STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2024

Stock Based Compensation

Shares Available For Issuance

In the fiscal year ended December 31, 2016, we adopted the 2016 Incentive Plan (“2016 Plan”). Under the 2016 Plan, we may grant awards up to an aggregate amount of shares equal to the sum of: (i) 2,250 shares of Class A common stock (subject to adjustment in the event of stock splits and other similar events), plus (ii) such additional number of shares of Class A common stock (up to 2,723 shares) as is equal to the sum of the number of shares of Class A common stock that remained available for grant under the 2006 Stock Incentive Plan (“2006 Plan”) immediately prior to the expiration of the 2006 Plan and the number of shares of Class A common stock subject to awards granted under the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us. As of March 31, 2024, there were 456 Class A common stock equivalents available for future grant under the 2016 Plan.

Stock Options

Stock options are granted at a price equal to the prevailing fair value of our Class A common stock at the date of grant. Generally, stock options granted have a term not to exceed ten years and vest over a one-year to five-year period from the date of grant.

The fair value of each stock option granted is estimated using a Black-Scholes option-pricing model, which requires extensive use of accounting judgment and financial estimation, including estimates of the expected term stock option holders will retain their vested stock options before exercising them and the estimated volatility of our Class A common stock price over the expected term.

A summary of stock option activity follows:


	Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding, December 31, 2023	129	$	66.03
Granted	—	$	—
Exercised	—	$	—
Forfeited	—	$	—
Outstanding, March 31, 2024	129	$	66.03	7.2	$	4,231
Exercisable, March 31, 2024	49	$	40.60	4.9	$	2,828

Stock-based compensation expense related to stock options was $151 during the three months ended March 31, 2024, as compared to $123 during the three months ended March 31, 2023. As of March 31, 2024, we had $1,957 of unrecognized stock-based compensation expense related to outstanding stock options to be recognized over a weighted average period of 3.6 years.

During the three months ended March 31, 2024, the aggregate intrinsic value of stock options exercised was zero dollars.

Other Stock Awards

Restricted stock awards, restricted stock units and performance stock units, with the exception of market-based performance stock units, are granted at a price equal to the fair value of our Class A common stock at the date of grant. The fair value of each market-based performance stock unit is estimated using a Monte Carlo pricing model, which requires extensive use of accounting judgment and financial estimation, including the estimated share price appreciation plus, if applicable, the value of dividends of our Class A common stock as compared to the Russell 2000 Index over the requisite service period.

Typically, restricted stock awards granted to non-employee directors vest incrementally over a three-year period beginning on the first anniversary of the date of grant. Restricted stock units granted to non-employee directors vest in full on the first anniversary of the grant date. Restricted stock units granted to employees vest incrementally over an identified service period, typically three years, beginning on the grant date based on continued employment. Performance stock units granted to employees, including market-based performance stock units, vest at a future date following the grant date and are based on the attainment of performance targets and market achievements, as applicable.

A summary of restricted stock award, restricted stock unit and performance stock unit activity follows:


	Restricted Stock Awards, Restricted Stock Units, and Performance Stock Units (1)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding, December 31, 2023	181	$	84.82
Granted	93	$	99.70
Class A Common Stock Vested	(34)	$	76.16
Forfeited	(1)	$	77.94
Outstanding, March 31, 2024	239	$	91.82	2.4	$	23,649
Unvested, March 31, 2024	414	$	93.99	2.2	$	40,908

(1)Performance stock unit grants, including market-based performance stock units, are included at the 100% attainment level. Attainment of the maximum performance targets and market achievements would result in the issuance of an additional 175 shares of Class A common stock currently included in unvested.

Stock-based compensation expense related to restricted stock awards, restricted stock units and performance stock units was $1,875 during the three months ended March 31, 2024, as compared to $1,762 during the three months ended March 31, 2023.

During the three months ended March 31, 2024, the total fair value of other stock awards vested was $3,165.

As of March 31, 2024, total unrecognized stock-based compensation expense related to outstanding restricted stock awards was $3, which will be recognized over a weighted average period of 0.2 years. As of March 31, 2024, total unrecognized stock-based compensation expense related to outstanding restricted stock units was $8,417, which will be recognized over a weighted average period of 2.6 years. As of March 31, 2024, total expected unrecognized stock-based compensation expense related to outstanding performance stock units was $8,626, which will be recognized over a weighted average period of 2.2 years.

The weighted average fair value of market-based performance stock units granted during the three months ended March 31, 2024 was $105.35 per award, which was calculated using a Monte Carlo pricing model assuming a risk-free interest rate of 4.31% and an expected volatility of 25.3% assuming no expected dividend yield. Risk-free interest rate is based on the U.S. Treasury yield curve for the expected service period of the award. Expected volatility is calculated using the daily volatility of our Class A common stock over the expected service period of the award.

The Monte Carlo pricing model requires extensive use of accounting judgment and financial estimation. Application of alternative assumptions could produce significantly different estimates of the fair value of stock-based compensation and consequently, the related amounts recognized in the consolidated statements of operations.

We also recorded $109 of stock-based compensation expense related to the Second Amended and Restated 1997 Employee Stock Purchase Plan during the three months ended March 31, 2024, as compared to $90 during the three months ended March 31, 2023.

Accumulated Other Comprehensive Income (Loss), Net of Tax

A summary of the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax follows:



	Interest Rate Swaps
Balance, December 31, 2023	$	(1,080)

Other comprehensive income before reclassifications	10,753
Income reclassified from accumulated other comprehensive income (loss) into interest expense	(2,330)
Income tax provision related to items of other comprehensive income	(2,308)
Other comprehensive income, net of tax	6,115
Balance, March 31, 2024	$	5,035

A summary of reclassifications out of accumulated other comprehensive income (loss), net of tax into earnings follows:


	Three Months Ended March 31,
	2024		2023
Accumulated Other Comprehensive Income (Loss), Net of Tax	Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss), Net of Tax				Affected Line Item in the Consolidated Statements of Operations
Interest rate swaps	$	(2,330)	$	(1,106)		Interest expense
	2,330		1,106			(Loss) income before income taxes
	642		303			(Benefit) provision for income taxes
	$	1,688	$	803		Net (loss) income