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Note 17 - Compensation Plans | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | 17. Compensation Plans: KSOP We have established the KSOP for the benefit of eligible employees in the U.S. and Puerto Rico. The KSOP includes both an employee savings component and an employee stock ownership component. The purpose of the combined plan is to enable our employees to participate in a tax-deferred savings arrangement under Internal Revenue Service Code Sections 401(a) and 401(k) (the “Code”), and to provide our employees equity participation through the employee stock ownership plan (“ESOP”) accounts. Under the KSOP, eligible employees may make pre-tax and after-tax cash contributions as a percentage of their compensation, subject to certain limitations under the applicable provisions of the Code. The maximum pre-tax contribution that can be made to the 401(k) account as determined under the provisions of Code Section 401(g) is $22.5 thousand for 2023, $20.5 thousand for 2022 and $19.5 thousand for 2021. Certain eligible participants (age 50 and older) may contribute an additional $7.5 thousand on a pre-tax basis for 2023, and $6.5 thousand for 2022 and 2021. After-tax contributions are limited to 10.0% of a participant’s compensation. Effective January 1, 2019, we increased the matching contributions to 100.0% of the first 6.0% of the participant’s contribution. The 401(k) matching contributions under the KSOP for the years ended December 31, 2023, 2022, and 2021, were $32.4 million, $40.0 million, and $33.7 million, respectively; which, at our option, were funded in cash. In 2005, we established the ISO Profit Sharing Plan (the “Profit Sharing Plan”), a defined contribution plan, to replace the qualified pension plan for all eligible employees hired on or after March 1, 2005. The Profit Sharing Plan is a component of the KSOP. Eligible employees participated in the Profit Sharing Plan if they completed 1,000 hours of service each plan year and were employed on December 31 of that year. We can make a discretionary contribution to the Profit Sharing Plan based on our annual performance. Participants vest once they have completed four years and 1,000 hours of service. For the years ended December 31, 2023, 2022, and 2021, there were no profit sharing contributions. Equity Compensation Plans All of our outstanding stock options, restricted stock awards, deferred stock units, and PSUs are covered under our 2021 Incentive Plan, or our 2013 Incentive Plan. Awards under our 2021 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, non-employee directors, and consultants are eligible for awards under our 2021 Incentive Plan. We transferred common stock under these plans from our treasury shares. As of December 31, 2023, there were 13,441,921 shares of common stock reserved and available for future issuance under our 2021 Incentive Plan. Cash received from stock option exercises for December 31, 2023 and December 31, 2022 was $141.9 million and $132.5 million, respectively. We issued common stock under these plans from our treasury shares. We have granted equity awards to key employees and directors. The ultimate realization of the PSUs may range from 0% to 200% of the recipient’s target levels established on the grant date. A summary of the status of the stock options, restricted stock, and PSUs awarded under our 2021 Incentive Plan as of December 31, 2023, 2022, and 2021 and changes during the years is presented below.
|  | Stock Option |  |  | Restricted Stock |  |  | PSU |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  |  |  | Average |  |  |  |  |  |  |  | Average |
|  |  |  |  |  | Average |  |  | Aggregate |  |  |  |  |  |  | Grant Date |  |  |  |  |  |  |  | Grant Date |
|  | Number |  |  | Exercise |  |  | Intrinsic |  |  | Number |  |  | Fair Value |  |  | Number |  |  |  | Fair Value |
|  | of Options |  |  | Price |  |  | Value |  |  | of Shares |  |  | Per Share |  |  | of Shares |  |  |  | Per Share |
|  |  |  |  |  |  |  |  |  | (in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at January 1, 2021 |  |  | 5,611,777 |  |  | $ | 98.28 |  |  | $ | 613.4 |  |  |  | 390,054 |  |  | $ | 131.63 |  |  |  | 145,609 |  |  |  | $ | 170.75 |
Granted |  |  | 750,822 |  |  | $ | 189.29 |  |  |  |  |  |  |  | 162,378 |  |  | $ | 189.23 |  |  |  | 59,144 |  |  |  | $ | 210.07 |
Dividend reinvestment |  |  | — |  |  | $ | — |  |  |  |  |  |  |  | — |  |  | $ | — |  |  |  | 980 |  |  |  |  | N/A |
Exercised or lapsed |  |  | (1,146,422 | ) |  | $ | 73.30 |  |  | $ | 147.6 |  |  |  | (173,726 | ) |  | $ | 120.94 |  |  |  | (42,610 | ) |  |  | $ | 140.70 |
Canceled, expired or forfeited |  |  | (149,079 | ) |  | $ | 155.40 |  |  |  |  |  |  |  | (27,202 | ) |  | $ | 157.79 |  |  |  | — |  |  |  | $ | — |
Outstanding at December 31, 2021 |  |  | 5,067,098 |  |  | $ | 115.73 |  |  | $ | 572.6 |  |  |  | 351,504 |  |  | $ | 161.33 |  |  |  | 163,123 |  |  |  | $ | 192.99 |
Granted |  |  | 653,802 |  |  | $ | 196.64 |  |  |  |  |  |  |  | 201,617 |  |  | $ | 193.33 |  |  |  | 111,333 |  |  |  | $ | 168.63 |
Dividend reinvestment |  |  | — |  |  | $ | — |  |  |  |  |  |  |  | — |  |  | $ | — |  |  |  | 1,371 |  |  |  |  | N/A |
Exercised or lapsed |  |  | (1,435,673 | ) |  | $ | 92.38 |  |  | $ | 129.1 |  |  |  | (205,407 | ) |  | $ | 157.22 |  |  |  | (54,927 | ) |  |  | $ | 174.42 |
Canceled, expired or forfeited |  |  | (261,411 | ) |  | $ | 181.48 |  |  |  |  |  |  |  | (40,139 | ) |  | $ | 182.35 |  |  |  | (21,406 | ) |  |  | $ | 202.55 |
Outstanding at December 31, 2022 |  |  | 4,023,816 |  |  | $ | 132.90 |  |  | $ | 193.3 |  |  |  | 307,575 |  |  | $ | 182.07 |  |  |  | 199,494 |  |  |  | $ | 195.34 |
Granted |  |  | 211,945 |  |  | $ | 185.29 |  |  |  |  |  |  |  | 194,236 |  |  | $ | 185.22 |  |  |  | 48,486 |  |  |  | $ | 212.86 |
Dividend reinvestment |  |  | — |  |  | $ | — |  |  |  |  |  |  |  | — |  |  | $ | — |  |  |  | 1,142 |  |  |  |  | N/A |
Exercised or lapsed |  |  | (1,295,815 | ) |  | $ | 108.85 |  |  | $ | 118.1 |  |  |  | (178,602 | ) |  | $ | 179.39 |  |  |  | (45,997 | ) |  |  | $ | 192.93 |
Canceled, expired or forfeited |  |  | (227,436 | ) |  | $ | 187.56 |  |  |  |  |  |  |  | (32,170 | ) |  | $ | 183.25 |  |  |  | (21,889 | ) |  |  | $ | 207.27 |
Outstanding at December 31, 2023 |  |  | 2,712,510 |  |  | $ | 143.91 |  |  | $ | 257.6 |  |  |  | 291,039 |  |  | $ | 186.28 |  |  |  | 181,236 |  |  |  | $ | 199.62 |
Exercisable at December 31, 2023 |  |  | 1,947,253 |  |  | $ | 127.43 |  |  | $ | 217.0 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exercisable at December 31, 2022 |  |  | 2,702,075 |  |  | $ | 110.02 |  |  | $ | 182.6 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonvested at December 31, 2023 |  |  | 765,257 |  |  |  |  |  |  |  |  |  |  |  | 291,039 |  |  |  |  |  |  |  | 181,236 |  |  |  |  |  |
Expected to vest at December 31, 2023 |  |  | 643,367 |  |  |  |  |  |  |  |  |  |  |  | 252,146 |  |  |  |  |  |  |  | 223,629 |  | (1) |  |  |  |
_______________
(1) | Includes estimated performance achievement
The fair value of our stock options granted was estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted-average assumptions noted in the following table during the years ended December 31:
|  | 2023 |  |  | 2022 |  |  | 2021 |
Expected volatility |  |  | 27.28 | % |  |  | 25.33 | % |  |  | 23.66 | %
Risk-free interest rate |  |  | 3.77 | % |  |  | 1.55 | % |  |  | 0.39 | %
Expected term in years |  |  | 4.0 |  |  |  | 4.2 |  |  |  | 4.3 |
Dividend yield |  |  | 0.66 | % |  |  | 0.60 | % |  |  | 0.63 | %
Weighted average grant date fair value per stock option |  | $ | 48.14 |  |  | $ | 42.25 |  |  | $ | 35.15 |
A summary of the status of our nonvested options and changes are presented below:
|  | Number of Options |  |  | Weighted Average Grant-Date Fair Value Per Share |
Nonvested balance at January 1, 2021 |  |  | 2,117,613 |  |  | $ | 23.39 |
Granted |  |  | 750,822 |  |  | $ | 35.15 |
Vested |  |  | (825,850 | ) |  | $ | 21.62 |
Cancelled or expired |  |  | (149,079 | ) |  | $ | 27.54 |
Nonvested balance at December 31, 2021 |  |  | 1,893,506 |  |  | $ | 28.49 |
Granted |  |  | 653,802 |  |  | $ | 42.25 |
Vested |  |  | (964,156 | ) |  | $ | 22.97 |
Cancelled or expired |  |  | (261,411 | ) |  | $ | 35.23 |
Nonvested balance at December 31, 2022 |  |  | 1,321,741 |  |  | $ | 34.65 |
Granted |  |  | 211,945 |  |  | $ | 52.69 |
Vested |  |  | (540,993 | ) |  | $ | 33.08 |
Cancelled or expired |  |  | (227,436 | ) |  | $ | 38.03 |
Nonvested balance at December 31, 2023 |  |  | 765,257 |  |  | $ | 39.74 |
Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of our common stock as of the reporting date. Excess tax benefits of $20.6 million, $26.5 million, and $35.9 million from exercised stock options were recorded as income tax benefit in our accompanying consolidated statements of operations for the years ended December 31, 2023, 2022, and 2021, respectively. Stock-based compensation expense for the years ended December 31, 2023, 2022, and 2021 was $54.0 million, $56.5 million, and $55.7 million, respectively. As of December 31, 2023, the weighted average remaining contractual terms were 5.6 years and 4.8 years for outstanding and exercisable stock options, respectively. As of December 31, 2022 the weighted average remaining contractual terms were 5.9 years and 4.9 years for outstanding and exercisable stock options, respectively. As of December 31, 2023, there was $76.2 million of total unrecognized compensation cost, exclusive of the impact of vesting upon retirement eligibility, related to nonvested share-based compensation arrangements granted under our 2021 and 2013 Incentive Plans. That cost is expected to be recognized over a weighted-average period of 2.18 years. Our U.K. Sharesave Plan offers qualifying employees in the United Kingdom the opportunity to own shares of our common stock. Employees who elect to participate are granted stock options, of which the exercise price is equal to the average of the closing price on the five trading days immediately preceding the plan invitation 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 years ended December 31, 2023, 2022, and 2021, we granted 5,144, 9,370 and 11,254 stock options under the U.K. Sharesave Plan at a discounted exercise price of $227.65, $178.26, and $166.16, respectively. As of December 31, 2023, there were 441,528 shares of common stock reserved and available for future issuance under our U.K. Sharesave Plan. We also offer eligible employees the opportunity to participate in an ESPP. Under our ESPP, participating employees may authorize payroll deductions of up to 20.0% of their regular base salary and up to 50.0% of their short-term incentive compensation, both of which in total may not exceed $25.0 thousand in any calendar year, to purchase shares of our common stock at a 5.0% discount of its fair market value at the time of purchase. In accordance with ASC 718, our ESPP is noncompensatory as the purchase discount is 5.0% or less from the fair market value, substantially all employees that meet limited employment qualifications may participate, and it incorporates no option features. During the years ended December 31, 2023, 2022, and 2021, we issued 18,636, 30,398, and 33,974 shares of common stock at a weighted average discounted price of $209.68, $174.66, and $181.77, respectively. As of December 31, 2023, there were 1,177,258 shares of common stock reserved and available for future issuance under our ESPP.

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