Stock Award Plans

12 Months Ended

Dec. 31, 2019

(10) Stock Award Plans

The Company has share-based compensation plans which are described below. The compensation cost that has been charged against earnings for the Company’s stock award plans and the income tax benefit recognized in the statement of earnings for stock awards for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands):

	2019		2018		2017
Compensation cost	$	13,612	$	19,104	$	11,460
Income tax benefit	$	3,368	$	5,903	$	4,333

The Company has an employee stock award plan for selected officers and other key employees which provides for the issuance of stock options, restricted stock awards and performance awards. On February 19, 2018, the employee stock award plan was amended to also allow for the granting of RSUs to selected officers and other key employees. Restricted stock and RSUs generally vest ratably over five years, however, the amendment included a provision for the continued vesting of unvested stock options and RSUs for employees who meet certain years of service and age requirements at the time of their retirement. The vesting change resulted in shorter expense accrual periods on stock options and RSUs granted after February 19, 2018 to employees who are nearing retirement and meet the service and age requirements.

The exercise price for each option equals the fair market value per share of the Company’s common stock on the date of grant. Substantially all stock options outstanding under the plan have terms of seven years and vest ratably over three years. No performance awards payable in stock have been awarded under the plan. At December 31, 2019, 1,356,969 shares were available for future grants under the employee plan and no outstanding stock options under the employee plan were issued with stock appreciation rights.

The following is a summary of the stock option activity under the employee plan described above for the year ended December 31, 2019:

	Outstanding Non- Qualified or Nonincentive Stock Awards			Weighted Average Exercise Price
Outstanding at December 31, 2018		464,702		$	69.85
Granted		114,429		$	74.57
Exercised		(74,825	)	$	64.83
Canceled or expired		(18,247	)	$	72.17
Outstanding at December 31, 2019		486,059		$	71.65

The following table summarizes information about the Company’s outstanding and exercisable stock options under the employee plan at December 31, 2019:

		Options Outstanding							Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Aggregated Intrinsic Value	Number Exercisable		Weighted Average Exercise Price		Aggregated Intrinsic Value
$	51.23		69,254		2.8	$	51.23			69,254	$	51.23
$	64.65 – $68.50		97,716		4.4	$	67.31			44,171	$	68.43
$	70.65 – $75.50		275,103		4.8	$	74.69			93,985	$	74.94
$	84.90 – $101.46		43,986		1.8	$	94.38			37,281	$	96.08
$	51.23 – $101.46		486,059		4.2	$	71.65	$8,936,000		244,691	$	70.28	$4,955,000

The following is a summary of the restricted stock award activity under the employee plan described above for the year ended December 31, 2019:

	Unvested Restricted Stock Award Shares			Weighted Average Grant Date Fair Value Per Share
Nonvested balance at December 31, 2018		214,216		$	64.73
Vested		(62,748	)	$	68.28
Forfeited		(16,799	)	$	63.10
Nonvested balance at December 31, 2019		134,669		$	63.28

No restricted stock awards were granted under the employee plan during 2019 or 2018. The weighted average grant date fair value of restricted stock awards granted under the employee plan for the year ended December 31, 2017 was $68.50.

The following is a summary of RSU activity under the employee plan described above for the year ended December 31, 2019:

	Unvested RSUs			Weighted Average Grant Date Fair Value Per Unit
Nonvested balance at December 31, 2018		141,055		$	75.59
Granted		146,650		$	74.46
Vested		(25,484	)	$	75.60
Forfeited		(7,054	)	$	74.93
Nonvested balance at December 31, 2019		255,167		$	74.96

The weighted average grant date fair value of RSUs granted for the years ended December 31, 2019 and 2018 was $74.46 and $75.59, respectively. No RSUs were granted during 2017.

The Company has a stock award plan for nonemployee directors of the Company which provides for the issuance of stock options and restricted stock. The director plan provides for automatic grants of restricted stock to nonemployee directors after each annual meeting of stockholders. In addition, the director plan allows for the issuance of stock options or restricted stock in lieu of cash for all or part of the annual director fee at the option of the director. The exercise prices for all options granted under the plan are equal to the fair market value per share of the Company’s common stock on the date of grant. The terms of the options are ten years. The restricted stock issued after each annual meeting of stockholders vests six months after the date of grant. Options granted and restricted stock issued in lieu of cash director fees vest in equal quarterly increments during the year to which they relate. At December 31, 2019, 461,133 shares were available for future grants under the director plan. The director stock award plan is intended as an incentive to attract and retain qualified independent directors.

The following is a summary of the stock option activity under the director plan described above for the year ended December 31, 2019:

	Outstanding Non- Qualified or Nonincentive Stock Awards			Weighted Average Exercise Price
Outstanding at December 31, 2018		131,104		$	70.14
Granted		2,652		$	84.90
Exercised		(18,000	)	$	49.51
Outstanding at December 31, 2019		115,756		$	73.68

The following table summarizes information about the Company’s outstanding and exercisable stock options under the director plan at December 31, 2019:

		Options Outstanding							Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value	Number Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	41.24 – $56.45		25,276		0.8	$	49.23			25,276	$	49.23
$	61.89 – $62.48		22,000		2.6	$	62.21			22,000	$	62.21
$	70.65 – $99.52		68,480		4.4	$	86.39			67,817	$	86.41
$	41.24 – $99.52		115,756		3.3	$	73.68	$2,134,000		115,093	$	73.62	$2,131,000

The following is a summary of the restricted stock award activity under the director plan described above for the year ended December 31, 2019:

	Unvested Restricted Stock Award Shares			Weighted Average Grant Date Fair Value Per Share
Nonvested balance at December 31, 2018		264		$	85.30
Granted		22,273		$	84.81
Vested		(20,798	)	$	84.91
Nonvested balance at December 31, 2019		1,739		$	83.68

The weighted average grant date fair value of restricted stock awards granted under the director plan for the years ended December 31, 2019, 2018, and 2017 were $84.81, $85.70, and $70.65, respectively.

The total intrinsic value of all stock options exercised under all of the Company’s plans was $1,655,000, $6,709,000 and $1,671,000 for the years ended December 31, 2019, 2018 and 2017, respectively. The actual tax benefit realized for tax deductions from stock option exercises was $410,000, $2,073,000 and $632,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

The total fair value of all the restricted stock vestings under all of the Company’s plans was $5,917,000, $12,936,000 and $8,485,000 for the years ended December 31, 2019, 2018 and 2017, respectively. The actual tax benefit realized for tax deductions from restricted stock vestings was $1,464,000, $3,997,000 and $3,208,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

The total fair value of all the RSU vestings under the Company’s employee plan was $1,727,000 for the year ended December 31, 2019. The actual tax benefit realized for tax deductions from RSU vestings was $427,000 for the year ended December 31, 2019. There were no RSU vestings for the years ended December 31, 2018 or 2017.

As of December 31, 2019, there was $2,313,000 of unrecognized compensation cost related to nonvested stock options, $4,226,000 related to restricted stock and $10,093,000 related to nonvested RSUs. The stock options are expected to be recognized over a weighted average period of approximately 1.3 years, restricted stock over approximately 1.4 years and RSUs over approximately 3.5 years.

The weighted average per share fair value of stock options granted during the years ended December 31, 2019, 2018 and 2017 was $22.77, $23.53 and $20.72, respectively. The fair value of the stock options granted during the years ended December 31, 2019, 2018 and 2017 was $2,666,000, $2,787,000 and $2,617,000, respectively. The Company currently uses treasury stock shares for restricted stock grants, RSU vestings and stock option exercises. The fair value of each stock option was determined using the Black-Scholes option pricing model. The key input variables used in valuing the stock options granted during the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019			2018			2017
Dividend yield	None			None			None
Average risk-free interest rate		2.5	%		2.7	%		2.0	%
Stock price volatility		28	%		27	%		27	%
Estimated option term	5.3 years			5.5 years			5.8 years