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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We issue restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the Company's 2018 Equity Incentive Plan. RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: (1) based on our internal financial performance metrics and (2) based on our total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group. At the time of vesting, the vested shares of common stock are issued in the employee’s name. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). RSUs granted to directors are only time-based and generally vest over one year. The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.
Year Ended December 31, | 2020 |  | 2019 |  | 2018
Fair value per stock award | $ | 94.98 |  |  | $ | 134.97 |  |  | $ | 128.70 |
Grant date stock price | $ | 83.93 |  |  | $ | 104.51 |  |  | $ | 89.42 |
Assumptions: |  |  |  |  |
Aptar's stock price expected volatility | 23.80 | % |  | 16.50 | % |  | 12.30 | %
Expected average volatility of peer companies | 48.50 | % |  | 31.90 | % |  | 27.50 | %
Correlation assumption | 63.50 | % |  | 37.40 | % |  | 20.20 | %
Risk-free interest rate | 0.31 | % |  | 2.19 | % |  | 2.42 | %
Dividend yield assumption | 1.72 | % |  | 1.30 | % |  | 1.43 | %
A summary of RSU activity as of December 31, 2020, and changes during the period then ended is presented below:
| Time-Based RSUs |  | Performance-Based RSUs
| Units |  | Weighted Average Grant-Date Fair Value |  | Units |  | Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2020 | 480,729 |  | $ | 95.45 |  |  | 181,680 |  | $ | 117.26 |
Granted | 241,812 |  | 87.13 |  |  | 417,313 |  | 93.08 |
Vested | (138,606) |  | 86.84 |  |  | — |  | — |
Forfeited | (7,737) |  | 97.80 |  |  | (8,929) |  | 111.60 |
Nonvested at December 31, 2020 | 576,198 |  | $ | 92.47 |  |  | 590,064 |  | $ | 100.27 |
Included in the December 31, 2020 time-based RSUs are 12,379 units awarded to non-employee directors and 11,490 units vested related to non-employee directors.
Year Ended December 31, | 2020 |  | 2019 |  | 2018
Compensation expense | $ | 32,085 |  |  | $ | 18,197 |  |  | $ | 8,703 |
Fair value of units vested | 12,038 |  |  | 4,566 |  |  | 2,980 |
Intrinsic value of units vested | 14,446 |  |  | 5,360 |  |  | 3,708 |
The actual tax benefit realized for the tax deduction from RSUs was approximately $5.8 million for the year ended December 31, 2020. As of December 31, 2020, there was $43.3 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted average period of 1.6 years. Historically we issued stock options to our employees and non-employee directors. Beginning in 2019, we no longer issue stock options. Stock options were awarded with the exercise price equal to the market price on the date of grant and generally vest over three years and expire 10 years after grant. For stock option grants, we used historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the Stock Awards Plans was $14.82 per share in 2018. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Stock Awards Plans: |
Year Ended December 31, | 2018
Dividend Yield | 1.5 | %
Expected Stock Price Volatility | 14.2 | %
Risk-free Interest Rate | 2.8 | %
Expected Life of Option (years) | 6.6
A summary of option activity under our stock plans as of December 31, 2020, and changes during the period then ended is presented below:
| Stock Awards Plans |  | Director Stock Option Plans
| Options |  | Weighted Average Exercise Price |  | Options |  | Weighted Average Exercise Price
Outstanding, January 1, 2020 | 5,044,180 |  |  | $ | 68.32 |  |  | 135,251 |  |  | $ | 58.45 |
Granted | — |  |  | — |  |  | — |  |  | — |
Exercised | (1,035,649) |  |  | 60.81 |  |  | (36,051) |  |  | 52.00 |
Forfeited or expired | (10,484) |  |  | 80.13 |  |  | — |  |  | — |
Outstanding at December 31, 2020 | 3,998,047 |  |  | $ | 70.28 |  |  | 99,200 |  |  | $ | 60.80 |
Exercisable at December 31, 2020 | 3,845,344 |  |  | $ | 69.45 |  |  | 99,200 |  |  | $ | 60.80 |
Weighted-Average Remaining Contractual Term (Years): |  |  |  |  |  |  |
Outstanding at December 31, 2020 | 4.8 |  |  |  | 2.6 |  |
Exercisable at December 31, 2020 | 4.6 |  |  |  | 2.6 |  |
Aggregate Intrinsic Value: |  |  |  |  |  |  |
Outstanding at December 31, 2020 | $ | 256,760 |  |  |  |  | $ | 7,311 |  |  |
Exercisable at December 31, 2020 | $ | 249,299 |  |  |  |  | $ | 7,311 |  |  |
Intrinsic Value of Options Exercised During the Years Ended: |  |  |  |  |  |  |
December 31, 2020 | $ | 59,179 |  |  |  |  | $ | 2,318 |  |  |
December 31, 2019 | $ | 87,251 |  |  |  |  | $ | 1,172 |  |  |
December 31, 2018 | $ | 72,951 |  |  |  |  | $ | 2,286 |  |  |
Year Ended December 31, | 2020 |  | 2019 |  | 2018
Compensation expense (included in SG&A) | $ | 1,693 |  |  | $ | 4,768 |  |  | $ | 8,677 |
Compensation expense (included in Cost of sales) | 370 |  |  | 928 |  |  | 2,181 |
Compensation expense, Total | $ | 2,063 |  |  | $ | 5,696 |  |  | $ | 10,858 |
Compensation expense, net of tax | 1,573 |  |  | 4,507 |  |  | 8,391 |
Grant date fair value of options vested | 7,601 |  |  | 17,492 |  |  | 16,518 |
The reduction in stock option expense is due to our move to RSUs as discussed above. Cash received from option exercises was approximately $68.6 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $14.5 million in the year ended December 31, 2020. As of December 31, 2020, the remaining valuation of stock option awards to be expensed in future periods was $0.2 million and the related weighted-average period over which it is expected to be recognized is 0.2 years.

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