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Equity Incentive Plans | 3 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Equity Incentive Plans | 7. EQUITY INCENTIVE PLANS The Board adopted The GEO Group, Inc. Amended and Restated 2018 Stock Incentive Plan (the "2018 Amended and Restated Plan"), which was approved by the Company's shareholders on April 28, 2021. The 2018 Amended and Restated Plan supersedes the previous 2018 Stock Incentive Plan. As of the date the 2018 Amended and Restated Plan was approved by the Company’s shareholders, it provided for a reserve of an additional 16,800,000 shares of common stock that may be issued pursuant to awards granted under the 2018 Amended and Restated Plan. The Company filed a Form S-8 registration statement related to the 2018 Amended and Restated Plan on June 15, 2021. Subsequently, the Board adopted The GEO Group, Inc. Second Amended and Restated 2018 Stock Incentive Plan which was approved by the Company's shareholders and became effective on May 3, 2024. Refer to Note 15-Subsequent Events for further information. Stock Options The Company uses a Black-Scholes option valuation model to estimate the fair value of each time-based or performance-based option awarded. A summary of the activity of stock option awards issued and outstanding under Company plans was as follows for the three months ended March 31, 2024:
|  | Shares |  |  | Wtd. Avg. Exercise Price |  |  | Wtd. Avg. Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value |
|  | (in thousands) |  |  |  |  |  |  |  |  | (in thousands) |
Options outstanding at January 1, 2024 |  |  | 2,038 |  |  | $ | 16.94 |  |  |  | 5.48 |  |  | $ | 2,558 |
Options granted |  |  | — |  |  |  | — |  |  |  |  |  |  |
Options exercised |  |  | (73 | ) |  |  | 7.20 |  |  |  |  |  |  |
Options forfeited/canceled/expired |  |  | (89 | ) |  |  | 19.58 |  |  |  |  |  |  |
Options outstanding at March 31, 2024 |  |  | 1,876 |  |  | $ | 17.19 |  |  |  | 5.31 |  |  | $ | 4,531 |
Options vested and expected to vest at March 31, 2024 |  |  | 1,828 |  |  | $ | 17.43 |  |  |  | 5.22 |  |  | $ | 4,239 |
Options exercisable at March 31, 2024 |  |  | 1,466 |  |  | $ | 19.82 |  |  |  | 4.48 |  |  | $ | 2,301 |
For the three months ended March 31, 2024 and 2023, the amount of stock-based compensation expense related to stock options was $0.2 million and $0.1 million, respectively. As of March 31, 2024, the Company had $1.3 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 2.7 years. Restricted Stock Compensation expense for nonvested stock awards is recorded over the vesting period based on the fair value at the date of grant. Generally, the restricted stock awards vest in equal increments generally over either a three or four-year period. The fair value of restricted stock awards, which do not contain a market-based vesting condition, is determined using the closing price of the Company's common stock on the date of grant. The Company has historically issued share-based awards with service-based, performance-based and market-based vesting criteria. A summary of the activity of restricted stock outstanding is as follows for the three months ended March 31, 2024:
|  | Shares |  |  | Wtd. Avg. Grant Date Fair Value |
|  | (in thousands) |  |  |  |
Restricted stock outstanding at January 1, 2024 |  |  | 3,999 |  |  | $ | 7.78 |
Granted |  |  | 929 |  |  |  | 13.82 |
Vested |  |  | (1,891 | ) |  |  | 7.79 |
Forfeited/canceled |  |  | (20 | ) |  |  | 8.08 |
Restricted stock outstanding at March 31, 2024 |  |  | 3,017 |  |  | $ | 8.67 |
During the three months ended March 31, 2024, the Company granted 929,292 shares of restricted stock to certain employees and executive officers. Of these awards, 318,807 are market and performance-based awards which will be forfeited if the Company does not achieve certain annual metrics during 2024, 2025 and 2026. The vesting of these performance-based restricted stock grants are subject to the achievement by GEO of two annual performance metrics as follows: (i) up to 50% of the shares of restricted stock ("TSR Target Award") can vest at the end of a three year performance period if GEO meets certain total shareholder return ("TSR") performance targets, as compared to the total shareholder return of a peer group of companies, over a three year period from January 1, 2024 to December 31, 2026 and (ii) up to 50% of the shares of restricted stock ("ROCE Target Award") can vest at the end of a three year period if GEO meets certain return on capital employed ("ROCE") performance targets over a three year period from January 1, 2024 to December 31, 2026. These market and performance awards can vest at between 0% and 200% of the target awards for both metrics. The number of shares shown for the performance-based awards is based on the target awards for both metrics. The metric related to ROCE is considered to be a performance condition. For share-based awards that contain a performance condition, the achievement of the targets must be probable before any share-based compensation expense is recorded. The Company reviews the likelihood of which target in the range will be achieved and if deemed probable, compensation expense is recorded at that time. If subsequent to initial measurement there is a change in the estimate of the probability of meeting the performance condition, the effect of the change in the estimated quantity of awards expected to vest is recognized by cumulatively adjusting compensation expense. If ultimately the performance targets are not met, for any awards where vesting was previously deemed probable, previously recognized compensation expense will be reversed in the period in which vesting is no longer deemed probable. The fair value of these awards was determined based on the closing price of the Company's common stock on the date of grant. The metric related to TSR is considered to be a market condition. For share-based awards that contain a market condition, the probability of satisfying the market condition must be considered in the estimate of grant-date fair value and previously recorded compensation expense is not reversed if the market condition is never met. The fair value of these awards was determined based on a Monte Carlo simulation, which calculates a range of possible outcomes and the probabilities that they will occur, using the following weighted average key assumptions: (i) volatility of 53.2%; (ii) beta of 0.96; and (iii) risk free rate of 4.28%. For the three months ended March 31, 2024 and 2023, the Company recognized $5.5 million and $5.4 million, respectively, of compensation expense related to its restricted stock awards. As of March 31, 2024, the Company had $20.3 million of unrecognized compensation costs related to non-vested restricted stock awards, including non-vested restricted stock awards with performance-based and market-based vesting, that are expected to be recognized over a weighted average period of 2.4 years. Employee Stock Purchase Plan The Company previously adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan" or "ESPP”) effective July 9, 2011. The Company has since amended and restated the Plan (the “Amended ESPP”) which was approved by the Company’s shareholders on April 28, 2021 and became effective on July 9, 2021. The purpose of the Amended ESPP, which is qualified under Section 423 of the Code, is to encourage stock ownership through payroll deductions by the employees of GEO and designated subsidiaries of GEO in order to increase their identification with the Company’s goals and secure a proprietary interest in the Company’s success. These deductions are used to purchase shares of the Company’s common stock at a 5% discount from the then current market price. The maximum number of shares of common stock reserved for issuance over the term of the Amended ESPP on the amended effective date shall not exceed 506,023 shares. The Amended ESPP is considered to be non-compensatory. As such, there is no compensation expense required to be recognized. Share purchases under the Amended ESPP are made on the last day of each month. During the three months ended March 31, 2024 and 2023, 3,039 and 4,567 shares, respectively, of the Company's common stock were issued in connection with the Amended ESPP.

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