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Note 12 - Equity Compensation Plans | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | 12. Equity Compensation Plans: All of the Company’s outstanding stock options, restricted stock awards, deferred stock units, and PSUs are covered under the 2013 Incentive Plan or 2009 Incentive Plan. Awards under the 2013 Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the 2013 Incentive Plan. The Company transferred common stock under these plans from the Company’s treasury shares. As of September 30, 2020, there were 3,099,195 shares of common stock reserved and available for future issuance under the 2013 Incentive Plan. Cash received from stock option exercises for the nine months ended September 30, 2020 and 2019 was $68.3 million and $45.8 million, respectively. The Company grants equity awards to key employees of the Company. The nonqualified stock options have an exercise price equal to the adjusted closing price of the Company’s common stock on the grant date, with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of the Company’s common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. PSUs vest at the end of a three-year performance period, subject to the recipient’s continued service. Each PSU represents the right to receive one share of Verisk common stock and the ultimate realization is based on the Company’s achievement of certain market performance criteria and may range from 0% to 200% of the recipient’s target levels of 100% established on the grant date. The fair value of PSUs is determined on the grant date using the Monte Carlo Simulation model. The Company recognizes the expense of the equity awards ratably over the vesting period, which could be up to four years. On January 15, 2020, the Company granted 882,749 stock options, 148,658 shares of restricted stock, and 50,736 performance share units to key employees. The 882,749 stock options and 141,725 shares of restricted stock have a graded service vesting period of four years, while 6,933 shares of restricted stock have a four-year cliff vesting period, and the 50,736 performance share units have a three-year performance period, subject to recipients' continued service. On July 1, 2020, the Company granted 4,080 shares of common stock, 3,570 non-qualified stock options that were immediately vested, 12,090 non-qualified stock options with a one-year service period that vest ratably over twelve months, and 7,180 deferred stock units to the Directors of the Company. A summary of the status of the stock options, restricted stock, and PSUs awarded under the 2013 Incentive Plan as of December 31, 2019 and September 30, 2020 and changes during the interim period are presented below:
|  | Stock Option |  |  | Restricted Stock |  |  | PSU |
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  |  | Weighted Average Grant Date Fair Value Per Share |
|  |  |  |  |  |  |  |  |  | (in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2019 |  |  | 6,432,814 |  |  | $ | 79.51 |  |  | $ | 449.2 |  |  |  | 428,729 |  |  | $ | 107.96 |  |  |  | 93,960 |  |  |  | $ | 158.50 |
Granted |  |  | 924,810 |  |  | $ | 158.94 |  |  |  |  |  |  |  | 159,328 |  |  | $ | 159.30 |  |  |  | 50,736 |  |  |  | $ | 192.93 |
Dividend reinvestment |  |  | — |  |  | $ | — |  |  |  |  |  |  |  | — |  |  | $ | — |  |  |  | 713 |  |  |  |  | N/A |
Exercised or lapsed |  |  | (1,308,469 | ) |  | $ | 54.86 |  |  | $ | 148.4 |  |  |  | (169,101 | ) |  | $ | 99.91 |  |  |  | — |  |  |  |  |  |
Canceled, expired or forfeited |  |  | (114,597 | ) |  | $ | 123.00 |  |  |  |  |  |  |  | (20,341 | ) |  | $ | 121.60 |  |  |  | — |  |  |  |  |  |
Outstanding at September 30, 2020 |  |  | 5,934,558 |  |  | $ | 96.48 |  |  | $ | 527.2 |  |  |  | 398,615 |  |  | $ | 130.77 |  |  |  | 145,409 |  |  |  | $ | 170.75 |
Exercisable at September 30, 2020 |  |  | 3,799,648 |  |  | $ | 75.69 |  |  | $ | 416.5 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exercisable at December 31, 2019 |  |  | 4,175,855 |  |  | $ | 65.05 |  |  | $ | 352.0 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonvested at September 30, 2020 |  |  | 2,134,910 |  |  |  |  |  |  |  |  |  |  |  | 398,615 |  |  |  |  |  |  |  | 145,409 |  |  |  |  |  |
Expected to vest at September 30, 2020 |  |  | 1,880,444 |  |  |  |  |  |  |  |  |  |  |  | 351,554 |  |  |  |  |  |  |  | 269,001 |  | (1) |  |  |  |
(1) | Includes estimated performance achievement
The fair value of the stock options granted was estimated using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table for the nine months ended September 30, 2020 and 2019:
|  | 2020 |  |  | 2019 |
Option pricing model |  | Black-Scholes |  |  | Black-Scholes |
Expected volatility |  | 18.41 | % |  | 18.76 | %
Risk-free interest rate |  | 1.53 | % |  | 2.27 | %
Expected term in years |  | 4.3 |  |  | 4.4 |
Dividend yield |  | 0.71 | % |  | 0.80 | %
Weighted average grant date fair value per stock option |  | $25.77 |  |  | $24.09 |
The expected term for the stock options granted was estimated based on studies of historical experience and projected exercise behavior. However, for certain awards granted, for which no historical exercise pattern exists, the expected term was estimated using the simplified method. The risk-free interest rate is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the expected term of the equity award. The volatility factor is calculated using historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option awards. The expected dividend yield was based on the Company’s expected annual dividend rate on the date of grant. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the adjusted closing price of Verisk common stock as of the reporting date. Excess tax benefits from exercised stock options were recorded as income tax benefit in the condensed consolidated statements of operations. This tax benefit is calculated as the excess of the intrinsic value of options exercised and restricted stock lapsed in excess of compensation recognized for financial reporting purposes. The weighted average remaining contractual terms were 6.1﻿ years and 4.8 years for the outstanding and exercisable stock options, respectively, as of September 30, 2020. For the nine months ended September 30, 2020, there was $94.3 million of total unrecognized compensation costs, exclusive of the impact of vesting upon retirement eligibility, related to nonvested stock-based compensation arrangements granted under the 2013 Incentive Plans. That cost is expected to be recognized over a weighted average period of 2.5 years. The total grant date fair value of options vested was $15.2 million and $13.0 million during the nine months ended September 30, 2020 and 2019, respectively. The total grant date fair value of restricted stock vested during the nine months ended September 30, 2020 and 2019 was $17.1 million and $15.3 million, respectively. The total grant date fair value of PSUs vested during the nine months ended September 30, 2020 and 2019 was $6.2 million and $3.0 million, respectively. The Company’s UK Sharesave Plan offers qualifying employees in the United Kingdom the opportunity to own shares of the Company’s common stock. Employees who elect to participate are granted stock options, of which the exercise price is equal to the adjusted closing price of the Company’s common stock on the grant date discounted by 5%, and enter into a savings contract, the proceeds of which are then used to exercise the options upon the three-year maturity of the savings contract. During the nine months ended September 30, 2020 and 2019, the Company granted 8,174 and 18,713 stock options under the UK Sharesave Plan. As of September 30, 2020, there were 453,866 s hares of common stock reserved and available for future issuance under the UK Sharesave Plan. The Company’s ESPP offers eligible employees the opportunity to purchase shares of the Company’s common stock at a discount of its fair market value at the time of purchase. During the nine months ended September 30, 2020 and 2019, the Company issued 25,312 and 23,321 shares of common stock at a weighted discounted price of $155.14 and $138.02 for the ESPP, respectively. As of September 30, 2020, there were 1,267,456 shares of common stock reserved and available for future issuance under the ESPP.

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