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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Incentive Compensation Program The Company maintains an Incentive Compensation Program, as amended and restated effective January 1, 2022 (the “Program”), under which the Company may award stock options and other equity-based incentives to the Company’s directors, officers, employees or consultants. The Program was originally approved by the Company’s stockholders in 1988. The Company’s stockholders subsequently approved increases in the number of shares available for issuance under the Program in 2009, 2012, 2015 and 2022. As of December 31, 2022, 1.5 million shares remained available for issuance under the Program, and 0.7 million of those shares were available for grant as restricted shares, performance shares or other “full value” awards. During the year ended December 31, 2022, the Company awarded 732 thousand stock options, 42 thousand restricted stock awards and 38 thousand performance share awards as part of the Program with an aggregate grant-date fair value of approximately $74.7 million to be recognized over the requisite service period for each award. Stock-based compensation cost by award type follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Stock option awards |  | $ | 14.8 |  |  | $ | 9.5 |  |  | $ | 10.4 |
Restricted stock awards |  | 8.1 |  |  | 7.3 |  |  | 8.6 |
Performance share awards |  | 9.4 |  |  | 7.7 |  |  | 7.4 |
Restricted stock units |  | — |  |  | — |  |  | 1.4 |
Stock appreciation rights |  | — |  |  | 9.0 |  |  | 2.4 |
Total stock-based compensation cost incurred |  | 32.3 |  |  | 33.5 |  |  | 30.2 |
Capitalized cost during the period |  | (3.2) |  |  | (9.3) |  |  | (3.5) |
Amortization of capitalized cost during the period |  | 2.1 |  |  | 14.3 |  |  | 1.2 |
Total stock-based compensation expense |  | $ | 31.2 |  |  | $ | 38.5 |  |  | $ | 27.9 |
Income tax benefit |  | $ | 14.6 |  |  | $ | 25.2 |  |  | $ | 8.8 |
In 2022, Carlisle's Board of Directors (the "Board") authorized a broad-based grant of stock options to U.S. employees. This grant contributed $4.7 million to stock-based compensation costs for the year ended December 31, 2022. $1.1 million of compensation cost was capitalized to inventory as of December 31, 2022. Inventory is recognized in costs of goods sold when that related inventory is sold. In 2018, the Board authorized a broad-based grant of stock options to U.S. employees and stock appreciation rights to employees outside of the U.S. This grant contributed $9.5 million and $4.0 million to stock-based compensation costs for the years ended December 31, 2021 and 2020, respectively. Stock Option Awards Stock options awarded under the Program generally vest on a straight-line basis over a three-year period on the anniversary date of the grant. All stock options have a maximum contractual term of 10 years. Shares issued to cover stock options issued under the Program may be issued from shares held in treasury, from new issuances of shares or a combination of the two. Unrecognized compensation cost from continuing operations related to stock options of $40.7 million as of December 31, 2022, is to be recognized over a weighted-average period of 2.5 years. The Company utilizes the Black-Scholes-Merton (“BSM”) option pricing model to determine the fair value of its stock options. The BSM relies on certain assumptions to estimate an option’s fair value. The weighted average assumptions used in the determination of fair value for stock options follows:
(in millions, except per share amounts and percentages) |  | 2022 Broad-based Grant |  | 2022 |  | 2021 |  | 2020 |  |
Expected dividend yield |  | 1.0 | % |  | 0.9 | % |  | 1.4 | % |  | 1.3 | % |  |
Expected term (in years) |  | 3.8 |  | 4.7 |  | 4.9 |  | 4.8 |  |
Expected volatility |  | 31.9 | % |  | 29.1 | % |  | 28.7 | % |  | 21.9 | % |  |
Risk-free interest rate |  | 3.9 | % |  | 1.8 | % |  | 0.4 | % |  | 1.4 | % |  |
Weighted-average grant date fair value (per share) |  | $ | 80.23 |  |  | $ | 55.96 |  |  | $ | 32.51 |  |  | $ | 29.29 |  |  |
Fair value of options granted |  | $ | 40.4 |  |  | $ | 12.8 |  |  | $ | 11.8 |  |  | $ | 11.6 |  |  |
The expected term of a stock option is based on the assumption that all outstanding stock options will be exercised at the midpoint of the valuation date (if vested) or the vesting dates (if unvested) and the stock options’ expiration date. The expected volatility is based on historical volatility, as well as implied volatility of the Company’s call options. The risk-free interest rate is based on rates of U.S. Treasury issues with a remaining life equal to the expected term of the stock option. The expected dividend yield is based on the latest quarterly dividend payment per share, annualized, divided by the average three-month stock price as of the date of grant. A summary of stock options outstanding and activity follows:
|  | Number of Units (in thousands) |  | Weighted-Average Exercise Price (per share) |  | Weighted-Average Contractual Term (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2021 |  | 1,270 |  |  | $ | 129.32 |  |  |  |  |
Options granted |  | 732 |  |  | 268.68 |  |  |  |  |
Options exercised |  | (349) |  |  | 115.87 |  |  |  |  |
Options forfeited / expired |  | (67) |  |  | 210.76 |  |  |  |  |
Outstanding as of December 31, 2022 |  | 1,586 |  |  | 193.17 |  |  | 7.7 |  | $ | 93.4 |
Vested and exercisable as of December 31, 2022 |  | 623 |  |  | 126.47 |  |  | 5.7 |  | $ | 68.0 |
Additional information related to stock option activity during the years ended December 31 follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Intrinsic value of options exercised |  | $ | 57.9 |  |  | $ | 72.8 |  |  | $ | 11.9 |
Restricted Stock Awards Restricted stock awarded under the Program is generally released to the recipient after a period of approximately three years. Unrecognized compensation cost from continuing operations related to restricted stock of $7.8 million as of December 31, 2022, is to be recognized over a weighted-average period of 1.7 years. A summary of restricted stock outstanding and activity follows:
|  | Number of Shares (in thousands) |  | Weighted-Average Grant Date Fair Value (per share) |  | Weighted-Average Contractual Term (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2021 |  | 155 |  |  | $ | 141.32 |  |  |  |  |
Shares granted |  | 42 |  |  | 227.44 |  |  |  |  |
Shares vested |  | (62) |  |  | 128.96 |  |  |  |  |
Shares forfeited |  | (10) |  |  | 169.47 |  |  |  |  |
Outstanding as of December 31, 2022 |  | 125 |  |  | 174.34 |  |  | 1.0 |  | $ | 29.4 |
Additional information related to restricted stock award activity during the years ended December 31 follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Weighted-average grant date fair value (per share) |  | $ | 227.44 |  |  | $ | 154.23 |  |  | $ | 147.78 |
Intrinsic value of restricted stock exercised |  | 15.7 |  |  | 11.8 |  |  | 9.6 |
Performance Share Awards Performance shares are granted for a three-year performance period, after which the actual number of performance shares earned by an employee is determined by the Company's attainment of a management objective which is based on the Company’s relative total stockholder return versus the S&P Midcap 400 Index® over a three-year time period. Unrecognized compensation cost from continuing operations related to performance share awards of $10.5 million as of December 31, 2022, is to be recognized over a weighted-average period of 1.8 years. For purposes of determining diluted earnings per share, the performance share awards are considered contingently issuable shares and are included in diluted earnings per share based upon the number of shares that would have been awarded had the conditions at the end of the reporting period continued until the end of the performance period. See Note 5 for further information regarding earnings per share computations. The Company utilizes the Monte-Carlo simulation approach based on a three-year measurement period to determine the fair value of performance shares. Such approach entails the use of assumptions regarding the future performance of the Company’s stock and those of the S&P Midcap 400 Index®. Those assumptions include expected volatility, risk-free interest rates, correlation coefficients and dividend reinvestment. Dividends accrue on the performance shares during the performance period and are to be paid in cash based upon the number of awards ultimately earned. A summary of performance shares outstanding and activity follows:
|  | Number of Shares (in thousands) |  | Weighted-Average Grant Date Fair Value (per share) |  | Weighted-Average Contractual Term (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2021 |  | 138 |  |  | $ | 196.15 |  |  |  |  |
Awards granted |  | 38 |  |  | 313.77 |  |  |  |  |
Awards vested |  | (89) |  |  | 154.23 |  |  |  |  |
Awards converted |  | 44 |  |  | 154.23 |  |  |  |  |
Awards forfeited |  | (3) |  |  | 246.70 |  |  |  |  |
Outstanding as of December 31, 2022 |  | 128 |  |  | 244.25 |  |  | 1.0 |  | $ | 30.1 |
Additional information related to performance share activity during the years ended December 31 follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Weighted-average grant date fair value (per share) |  | $ | 313.77 |  |  | $ | 213.13 |  |  | $ | 222.50 |
Intrinsic value of performance share awards exercised |  | 22.0 |  |  | 13.3 |  |  | 12.9 |
Restricted Stock Units Up to and including February 4, 2020, restricted stock units were awarded to eligible directors which are fully vested and expensed upon grant date. The restricted stock units are paid in shares of Company common stock after the director ceases to serve as a member of the Board, or if earlier, upon a change in control of the Company. Effective May 6, 2020, eligible directors are no longer issued restricted stock units, but instead are awarded restricted stock awards that vest on the earlier of (i) one year from the date of grant; (ii) the director’s retirement from the Board upon reaching age 72 or after completing 18 consecutive years of service on the Board; or (iii) a change in control of the Company. Additional information related to restricted stock unit activity during the year ended December 31, 2020 follows:
(in thousands, except per share amounts) |  |  |  |  |  | 2020
Restricted stock units granted |  |  |  |  |  | 8 |
Weighted-average grant date fair value (per share)(1) |  |  |  |  |  | $ | 161.41 |
(1)Restricted stock units' fair value is based on the closing market price of the stock on the respective dates of the grants. Stock Appreciation Rights Stock appreciation rights issued under the 2018 one-time grant discussed above, vested and were settled in cash on May 2, 2021, for $22.2 million. Deferred Compensation - Equity Certain employees are eligible to participate in the Company’s Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). Participants may elect to defer all or part of their restricted and performance shares. Participants have elected to defer an aggregate of 72 thousand and 84 thousand shares of Company common stock as of December 31, 2022 and 2021, respectively. Company stock held for future issuance of vested awards is classified as additional paid in capital in the Consolidated Balance Sheets and is recorded at vest date fair value. Such deferred shares are included in basic earnings per share.

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