Share-Based Payments

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock Compensation Expense

Stock-based compensation expense arising from our employee stock purchase plan and share-based compensation plans recognized within operating expenses in the consolidated statements of income amounted to $5.5 million and $5.3 million for the three months ended March 31, 2024 and 2023.

Restricted Stock Awards. Restricted stock awards are granted to executive officers and other key employees and members of the Company's Board of Directors. The awards vest, depending on award recipient, either ratably over a period of three or four years or cliff vest after four years. Vesting is accelerated in certain circumstances, including upon retirement.

The following is a summary of stock award activity for the three months ended March 31, 2024:


	Shares	Weighted-Average Grant-Date Fair Value

Nonvested, January 1, 2024	148,913	$	56.48
Granted	18,175	90.67
Vested	(16,283)	55.02
Forfeited	—	—
Nonvested, March 31, 2024	150,805	$	60.76

The fair value of vested awards was $1.5 million and $1.2 million during the three months ended March 31, 2024 and 2023.

Stock Performance Awards. Stock performance awards are granted to executive officers and certain other key employees. The awards vest at the end of a three-year performance period. The number of common shares awarded, if any, at the end of the performance period ranges from zero to 150% of the target amount based on two performance measures: i) total shareholder return relative to a peer group and ii) ROE. Vesting of the awards is accelerated in certain circumstances, including on retirement. The number of common shares awarded on an accelerated vesting is based on actual performance at the end of the performance period.

The grant date fair value of stock performance awards granted during the three months ended March 31, 2024 and 2023 was determined using a Monte Carlo fair value simulation model incorporating the following assumptions:


	2024		2023

Risk-free interest rate	4.16	%	4.15	%
Expected term (in years)	3		3
Expected volatility	35.10	%	34.00	%
Dividend yield	2.40	%	2.50	%

The risk-free interest rate was derived from yields on U.S. government bonds of a similar term. The expected term of the award is equal to the three-year performance period. Expected volatility was estimated based on actual historical volatility of our common stock. Dividend yield was estimated based on historical and future yield estimates.

The following is a summary of stock performance award activity for the three months ended March 31, 2024 (share amounts reflect awards at target):


	Shares	Weighted-Average Grant-Date Fair Value

Nonvested, January 1, 2024	194,200	$	50.33
Granted	43,400	94.45
Vested	(79,000)	38.34
Forfeited	—	—
Nonvested, March 31, 2024	158,600	$	68.37

The fair value of vested awards was $11.1 million and $5.3 million during the three months ended March 31, 2024 and 2023, respectively.