the Company’s common stock, discounted for the estimated amount of dividends that would not be received during the measurement period. Compensation expense is recorded each reporting period based on the probable number of awards that will ultimately vest given the projected level of financial performance. If during the measurement period certain threshold performance objectives are not met, no compensation cost is recognized and any compensation expense recorded in prior periods is reversed. The RSUs have no performance conditions associated with their vesting and vest after the period of service established for the given grant. In addition, the Company grants stock awards that have no performance or service conditions associated with their vesting to non-employee directors of the Company.

A summary of stock award activity for the year ended December 31, 2023, is presented below:


	Shares			Weighted-Average Grant Date Fair Value
Stock Awards
Unvested at January 1, 2023		103,969		$	110.50
Granted		88,130			104.96
Vested		(29,906	)		116.41
Forfeited/modified due to change of assumptions		(95,407	)		106.68
Unvested at December 31, 2023		66,786			106.00

The weighted-average grant-date fair values of stock awards granted during the years ended December 31, 2023, 2022 and 2021, were $104.96, $106.78, and $119.76, respectively. As of December 31, 2023, under the Company’s current assumption as to the number of shares of stock awards that will vest at the measurement periods ended December 31, 2024 and 2025, there was $3,761,000 of unrecognized compensation cost for unvested stock awards. That cost is expected to be recognized over a period of 1.7 years.

At December 31, 2023, the Company had stock-settled SARs outstanding. SARs granted prior to 2017 cliff vested after two years. Starting in 2017, SARs have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the SARs with graded vesting feature. All SARs expire ten years from the grant date. Upon the exercise of a SARs award, a participant receives Company common stock. For stock-settled SARs, the number of shares equals the excess of the fair market value of a total number of shares/SARs exercised at the date of exercise over the fair market value of a total number of shares/SARs exercised at the date of grant (the exercise price) divided by the fair market value of a share of Company common stock at the date of exercise. Compensation expense for stock-settled SARs is based on the grant-date value of the awards allocated over the proportion of the vesting period that has been completed at the reporting date.

The following is a summary of SARs activity for the year ended December 31, 2023:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
SARs
Outstanding at January 1, 2023		850,156		$	94.49
Granted		77,006			108.64
Exercised		(38,988	)		61.97
Forfeited		(56,255	)		112.46
Outstanding at December 31, 2023		831,919			96.11		5.94	$	—

The weighted-average grant-date fair values of SARs granted during the years 2023, 2022 and 2021 were $38.98, $34.76, and $36.49, respectively. The fair value for each SARs award was estimated using the Black-Scholes valuation model incorporating the same assumptions as noted for stock options.

At December 31, 2023, there was $3,648,000 of total unrecognized compensation cost related to all unvested SARs. That cost is to be recognized over a weighted-average period of 1.6 years.

In general, it is the Company’s policy to issue new shares of its common stock upon the exercise of stock options and stock-settled SARs or the vesting of performance shares and RSUs.