XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.22.4

CAPITAL STOCK AND STOCK AWARD PLANS | 12 Months Ended
--- | ---
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
CAPITAL STOCK AND STOCK AWARD PLANS | CAPITAL STOCK AND STOCK AWARD PLANS PREFERRED STOCK. Our Certificate of Incorporation authorizes the issuance of 20,000,000 shares of preferred stock, par value $0.10 per share. There are no shares of preferred stock outstanding. The preferred stock may be issued by resolution of our Board of Directors at any time without any action of the stockholders. The Board of Directors may issue the preferred stock in one or more series and fix the designation and relative powers. These include voting powers, preferences, rights, qualifications, limitations, and restrictions of each series. The issuance of any such series may have an adverse effect on the rights of holders of common stock and may impede the completion of a merger, tender offer, or other takeover attempt. COMMON STOCK. Our Certificate of Incorporation authorizes 480,000,000 shares of common stock, par value $0.10 per share. Subject to the rights of preferred stock, which may from time to time be outstanding, holders of common stock are entitled to receive dividends out of funds legally available, when and if declared by the Board of Directors, and to receive their share of the net assets of the company legally available for distribution upon liquidation or dissolution. For each share of common stock held, stockholders are entitled to one vote on each matter to be voted on by the stockholders, including the election of directors. Holders of common stock are not entitled to cumulative voting. The stockholders do not have preemptive rights. All outstanding shares of common stock are fully paid and nonassessable. STOCK AWARD PLANS. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense as it vests. A summary expense recognized within personnel expenses in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):
| 2022 |  | 2021 |  | 2020
Stock options | $ | 13,025 |  |  | $ | 16,128 |  |  | $ | 20,162 |
Stock awards | 74,186 |  |  | 110,701 |  |  | 20,985 |
Company expense on ESPP discount | 3,466 |  |  | 3,148 |  |  | 2,848 |
Total stock-based compensation expense | $ | 90,677 |  |  | $ | 129,977 |  |  | $ | 43,995 |
On May 5, 2022, our shareholders approved a 2022 Equity Incentive Plan (the “Plan”) and authorized an initial 4,261,884 shares for issuance of awards thereunder. Upon approval of the Plan, no new awards may be made under our 2013 Equity Incentive Plan. The Plan allows us to grant certain stock awards, including stock options at fair market value, performance-based restricted stock units and shares, and time-based restricted stock units, to our key employees and non-employee directors. Shares subject to awards granted under the plan or our prior equity incentive plans that expire or are canceled without delivery of shares or that are settled in cash, generally become available again for issuance under the Plan. There were 4,377,540 shares were available for stock awards under the Plan as of December 31, 2022. STOCK OPTIONS. We have awarded stock options to certain key employees that vest primarily based on their continued employment. The value of these awards is established by the market price on the date of the grant calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates were the primary reasons for changes in the fair value. These grants are being expensed based on the terms of the awards. Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants. The following schedule summarizes stock option activity in the plans. All outstanding unvested options as of December 31, 2022, relate to time-based grants from 2018 through 2020.
| Options |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value (in thousands) |  | Average Remaining Life (years)
Outstanding as of December 31, 2021 | 6,493,864 |  |  | $ | 76.88 |  |  | $ | 199,682 |  |  | 5.8
Exercised | (1,126,384) |  |  | 71.91 |  |  |  |  |
Forfeitures | (8,684) |  |  | 76.43 |  |  |  |  |
Outstanding as of December 31, 2022 | 5,358,796 |  |  | $ | 77.93 |  |  | $ | 73,065 |  |  | 5.1
Vested as of December 31, 2022 | 4,491,967 |  |  | $ | 78.17 |  |  |  |  | 4.7
Exercisable as of December 31, 2022 | 4,491,967 |  |  | $ | 78.17 |  |  |  |  | 4.7
As of December 31, 2022, unrecognized compensation expense related to stock options was $13.4 million. The amount of future expense to be recognized will be based on the passage of time and the employees' continued employment. There were no potentially dilutive stock options for 2022 excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock). Information on the intrinsic value of options exercised is as follows (in thousands):
2022 | $ | 43,353 |
2021 | 20,427 |
2020 | 38,551 |
The following table summarizes these unvested stock option grants as of December 31, 2022:
First Vesting Date |  | Last Vesting Date |  | Options Granted, Net of Forfeitures |  | Weighted Average Grant Date Fair Value(1) |  | Unvested Options
December 31, 2019 |  | December 31, 2023 |  | 1,152,836 |  |  | $ | 20.13 |  |  | 223,752 |
December 31, 2020 |  | December 31, 2024 |  | 1,632,187 |  |  | 13.87 |  |  | 643,077 |
|  |  |  | 2,785,023 |  |  | $ | 16.46 |  |  | 866,829 |
________________________________ (1) Amount shown is the weighted average grant date fair value of options granted, net of forfeitures. Determining Fair Value We estimated the fair value of stock options granted using the Black-Scholes option pricing model. We estimate the fair value of restricted shares and units using the Black-Scholes option pricing model-protective put method. A description of significant assumptions used to determine the risk-free interest rate, dividend yield, expected volatility, and expected term are as follows: Risk-Free Interest Rate-The risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Dividend Yield-The dividend yield assumption is based on our history of dividend payouts. Expected Volatility-Expected volatility was determined based on the implied volatility of traded options of our stock and the historical volatility of our stock price. Expected Term-Expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. The grant date fair value per option was estimated using the Black-Scholes option pricing model with the following assumptions:
| 2020 Grants |  | 2019 Grants
Weighted-average risk-free interest rate | 1.6% |  | 2.1%
Expected dividend yield | 2.5% |  | 2.0%
Weighted-average volatility | 23% |  | 25%
Expected term (in years) | 8.91 |  | 6.08
Weighted average fair value per option | $ | 13.88 |  |  | $ | 17.52 |
STOCK AWARDS. We have awarded performance-based restricted shares, performance-based restricted stock units (“PSUs”), and time-based restricted stock units. Nearly all of our awards contain restrictions on the awardees’ ability to sell or transfer vested awards for a specified period of time. The fair value of these awards is established based on the market price on the date of grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants with post-vesting holding restrictions vary from 12 percent to 24 percent and are calculated using the Black-Scholes option pricing model-protective put method. The duration of the restriction period to sell or transfer vested awards, changes in the measured stock price volatility, and changes in interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. Performance-Based Awards We have awarded performance-based restricted shares through 2020 to certain key employees. These awards vest over a five-year period based on the company’s earnings growth. Beginning in 2021, we have awarded annually PSUs to certain key employees. These PSUs vest over a three-year period based on the company's cumulative three-year dilutive earnings per share growth and annual adjusted gross profits growth. These PSUs contain an upside opportunity of 200 percent of target contingent upon obtaining certain dilutive earnings per share and adjusted gross profits growth targets. The following table summarizes activity related to our performance-based restricted shares and PSUs as of December 31, 2022:
| Number of Restricted Shares and Restricted Stock Units |  | Weighted Average Grant Date Fair Value
Unvested as of December 31, 2021 | 407,642 |  |  | $ | 72.21 |
Granted(1) | 334,092 |  |  | 76.87 |
Performance-based grant adjustment(2) | 59,338 |  |  | 71.43 |
Vested | (266,651) |  |  | 68.86 |
Forfeitures | (16,613) |  |  | 70.84 |
Unvested as of December 31, 2022 | 517,808 |  |  | $ | 76.89 |
________________________________ (1) Amount represents PSU grants at target. (2)Amount represents incremental shares issuable for achieving 200 percent upside upon meeting certain adjusted gross profits targets in 2022. The following table summarizes unvested PSUs by vesting period at target:
First Vesting Date |  | Last Vesting Date |  | Performance Shares and Stock Units Granted, Net of Forfeitures |  | Weighted Average Grant Date Fair Value (1) |  | Unvested Performance Shares and Restricted Stock Units
December 31, 2021 |  | December 31, 2023 |  | 261,524 |  |  | $ | 74.84 |  |  | 248,708 |
December 31, 2022 |  | December 31, 2024 |  | 294,928 |  |  | 76.74 |  |  | 269,100 |
|  |  |  | 556,452 |  |  | $ | 75.85 |  |  | 517,808 |
________________________________ (1) Amount shown is the weighted average grant date fair value of PSUs granted, net of forfeitures. We granted an additional 272,455 performance-based restricted stock units at target in February 2023. These awards have a weighted average grant date fair value of $92.15 and will vest over a three-year period based upon achieving certain cumulative three-year dilutive earnings per share, adjusted gross profits, and adjusted operating margin percentage targets. Time-Based Awards We award time-based restricted stock units to certain key employees. Time-based awards granted through 2020 vest over a five-year period. Beginning in 2021, we have granted annually time-based awards that vest over a three-year period primarily based on the passage of time and the employee's continued employment. These grants are being expensed based on the terms of the awards. The following table summarizes our unvested time-based restricted share and restricted stock unit grants as of December 31, 2022:
| Number of Restricted Shares and Stock Units |  | Weighted Average Grant Date Fair Value
Unvested as of December 31, 2021 | 763,481 |  |  | $ | 69.42 |
Granted | 745,689 |  |  | 77.55 |
Vested | (568,617) |  |  | 71.85 |
Forfeitures | (51,141) |  |  | 72.88 |
Unvested as of December 31, 2022 | 889,412 |  |  | $ | 74.26 |
We granted an additional 688,341 time-based restricted stock units in February 2023. These awards have a weighted average grant date fair value of $92.74 and will vest over a three-year period. A summary of the fair value of stock awards vested (in thousands):
2022 | $ | 74,186 |
2021 | 110,701 |
2020 | 20,985 |
As of December 31, 2022, there was unrecognized compensation expense of $119.0 million related to previously granted stock awards assuming maximum achievement is obtained on our performance-based awards. The amount of future expense to be recognized will be based on the passage of time, the company’s dilutive earnings per share and adjusted gross profits growth, and certain other conditions. EMPLOYEE STOCK PURCHASE PLAN. Our 1997 Employee Stock Purchase Plan allows our employees to contribute up to $10,000 of their annual cash compensation to purchase company stock. Purchase price is determined using the closing price on the last day of the quarter discounted by 15 percent. Shares are vested immediately. The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands):
| Shares Purchased By Employees |  | Aggregate Cost to Employees |  | Expense Recognized By the Company
2022 | 229,705 |  |  | $ | 19,643 |  |  | $ | 3,466 |
2021 | 220,970 |  |  | 17,838 |  |  | 3,148 |
2020 | 236,062 |  |  | 16,146 |  |  | 2,848 |
SHARE REPURCHASE PROGRAMS. On December 9, 2021, the Board of Directors increased the company’s share repurchase authorization by an additional 20,000,000 shares of common stock. As of December 31, 2022, we had 7,409,198 shares remaining under the share repurchase authorization. The activity under these authorizations is as follows (dollar amounts in thousands):
| Shares Repurchased |  | Total Value of Shares Repurchased
2022 Repurchases | 14,226,190 |  |  | $ | 1,456,713 |
2021 Repurchases | 6,154,364 |  |  | 580,818 |
2020 Repurchases | 2,542,915 |  |  | 182,745 |

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a)(1) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration