XML 76 R11.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Stock-Based Compensation Plans | 12 Months Ended
--- | ---
Dec. 31, 2019
Stock-Based Compensation Plans [Abstract] |
Stock-Based Compensation Plans | 4. Stock-Based Compensation Plans We have three stock incentive plans under which a total of 5.1 million shares were able to be issued to key employees and directors through a grant of stock options, stock awards and/or performance stock units (“PSUs”). The Compensation/Incentive Committee (“CIC”) of the Board of Directors administers these plans. We grant stock options, stock awards and PSUs to our officers, other key employees and directors to better align their long-term interests with those of our shareholders. We grant stock options at an exercise price equal to the market price of our stock on the date of grant. Options vest ratably annually over a three year period. Those granted after 2014 have a contractual life of 5 years; those granted prior to 2014 have a contractual life of 10 years. Unrestricted stock awards generally are granted to our non-employee directors annually at the time of our annual meeting. PSUs are contingent upon achievement of multi-year earnings per share (“EPS”) targets or total shareholder return (“TSR”) targets. Upon achievement of targets, PSUs are converted to unrestricted shares of stock. We recognize the cost of stock options, stock awards and PSUs on a straight-line basis over the service life of the award, generally the vesting period. We include the cost of all stock-based compensation in selling, general and administrative expense. In May 2019, the CIC granted 2,313 unrestricted shares of stock to the Company’s outside directors. PERFORMANCE AWARDS The CIC determines a targeted number of PSUs to be granted to each participant. A participant can ultimately receive up to 200% of the targeted PSUs based upon exceeding the respective EPS and TSR target. In February 2017, 2018 and 2019, the CIC granted PSUs contingent upon the achievement of certain TSR targets as compared to the TSR of a group of peer companies for the three year measurement period, at which date the awards may vest. We utilize a Monte Carlo simulation approach in a risk-neutral framework with inputs including historical volatility and the risk-free rate of interest to value these TSR awards. We amortize the total estimated cost over the service period of the award. In February 2017, 2018 and 2019, the CIC granted PSUs contingent on the achievement of certain EPS targets over the three year measurement period. At the end of each reporting period, we estimate the number of shares of stock we believe will ultimately vest and record that expense over the service period of the award. Comparative data for the PSUs include:
|  | 2019 Awards |  |  | 2018 Awards |  |  | 2017 Awards |
TSR Awards |  |  |  |  |  |  |  |  |
Shares of stock granted - target |  | 7,029 |  |  | 7,523 |  |  | 7,304 |
Per-share fair value | $ | 434.51 |  | $ | 341.20 |  | $ | 226.95 |
Volatility |  | 21.4 | % |  | 22.9 | % |  | 21.8 | %
Risk-free interest rate |  | 2.45 | % |  | 2.34 | % |  | 1.44 | %
EPS Awards |  |  |  |  |  |  |  |  |
Shares of stock granted - target |  | 7,029 |  |  | 7,523 |  |  | 7,304 |
Per-share fair value | $ | 322.40 |  | $ | 256.29 |  | $ | 172.60 |
Common Assumptions |  |  |  |  |  |  |  |  |
Service period (years) |  | 2.9 |  |  | 2.9 |  |  | 2.9 |
Three-year measurement period ends December 31, |  | 2021 |  |  | 2020 |  |  | 2019 |
‎ The following table summarizes total stock option, stock award and PSU activity during 2019:
| Stock Options |  | Stock Awards |  | Performance Units (PSUs)
|  |  |  |  |  |  |  |  |  |  |  |  |  | Weighted |  |  |  |  |
|  |  |  | Weighted Average |  |  | Aggregate |  |  |  |  | Average |  |  |  |  | Weighted
|  |  |  |  |  | Remaining |  |  | Intrinsic |  |  |  |  | Grant-Date |  | Number of |  |  | Average
| Number of |  |  | Exercise |  | Contractual |  |  | Value |  | Number of |  |  | Per-Share |  | Target |  |  | Grant-Date
| Options |  |  | Price |  | Life (Years) |  |  | (thousands) |  | Awards |  |  | Fair Value |  | Units |  |  | Price
Outstanding at January 1, 2019 | 1,395,034 |  | $ | 181.82 |  |  |  |  |  |  | - |  | $ | - |  | 48,160 |  | $ | 207.17
Granted | 287,010 |  |  | 413.19 |  |  |  |  |  |  | 2,313 |  |  | 331.69 |  | 27,688 |  |  | 253.44
Exercised/Vested | (464,661) |  |  | 139.78 |  |  |  |  |  |  | (2,313) |  |  | 331.69 |  | (32,136) |  |  | 136.48
Canceled/ Forfeited | (11,435) |  |  | 215.86 |  |  |  |  |  |  | - |  |  | - |  | (734) |  |  | 269.08
Outstanding at December 31, 2019 | 1,205,948 |  | $ | 252.77 |  | 3.3 |  | $ | 225,226 |  | - |  | $ | - |  | 42,978 |  | $ | 288.78
Vested and expected to vest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
at December 31, 2019 | 1,205,948 |  | $ | 252.77 |  | 3.3 |  | $ | 225,226 |  | - |  | *$ | - |  | 82,603 |  | *$ | 290.11
Exercisable at December 31, 2019 | 654,424 |  |  | 172.20 |  | 2.6 |  |  | 174,949 |  | n.a. |  |  | n.a. |  | n.a. |  |  | n.a.
* Amount includes 27,761 share units which vested and were converted to shares of stock and distributed in the first quarter of 2020.
We estimate the fair value of stock options using the Black-Scholes valuation model. We determine expected term, volatility, and dividend yield and forfeiture rate based on our historical experience. We believe that historical experience is the best indicator of these factors. Comparative data for stock options, stock awards and PSUs include (in thousands, except per-share amounts):
|  | Years Ended December 31,
|  | 2019 |  |  | 2018 |  |  | 2017
Total compensation expense of stock-based compensation |  |  |  |  |  |  |  |
plans charged against income | $ | 21,338 |  | $ | 19,229 |  | $ | 16,256
Total income tax benefit recognized in income for stock |  |  |  |  |  |  |  |
based compensation expense charged against income |  | 5,373 |  |  | 4,788 |  |  | 5,690
Total intrinsic value of stock options exercised |  | 106,793 |  |  | 102,144 |  |  | 50,192
Total intrinsic value of stock awards vested during the period |  | 767 |  |  | 4,003 |  |  | 6,983
Per-share weighted average grant-date fair value of |  |  |  |  |  |  |  |
stock awards granted |  | 331.69 |  |  | 333.75 |  |  | 203.52
The assumptions we used to value stock option grants are as follows:
|  | 2019 |  |  | 2018 |  |  | 2017
Stock price on date of issuance | $ | 413.19 |  | $ | 306.70 |  | $ | 231.91
Grant date fair value per share | $ | 78.06 |  | $ | 67.16 |  | $ | 46.27
Number of options granted |  | 287,010 |  |  | 246,350 |  |  | 330,550
Expected term (years) |  | 4.0 |  |  | 4.0 |  |  | 4.0
Risk free rate of return |  | 1.65 | % |  | 2.99 | % |  | 1.86
Volatility |  | 21.25 | % |  | 22.42 | % |  | 22.80
Dividend yield |  | 0.3 | % |  | 0.4 | % |  | 0.5
Forfeiture rate |  | - |  |  | - |  |  | -
Other data for stock options, stock awards and PSUs for 2018 include (dollar amounts in thousands):
|  | Stock |  |  | Stock |  |  |
|  | Options |  |  | Awards |  |  | PSUs
Total unrecognized compensation at the end of the year | $ | 34,640 |  | $ | - |  | $ | 7,475
Weighted average period over which unrecognized compensation to be recognized (years) |  | 2.3 |  |  | - |  |  | 1.7
Actual income tax benefit realized | $ | 25,193 |  | $ | 181 |  | $ | 2,489
Aggregate intrinsic value vested and expected to vest | $ | 225,226 |  | $ | - |  | $ | 36,306
EMPLOYEE STOCK PURCHASE PLAN (“ESPP”) The ESPP allows eligible participants to purchase shares of stock through payroll deductions at current market value. We pay administrative and broker fees associated with the ESPP. Shares of stock purchased for the ESPP are purchased on the open market and credited directly to participants’ accounts. In accordance with the FASB’s guidance, the ESPP is non-compensatory.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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