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Stock-Based Compensation Plans | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement, Noncash Expense [Abstract] |
Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS Pursuant to our Amended and Restated Incentive Compensation Plan (the “Incentive Plan”), at any time prior to April 12, 2031, we can grant stock-based awards in the form of restricted stock, restricted stock units and stock options to team members, officers, directors, and contractors. On April 12, 2021, our board of directors approved an amendment to the Incentive Plan, subject to shareholder approval, increasing the number of shares authorized for issuance by 750,000 shares, to 2,750,000 shares. Shareholder approval was received at our annual meeting of shareholders on July 21, 2021. The shares available for future grants under the Incentive Plan totaled 258,467 as of December 31, 2021. Stock option grants We grant time-based stock options to team members and directors in accordance with the Incentive Plan. Based on the terms of individual stock option grant agreements, the stock options: •vest and become exercisable in four equal annual installments beginning on the first anniversary of the date on which the options were granted, based on continuous employment or service, and •expire either six or ten years from the date of the grant. From December 2020 through June 2021, we granted 770,500 stock options, subject to shareholder approval of an amendment to the Incentive Plan (“Shareholder Approval”). Under GAAP, if a stock award is subject to shareholder approval, it is not considered granted for accounting purposes until that approval is received. Shareholder Approval was received at our annual meeting of shareholders on July 21, 2021. Accordingly, the accounting grant date of the 770,500 previously-awarded stock options is July 21, 2021. A summary of the stock option activity under the Incentive Plan for the year ended December 31, 2021, is presented below:
Stock Options |  | Number of Stock Options |  | Weighted Average Exercise Price Per Share |  | Aggregate Intrinsic Value (1) (in millions) |  | Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2020 |  | — |  |  | $ | — |  |  |  |  |
Granted |  | 778,500 |  |  | 349.17 |  |  |  |  |
Exercised |  | (35,251) |  |  | 333.94 |  |  |  |  |
Forfeited |  | (37,500) |  |  | 333.94 |  |  |  |  |
Outstanding as of December 31, 2021 |  | 705,749 |  |  | $ | 350.74 |  |  | $ | 237.8 |  |  | 5.7
Exercisable as of December 31, 2021 |  | 120,251 |  |  | $ | 333.94 |  |  | $ | 42.5 |  |  | 4.7
Unvested as of December 31, 2021 |  | 585,498 |  |  | $ | 354.18 |  |  | $ | 195.3 |  |  | 5.9
(1)The intrinsic value of stock options is the amount by which the market price of the stock as of December 31, 2021 exceeded the exercise price of the options. The grant-date weighted average fair value of stock options granted in 2021 was $188.43 per share. The total intrinsic value of stock options exercised during 2021 was $11.6 million. Net cash proceeds from the exercise of stock options in 2021 was $11.8 million. We estimated the fair value of each stock option on the date of grant using a Black-Scholes valuation model with the following assumptions:
Valuation Assumptions |  | 2021 |  |  |  |
Risk-free interest rate |  | 0.4% | - | 0.7% |  |  |  |
Expected stock price volatility |  | 37.0% | - | 39.0% |  |  |  |
Expected life of stock options (in years) |  | 3.0 | - | 4.5 |  |  |  |
Restricted Stock Units We grant performance-based and time-based restricted stock units to team members and directors in accordance with the Incentive Plan. The grant-date fair value per share is estimated to equal the market price of our common stock on the date of grant. Each restricted stock unit represents and has a value equal to one share of common stock. Based on the terms of individual restricted stock unit grant agreements, restricted stock units vest under one of the following methods: •For our former Chief Executive Officer, over a period of ten years, based on continuous employment and the cumulative improvement in our annual adjusted economic profit. •For certain team members, over a period of three years, based on continuous employment. •For certain team members, over a period of one to four years, based on continuous employment and the compounded annual growth rate in our adjusted net income per diluted share, a non-GAAP financial measure. •For certain directors, over a period of five years, based upon the compounded annual growth rate in our adjusted net income per diluted share, a non-GAAP financial measure. A summary of the restricted stock unit (“RSU”) activity under the Incentive Plan for the year ended December 31, 2021, is presented below:
Restricted Stock Units |  | Number of Restricted Stock Units |  | Weighted Average Grant-Date Fair Value Per Share |  | Aggregate Intrinsic Value (2) (in millions) |  | Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2020 |  | 412,602 |  |  | $ | 138.65 |  |  |  |  |
Granted |  | 7,302 |  |  | 366.07 |  |  |  |  |
Converted |  | (11,416) |  |  | 190.32 |  |  |  |  |
Forfeited |  | (31,653) |  |  | 112.39 |  |  |  |  |
Outstanding as of December 31, 2021 (1) |  | 376,835 |  |  | $ | 143.70 |  |  | $ | 259.1 |  |  | 2.5
Vested as of December 31, 2021 |  | 366,683 |  |  | $ | 136.81 |  |  | $ | 252.2 |  |  | 2.3
(1)No RSUs outstanding at December 31, 2021 were convertible to shares of common stock. (2)The intrinsic value of RSUs is measured by applying the closing stock price as of December 31, 2021 to the applicable number of units. The grant-date weighted average fair value of RSUs granted in 2021, 2020 and 2019 was $366.07, $436.89, and $453.64, respectively. The total intrinsic value of RSUs converted to common stock during 2021, 2020 and 2019 was $7.9 million, $7.6 million, and $36.9 million, respectively. During 2021, we recognized a $3.0 million reversal of stock-based compensation expense due to the forfeiture of 31,000 unvested RSUs upon the retirement of our former Chief Executive Officer in May 2021. Restricted Stock Prior to 2020, we granted performance-based and time-based shares of restricted stock to team members in accordance with the Incentive Plan. The grant-date fair value per share was estimated to equal the market price of our common stock on the date of grant. Based on the terms of individual restricted stock grant agreements, shares vest under one of the following methods: •For our former Chief Executive Officer, over a period of 15 years, based on continuous employment and a combination of the cumulative improvement in our annual adjusted economic profit, a non-GAAP financial measure, and the attainment of annual adjusted economic profit targets. •For all other team members, over a period of three years, based on continuous employment. A summary of the non-vested restricted stock activity under the Incentive Plan for the year ended December 31, 2021 is presented below:
Restricted Stock |  | Number of Shares |  | Weighted Average Grant-Date Fair Value Per Share
Non-vested as of December 31, 2020 |  | 122,718 |  |  | $ | 117.88 |
Vested |  | (12,130) |  |  | 177.77 |
Forfeited |  | (109,085) |  |  | 106.76 |
Non-vested as of December 31, 2021 |  | 1,503 |  |  | $ | 441.54 |
No shares of restricted stock were granted in 2020 and 2021. The grant-date weighted average fair value of shares granted in 2019 was $441.54. The total fair value of shares vested was $8.3 million in 2021, $5.1 million in 2020 and $7.9 million in 2019. During 2021, we recognized an $8.5 million reversal of stock-based compensation expense due to the forfeiture of 109,000 shares of unvested restricted stock upon the retirement of our former Chief Executive Officer in May 2021. Stock-based compensation expense Stock-based compensation expense consists of the following:
(In millions) | For the Years Ended December 31,
| 2021 |  | 2020 |  | 2019
Stock options | $ | 33.7 |  |  | $ | — |  |  | $ | — |
Restricted stock units | (1.1) |  |  | 4.2 |  |  | 4.6 |
Restricted stock | (7.8) |  |  | 2.0 |  |  | 3.0 |
Total | $ | 24.8 |  |  | $ | 6.2 |  |  | $ | 7.6 |
While the stock-based awards are often expected to vest in equal, annual installments over the corresponding requisite service periods of the grants, for certain grants the related stock-based compensation expense is not recognized on a straight-line basis over the same periods. For restricted stock and restricted stock units granted prior to 2021, each installment was accounted for as a separate award and, as a result, the fair value of each installment is being recognized as stock-based compensation expense on a straight-line basis over the related expected vesting period. Assuming performance targets are achieved in the periods currently estimated, we expect to recognize the remaining expense for stock-based awards outstanding as of December 31, 2021 over a weighted average period of 1.5 years, as follows:
(In millions) |  |  |  |  |  |  |  |
For the Years Ended December 31, |  | Stock Options |  | Restricted Stock Units |  | Restricted Stock |  | Total Projected Expense
2022 |  | $ | 34.8 |  |  | $ | 1.0 |  |  | $ | — |  |  | $ | 35.8 |
2023 |  | 34.3 |  |  | 0.7 |  |  | — |  |  | 35.0 |
2024 |  | 34.2 |  |  | 0.1 |  |  | — |  |  | 34.3 |
2025 |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
2026 |  | — |  |  | — |  |  | — |  |  | — |
Thereafter |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 105.8 |  |  | $ | 1.8 |  |  | $ | — |  |  | $ | 107.6 |

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