Stock-based compensation expense consists of stock-based payment awards made to employees and directors, including employee stock options and restricted stock awards, based on estimated fair values. As stock-based compensation expense recognized in the Company’s consolidated statements of income for the years ended December 31, 2023, 2022, and 2021 was based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ.

2022 Omnibus Incentive Plan (2022 Plan) — The Company has one active stock incentive plan, the 2022 Omnibus Incentive Plan (the 2022 Plan). Including the shares rolled over from the 2017 Omnibus Incentive Plan, the 2022 Plan provides for the issuance of 3,452 shares of common stock. The number of shares available to be issued under the 2022 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) two shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). Non-employee director options, to the extent granted, will vest and become exercisable in three equal annual installments, or the length of the term if less than three years, on the completion of each year of service measured from the grant date. All other options generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years from the date of grant. At December 31, 2023, the total number of shares available for issuance under the 2022 Plan was 1,454.

The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility, expected option life, and forfeiture rates. The fair-value of the restricted stock awards at the grant date is based on the market price on the grant date, adjusted for forfeiture rates. The Company develops estimates based on historical data and market information, which can change significantly over time. The Black-Scholes model required the Company to make several key judgments including:

•The expected option term is calculated by the average of the contractual term of the options and the weighted average vesting period for all options. The calculation of the expected option term is based on the Company's experience due to sufficient history.

The Company granted 1,008, 581 and 621 stock options during the years ended December 31, 2023, 2022, and 2021, respectively. The Company used the following assumptions for stock options granted during the years ended December 31, 2023, 2022 and 2021:



Grant Year	Options Granted	Weighted Average Risk-Free Rate	Expected Life	Weighted Average Volatility	Weighted Average Dividend Yield
2023	1,008	4.3%	6.2 years	41.3%	0.2%
2022	581	2.8%	6.2 years	42.1%	0.3%
2021	621	1.0%	6.2 years	42.4%	0.3%

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the periods ended December 31, 2023, 2022 and 2021 and therefore, the intrinsic value was $0 at the date of grant.


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested




January 1, 2021	4,038	$	27.71	2,148	$	16.66
Granted	621	80.19
Forfeited	(105)	44.76
Exercised	(516)	17.80
December 31, 2021	4,038	$	36.60	2,183	$	21.02
Granted	581	85.74
Forfeited	(98)	59.52
Exercised	(688)	18.43
December 31, 2022	3,833	$	46.72	2,069	$	28.87
Granted	1,008	95.05
Forfeited	(91)	71.44
Exercised	(759)	24.21
December 31, 2023	3,991	$	62.65	1,887	$	39.58




	Stock Options Outstanding							Stock Options Vested
				Number Outstanding	Black-Scholes Fair Value		Remaining Contractual Life (Years)	Vested and Exercisable
Year of Grant	Exercise Price

2014	8.94	-	16.05	99	$	484	1	99
2015	18.20	-	21.39	175	1,369		2	175
2016	15.93	-	16.86	155	916		3	155
2017	15.80	-	19.41	194	1,138		4	194
2018	22.49	-	32.71	336	3,523		5	336
2019	41.07	-	45.76	510	8,014		6	383
2020	44.84	-	59.49	476	9,383		7	257
2021	73.47	-	83.64	513	16,844		8	189
2022	79.79	-	94.88	540	20,466		9	99
2023	$89.83	-	$98.83	993	43,566		10	—
TOTAL				3,991	$	105,703		1,887

The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options. At December 31, 2023, 2022 and 2021, the aggregate intrinsic value of options that vested during the years ended December 31, 2023, 2022 and 2021 was $31,658, $27,955, and $27,731, respectively. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $56,186, $47,441, and $34,278, respectively.

The Company granted 219, 233 and 222 restricted stock awards during the years ended December 31, 2023, 2022 and 2021, respectively. All awards were granted at an issue price of $0 and generally vest over five years. The fair value per share of restricted awards granted during the years ended December 31, 2023, 2022 and 2021 ranged from $89.83 to $98.31, $73.17 to $94.88 and $72.84 to $93.31, respectively. The fair value per share includes quarterly stock awards to non-employee directors.


	Non-Vested Restricted Awards	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2021	591	$	38.90
Granted	222	81.65
Vested	(244)	47.45
Forfeited	(20)	45.64
Nonvested at December 31, 2021	549	$	52.16
Granted	233	81.57
Vested	(269)	54.06
Forfeited	(26)	57.29
Nonvested at December 31, 2022	487	$	64.92
Granted	219	92.04
Vested	(255)	64.21
Forfeited	(20)	71.53
Nonvested at December 31, 2023	431	$	78.91

During the year ended December 31, 2023, the Company granted 18 quarterly stock awards to non-employee directors for their service on the Company's board of directors from the 2022 Plan. The fair value per share of these stock awards ranged from $89.94 to $98.31 based on the market price on the grant date.

On August 27, 2019, the Board approved the Long-Term Incentive Plan (the 2019 LTI Plan). The 2019 LTI Plan provides that certain employees of the Company who assisted in the consummation of the spin-off of Pennant from the Company in 2019 (spin-off transaction) were granted shares of restricted stock upon successful completion of the spin-off. The 2019 LTI Plan provides for the issuance of 500 shares of Pennant restricted stock. The shares are vested over five years at 20% per year on the anniversary of the grant date. If a recipient is terminated or voluntarily leaves the Company, all shares subject to restriction or not yet vested are entirely forfeited. The total stock-based compensation related to the 2019 LTI Plan was approximately $827, $836, and $854 for the years ended December 31, 2023, 2022 and 2021, respectively.


	Year Ended December 31,
		2023		2022		2021
Stock-based compensation expense related to stock options		$	17,221	$	11,361	$	8,459
Stock-based compensation expense related to restricted stock awards		11,845		9,920		8,385
Stock-based compensation expense related to stock options and restricted stock awards to non-employee directors		1,688		1,439		1,834
TOTAL		$	30,754	$	22,720	$	18,678

In future periods, the Company expects to recognize approximately $67,750 and $29,245 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of December 31, 2023. Future stock-based compensation expense will be recognized over 3.9 and 3.4 weighted average years for unvested options and restricted stock awards, respectively. There were 2,104 unvested and outstanding options as of December 31, 2023, of which 1,940 shares are expected to vest. The weighted average contractual life for options outstanding, vested and expected to vest as of December 31, 2023 was 6.7 years.