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STOCK BASED AND DEFERRED COMPENSATION | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
STOCK BASED AND DEFERRED COMPENSATION | STOCK BASED AND DEFERRED COMPENSATION We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants. The 2018 Plan authorizes 6,600,000 shares of stock to be awarded, of which 731,405 shares remain available for grant at December 31, 2022. We believe that such awards provide a means of performance-based compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock and performance-based awards granted to senior executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date. Summary of Nonvested (Restricted) Shares and Units Activity: We grant time-based and performance-based restricted shares or units. Performance-based restricted shares and units are only granted to executive officers. All performance share awards only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors. The number of shares that may be issued to the award recipients may be greater or lesser than the target award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.
|  | Nonvested Restricted Share Activity (time-based) |  | Weighted Average Grant Date Fair Value |  | Nonvested Restricted Share Activity (performance- based) |  | Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020 |  | 834,620 |  |  | $ | 41.25 |  |  | 405,909 |  |  | $ | 40.20 |
Granted (1) |  | 225,593 |  |  | 72.51 |  |  | 80,193 |  |  | 61.06 |
Vested (Earned/Released) (1) |  | (234,842) |  |  | 38.80 |  |  | (178,174) |  |  | 34.10 |
Forfeited (2) |  | (34,754) |  |  | 46.31 |  |  | — |  |  | — |
Outstanding as of December 31, 2020 |  | 790,617 |  |  | 50.67 |  |  | 307,928 |  |  | 49.16 |
Granted (3) |  | 226,936 |  |  | 85.19 |  |  | 86,384 |  |  | 65.91 |
Vested (Earned/Released) (3) |  | (264,513) |  |  | 46.09 |  |  | (203,561) |  |  | 44.92 |
Forfeited (2) |  | (60,511) |  |  | 60.96 |  |  | — |  |  | — |
Outstanding at December 31, 2021 |  | 692,529 |  |  | 62.94 |  |  | 190,751 |  |  | 61.68 |
Granted (4) |  | 278,340 |  |  | 94.12 |  |  | 80,472 |  |  | 59.67 |
Vested (Earned/Released) (4) |  | (270,022) |  |  | 49.42 |  |  | (126,556) |  |  | 43.28 |
Forfeited (2) |  | (41,745) |  |  | 80.71 |  |  | — |  |  | — |
Outstanding at December 31, 2022 |  | 659,102 |  |  | $ | 80.52 |  |  | 144,667 |  |  | $ | 71.33 |
(1)Performance-based shares granted and earned/released for the year ended December 31, 2020 includes 24,054 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2017. These shares vested in February 2020. (2)Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are the result of failing to attain certain goals as outlined in our executive officers' compensation agreements. (3)Performance-based shares granted and earned/released for the year ended December 31, 2021 includes 37,425 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2018. These shares vested in March 2021. Performance-based shares granted for the year ended December 31, 2021 also includes 1,670 shares and 696 shares that were issued to our former General Counsel, who retired on December 15, 2021, as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the years ended December 31, 2019 and 2018, respectively. These shares vested in December 2021 in accordance with his employment agreement. (4)Performance-based shares granted and earned/released for the year ended December 31, 2022 includes 37,146 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2019. These shares vested in March 2022. Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation - Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (in thousands):
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Stock-based compensation expense |  | $ | 22,333 |  |  | $ | 20,069 |  |  | $ | 19,995 |
The following table includes additional information regarding our stock compensation plan (dollars in thousands):
|  | At December 31,
|  | 2022 |  | 2021
Unrecognized stock-based compensation cost |  | $ | 29,187 |  |  | $ | 25,007 |
Weighted average years expense recognition period |  | 1.98 |  | 1.97
Total equity awards outstanding (1) |  | 803,769 |  |  | 883,280 |
(1) Includes unvested restricted stock awards, restricted stock units and performance-based awards (assuming 100%/target payout). We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the years ended December 31, 2022, 2021 and 2020, other than minor administrative costs.

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