Stock Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Note 14 - 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, directors and other key employees. Grants can take the form of performance- or time-based restricted stock units, deferred shares and stock options. A summary of the awards granted in 2021 is presented below:


	Expected to be Settled in Equity	Expected to be Settled in Cash	Total Awards Granted
Performance-based restricted stock units	171,615	6,390	178,005
Time-based restricted stock units	131,115	4,320	135,435
Deferred shares	4,100	1,250	5,350

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 $0.9 million and $1.0 million accrued in salaries, wages and benefits as of December 31, 2021 and 2020, 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, 2021 is as follows:


	Number of Shares	Weighted-average Grant Date Fair Value
Outstanding - beginning of year	1,125,472	$	46.50
Granted - new awards	306,830	75.57
Adjusted for performance results achieved (1)	181,933	44.65
Vested	(577,948)	44.18
Canceled or expired	(42,316)	56.55
Outstanding - end of year	993,971	$	56.06

(1) Adjustments for the number of shares vested under the 2018 awards at the end of the three-year period ended December 31, 2020 being higher than the target number of shares.

As of December 31, 2021, a total of 993,971 stock awards have been awarded that have not yet vested. The Company distributed shares totaling 577,948 in 2021, 557,590 in 2020 and 539,396 in 2019 due to the vesting of stock awards. The grant date fair value of these vested shares was $25.5 million, $24.4 million and $17.3 million, respectively. The Company recognized compensation expense of $18.2 million, $19.6 million and $22.3 million for the years ended December 31, 2021, 2020 and 2019, respectively, relating to performance-based restricted stock units, time-based restricted stock units, deferred shares and restricted shares.

In addition to performance-based restricted stock units, time-based restricted stock units and deferred shares, the Company has granted stock option awards to officers and key employees. Stock options typically have a ten-year term and generally vest in 25% increments beginning annually on the first anniversary date of grant.

Note 14 - Stock Compensation (continued)

During 2021, 2020 and 2019, the Company recognized stock-based compensation expense of $2.0 million ($1.5 million after tax or $0.02 per diluted share), $3.6 million ($2.7 million after tax or $0.04 per diluted share) and $4.9 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 2021 or 2020. The fair value of stock option awards granted in 2019 was estimated at the date of grant using a Black-Scholes option-pricing method with the following assumptions:


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

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, 2021 is presented below:


	Number of Shares	Weighted-average Exercise Price		Weighted-average Remaining Contractual Term	Aggregate Intrinsic Value (millions)
Outstanding - beginning of year	1,904,749	$	40.53

Exercised	(674,705)	38.55
Canceled or expired	(12,099)	43.16
Outstanding - end of year	1,217,945	$	41.59	7 years	$	33.7
Options expected to vest	1,217,945	41.59		7 years	33.7
Options exercisable	890,855	41.00		6 years	25.2

The total intrinsic value of stock option awards exercised during the years ended December 31, 2021, 2020 and 2019 was $29.4 million, $20.7 million and $13.4 million, respectively. Net cash proceeds from the exercise of stock option awards were $26.0 million, $37.4 million and $27.5 million, respectively.

As of December 31, 2021, the Company had unrecognized compensation expense of $23.4 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 6.4 million shares available for future grants for all plans at December 31, 2021.