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OPTIONS AND AWARDS | 3 Months Ended
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Mar. 31, 2025
Share-Based Payment Arrangement [Abstract] |
OPTIONS AND AWARDS | OPTIONS AND AWARDS 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 condensed consolidated statements of income for the three months ended March 31, 2025 and 2024 was based on awards 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 stock incentive plan, the 2022 Omnibus Incentive Plan (the 2022 Plan), pursuant to which grants of the Company's securities may currently be made. 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 March 31, 2025, the total number of shares available for issuance under the 2022 Plan was 28. 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. Stock Options The Company used the following assumptions for stock options granted during the three months ended March 31, 2025 and 2024:
Grant Year |  | Options Granted |  | Weighted Average Risk-Free Rate |  | Expected Life |  | Weighted Average Volatility |  |  |  | Weighted Average Dividend Yield |  |
2025 |  | 152 |  | 4.3% |  | 6.2 years |  | 39.8% |  |  |  | 0.2% |  |
2024 |  | 181 |  | 4.3% |  | 6.1 years |  | 40.9% |  |  |  | 0.2% |  |
For the three months ended March 31, 2025 and 2024, the following represents the exercise price and fair value displayed at grant date for stock option grants:
Grant Year |  | Granted |  | Weighted Average Exercise Price |  | Weighted Average Fair Value of Options
2025 |  | 152 |  | $ | 126.34 |  |  | $ | 57.17 |
2024 |  | 181 |  | $ | 122.69 |  |  | $ | 56.23 |
The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the three months ended March 31, 2025 and 2024 and therefore, the intrinsic value was $0 at the date of grant. The following table represents the employee stock option activity during the three months ended March 31, 2025:
| Number of Options Outstanding |  | Weighted Average Exercise Price |  | Number of Options Vested |  | Weighted Average Exercise Price of Options Vested
January 1, 2025 | 3,987 |  |  | $ | 78.84 |  |  | 1,895 |  |  | $ | 52.64 |
Granted | 152 |  |  | 126.34 |  |  |  |  |
Forfeited | (14) |  |  | 111.49 |  |  |  |  |
Exercised | (106) |  |  | 47.47 |  |  |  |  |
March 31, 2025 | 4,019 |  |  | $ | 81.35 |  |  | 1,941 |  |  | $ | 55.85 |
The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of March 31, 2025 and December 31, 2024 is as follows:
Options |  | March 31, 2025 |  | December 31, 2024 |  |
Outstanding |  | $ | 198,136 |  |  | $ | 219,309 |  |  |
Vested |  | 142,748 |  |  | 152,011 |  |  |
Expected to vest |  | 52,289 |  |  | 63,243 |  |  |
The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options. The aggregate intrinsic value of options that vested during the three months ended March 31, 2025 and 2024 was $6,045 and $7,382, respectively. The total intrinsic value of options exercised during the three months ended March 31, 2025 and 2024 was $9,470 and $19,959, respectively. Restricted Stock Awards The Company granted 92 and 95 restricted stock awards during the three months ended March 31, 2025 and 2024, 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 three months ended March 31, 2025 and 2024 ranged from $126.34 to $134.58 and $116.65 to $122.69, respectively. The fair value per share includes quarterly stock awards to non-employee directors. Included in the restricted stock award grants are $8,003 and $6,165 of annual bonuses that were settled in vested restricted stock awards during the three months ended March 31, 2025 and 2024, respectively. A summary of the status of the Company's non-vested restricted stock awards as of March 31, 2025 and changes during the three months ended March 31, 2025, is presented below:
| Non-Vested Restricted Awards |  | Weighted Average Grant Date Fair Value
Nonvested at January 1, 2025 | 435 |  |  | $ | 102.71 |
Granted | 92 |  |  | 128.67 |
Vested | (101) |  |  | 115.25 |
Forfeited | (5) |  |  | 114.00 |
Nonvested at March 31, 2025 | 421 |  |  | $ | 105.22 |
During the three months ended March 31, 2025, the Company granted 3.6 automatic quarterly stock awards to non-employee directors for their service on the Company's board of directors. The fair value per share of these stock awards was $134.58 based on the market price on the grant date. Stock-based compensation expense Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three months ended March 31, 2025 and 2024 was as follows:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024 |  |
Stock-based compensation expense related to stock options |  |  |  |  | $ | 6,805 |  |  | $ | 4,988 |  |  |
Stock-based compensation expense related to restricted stock awards |  |  |  |  | 3,402 |  |  | 2,727 |  |  |
Stock-based compensation expense related to restricted stock awards to non-employee directors |  |  |  |  | 484 |  |  | 516 |  |  |
TOTAL |  |  |  |  | $ | 10,691 |  |  | $ | 8,231 |  |  |
In future periods, the Company expects to recognize approximately $86,128 and $37,841 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of March 31, 2025. Future stock-based compensation expense will be recognized over 3.7 weighted average years for both unvested options and restricted stock awards. There were 2,078 unvested and outstanding options as of March 31, 2025, of which 1,913 options are expected to vest. The weighted average contractual life for options outstanding, vested and expected to vest as of March 31, 2025 was 6.7 years.

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