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Stock Based Compensation Plans | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stock Based Compensation Plans | 6. Stock Based Com pensation Plans In the first quarter of 2023, the Company updated its Long-Term Incentive Program (“LTIP”) to provide employees with an award of stock options and initial grants of restricted stock units (“RSUs”), and made an initial grant of performance share units ("PSUs") to members of the Company's Executive Leadership Team ("ELT"). In connection with this update, the awards, which were granted in the second quarter in previous years, were granted in the first quarter of 2023 and are expected to be granted in the first quarter in subsequent years. The stock option terms remain unchanged and are summarized in more detail in the Stock Based Compensation footnote within the Company’s 2022 Form 10-K. The Company recognizes the grant-date fair value for each of these awards, less estimated forfeitures, as compensation expense ratably over the vesting period. Stock Options The following table provides a summary of option activity:
|  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  |  |  |  | Average |  |  |  |
|  |  |  | Weighted |  |  | Remaining |  |  |  |
|  |  |  | Average |  |  | Contractual |  |  | Aggregate |
|  |  |  | Exercise |  |  | Term |  |  | Intrinsic |
| Options |  |  | Price |  |  | (in Years) |  |  | Value |
Outstanding at December 31, 2022 |  | 11.9 |  |  | $ | 62.64 |  |  |  |  |  |  |
Granted |  | 1.0 |  |  |  | 83.61 |  |  |  |  |  |  |
Exercised |  | (2.4 | ) |  |  | 44.53 |  |  |  |  |  |  |
Cancelled |  | (0.2 | ) |  |  | 81.21 |  |  |  |  |  |  |
Outstanding at September 30, 2023 |  | 10.3 |  |  | $ | 68.62 |  |  |  | 6.0 |  |  | $ | 238.7 |
Exercisable at September 30, 2023 |  | 6.5 |  |  | $ | 58.98 |  |  |  | 4.6 |  |  | $ | 211.0 |
The following table provides information regarding the intrinsic value of stock options exercised and stock compensation expense related to stock option awards:
| Three Months Ended |  |  | Nine Months Ended |
| September 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
| 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Intrinsic Value of Stock Options Exercised | $ | 14.2 |  |  | $ | 3.3 |  |  | $ | 121.9 |  |  | $ | 29.6 |
Stock Compensation Expense Related to Stock Option Awards | $ | 3.8 |  |  | $ | 4.1 |  |  | $ | 22.7 |  |  | $ | 21.6 |
Issued Stock Options |  | 0.0 |  |  |  | 0.0 |  |  |  | 1.0 |  |  |  | 1.5 |
Weighted Average Fair Value of Stock Options issued (per share) | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 24.05 |  |  | $ | 21.48 |
Fair Value of Stock Options Issued | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 24.8 |  |  | $ | 32.7 |
The following table provides a summary of the assumptions used in the valuation of issued stock options:
| Three Months Ended |  | Nine Months Ended |
| September 30, |  | September 30, |  | September 30, |  |  | September 30, |
| 2023 |  | 2022 |  | 2023 |  |  | 2022 |
Risk-free interest rate | N/A |  | N/A |  |  | 4.0 | % |  |  | 2.9 | %
Expected life in years | N/A |  | N/A |  |  | 7.3 |  |  |  | 7.1 |
Expected volatility | N/A |  | N/A |  |  | 22.4 | % |  |  | 21.7 | %
Dividend yield | N/A |  | N/A |  |  | 1.3 | % |  |  | 1.2 | %
Restricted Stock Units The Company updated its LTIP in the first quarter of 2023 to add RSUs to its annual employee compensation program. As a result of this update, the Company granted employees 119,570 RSUs with a total fair value of $10.3 at a weighted average grant date fair value of $86.18 per RSU during the nine months ended September 30, 2023. The annual RSU grants vest one-third on each of the first, second and third anniversaries of the grant date, subject to the recipient’s continued employment with the Company from the grant date through the applicable vesting date, and are settled with shares of the Company’s Common Stock within 60 days following the applicable vesting date. Additionally, in connection with the Hero Acquisition (see Note 10), 854,882 shares of restricted stock were issued in October 2022 with a total fair value of $61.5. The restricted stock will be recognized as compensation expense as the stock is subject to vesting requirements for individuals who received the restricted stock and will continue to be employed by the Company. The vesting requirements are satisfied at various dates over a three-year period from the date of the acquisition. Performance Stock Units In the first quarter of 2023, the Company granted PSUs to members of the ELT including the CEO, with an aggregate award fair value equal to $2.2. 19,650 PSUs were issued at a weighted average grant date fair value equal to $110.95 per PSU using a Monte Carlo model. The performance target is based on the Company's total shareholder return ("TSR") relative to a Company selected peer group. The PSUs vest on the later of (i) the third anniversary of the grant date, and (ii) the date that the Compensation & Human Capital Committee certifies the achievement of the applicable performance goals, in each case, subject to the recipient’s continued employment with the Company from the grant date through the vesting date. The number of shares that may be issued ranges from 0% to 200% based on relative TSR during the three-year performance period. Vested PSUs will be settled into shares of the Company’s Common Stock, if at all, within 60 days following the vesting date.

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