Stock Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Note 13 - Stock Compensation

Under its long-term incentive plan, the Company’s common shares have been made available for grant, at the discretion of the Compensation Committee of the Board of Directors, to officers and key employees in the form of stock option awards. Stock option awards typically have a ten-year term and generally vest in 25% increments annually beginning on the first anniversary of the date of grant.

During 2020, 2019 and 2018, the Company recognized stock-based compensation expense of $3.6 million ($2.7 million after tax or $0.04 per diluted share), $4.9 million ($3.7 million after tax or $0.05 per diluted share) and $4.8 million ($3.7 million after tax or $0.05 per diluted share), respectively, for stock option awards.

Beginning in 2020, the Company discontinued the use of nonqualified stock options. As such, there were no stock option awards granted in 2020. The fair value of stock option awards granted in 2019 and 2018 was estimated at the date of grant using a Black-Scholes option-pricing method with the following assumptions:


	2019			2018
Weighted-average fair value per option	$	9.58		$	10.29
Risk-free interest rate	2.46		%	2.62		%
Dividend yield	2.52		%	2.30		%
Expected stock volatility	28.29		%	27.78		%
Expected life - years	5			5

Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives of the options. The dividend yield was calculated based upon the last dividend prior to the grant compared to the trailing 12 months' daily stock prices. The risk-free interest rate was based upon yields of U.S. zero coupon issues with a term equal to the expected life of the option being valued.

A summary of stock option award activity for the year ended December 31, 2020 is presented below:


	Number of Shares	Weighted-average Exercise Price		Weighted-average Remaining Contractual Term	Aggregate Intrinsic Value (millions)
Outstanding - beginning of year	2,913,272	$	40.10

Exercised	(956,258)	39.07
Canceled of expired	(52,265)	43.27
Outstanding - end of year	1,904,749	$	40.53	7 years	$	70.1
Options expected to vest	1,904,749	40.53		7 years	70.1
Options exercisable	1,259,075	38.94		6 years	48.4

The total intrinsic value of stock option awards exercised during the years ended December 31, 2020, 2019 and 2018 was $20.7 million, $13.4 million and $6.7 million, respectively. Net cash proceeds from the exercise of stock option awards were $37.4 million, $27.5 million and $12.8 million, respectively.

In addition to stock option awards, the Company has granted performance-based restricted stock units, time-based restricted stock units and deferred shares under its long-term incentive plan. A summary of those awards granted in 2020 is presented below:


	Expected to be Settled in Equity	Expected to be Settled in Cash	Total Awards Granted
Performance-based restricted stock units	442,371	11,251	453,622
Time-based restricted stock units	204,550	4,480	209,030
Deferred shares	5,000	—	5,000

Note 13 - Stock Compensation (continued)

Performance-based restricted stock units are calculated and awarded based on the achievement of specified performance objectives and cliff vest three years from the date of grant. Time-based restricted stock units generally vest in 25% increments annually beginning on the first anniversary of the grant. Deferred shares generally cliff vest five years from the date of grant. For time-based restricted stock units that are expected to settle in cash, the Company had $1.0 million and $1.1 million accrued in salaries, wages and benefits as of December 31, 2020 and 2019, respectively, on the Consolidated Balance Sheets.

A summary of stock award activity, including performance-based restricted stock units, time-based restricted stock units and deferred shares that will settle in common shares for the year ended December 31, 2020 is as follows:


	Number of Shares	Weighted-average Grant Date Fair Value
Outstanding - beginning of year	1,106,386	$	43.13
Granted - new awards	651,921	50.05
Vested	(557,590)	43.76
Canceled or expired	(75,245)	47.97
Outstanding - end of year	1,125,472	$	46.50

As of December 31, 2020, a total of 1,125,472 stock awards have been awarded that have not yet vested. The Company distributed shares totaling 557,590 in 2020, 539,396 in 2019 and 290,287 in 2018 due to the vesting of stock awards. The grant date fair value of these vested shares was $24.4 million, $17.3 million and $11.8 million, respectively. The Company recognized compensation expense of $19.6 million, $22.3 million and $27.5 million for the years ended December 31, 2020, 2019 and 2018, respectively, relating to performance-based restricted stock units, time-based restricted stock units, deferred shares and restricted shares.

As of December 31, 2020, the Company had unrecognized compensation expense of $22.5 million related to stock options and stock awards, which is expected to be recognized over a total weighted-average period of two years. There were 7.8 million shares available for future grants for all plans at December 31, 2020.