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STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Long Term Incentive Plans
In 2017, the Company adopted a Long Term Incentive Plan (“2017 LTIP”), which allows for the issuance of restricted stock units (“RSUs”), performance stock units (“PSUs”), and options, and reserved 2,467,430 shares of common stock. Additionally, in June 2021, the Company adopted the 2021 Long Term Incentive Plan (“2021 LTIP”), which reserved an incremental 700,000 shares of common stock in addition to the 2017 LTIP. The 2017 LTIP and 2021 LTIP shall be collectively referred herein as the “LTIP”. See below for further discussion of awards granted under the LTIP.
The Company recorded compensation expense related to the awards granted under the LTIP as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Restricted stock units$1,561 $1,350 $4,628 $3,935 
Performance stock units728 373 1,468 375 
Stock options— — — 126 
Total stock-based compensation$2,289 $1,723 $6,096 $4,436 
As of September 30, 2021, unrecognized compensation expense will be amortized through the relevant periods as follows (in thousands):
Unrecognized Compensation ExpenseFinal Year of Recognition
Restricted stock units$8,886 2024
Performance stock units4,911 2023
$13,797 
Restricted Stock Units
The LTIP allows for the issuance of RSUs to members of the Board of Directors (the “Board”) and employees of the Company at the discretion of the Board. Each RSU represents one share of the Company's common stock to be released from restriction upon completion of the vesting period. The awards typically vest in one-third increments over three years. The RSUs are valued at the grant date share price and are recognized as general and administrative expense over the vesting period of the award.
During the nine months ended September 30, 2021, the Company granted 178,567 RSUs with a fair value of $6.1 million. A summary of the status and activity of non-vested restricted stock units for the nine months ended September 30, 2021 is presented below:
 Restricted Stock UnitsWeighted-Average Grant-Date Fair Value
Non-vested, beginning of year550,056 $20.30 
Granted178,567 34.35 
Vested(267,635)21.12 
Forfeited(23,586)17.25 
Non-vested, end of quarter437,402 $25.69 
Cash flows resulting from excess tax benefits are to be classified as part of cash flows from operating activities. Excess tax benefits are realized tax benefits from tax deductions for vested restricted stock in excess of the deferred tax asset attributable to stock compensation costs for such restricted stock. The Company recorded no excess tax benefits for the periods presented.
Performance Stock Units
The LTIP allows for the issuance of PSUs to employees at the sole discretion of the Board. The number of shares of the Company's common stock that may be issued to settle PSUs ranges from zero to two times the number of PSUs awarded. The PSUs vest in their entirety at the end of the three-year performance period. The first criterion is based on a comparison of the Company's absolute and relative total shareholder return (“TSR”) for the performance period compared with the TSRs of a group of peer companies for the same performance period. The TSR for the Company and each of the peer companies is determined by dividing (A) (i) the volume-weighted average share price for the last 30 trading days of the performance period minus (ii) the volume-weighted average share price for the 30 trading days preceding the beginning of the performance period, by (B) the volume-weighted average share price for the 30 trading days preceding the beginning of the performance period. The second criterion, when applicable, is based on the Company's annual return on average capital employed (“ROCE”) for each year during the three-year performance period. The total number of PSUs granted was split as follows for the relevant grant years:
202120202019
TSR100 %67 %50 %
ROCE— %33 %50 %
Compensation expense associated with PSUs is recognized as general and administrative expense over the performance period. Because these awards depend on a combination of performance-based and market-based settlement criteria, compensation expense may be adjusted in future periods as the number of units expected to vest increases or decreases based on the Company's expected ROCE performance. As of September 30, 2021, the Company does not expect any of the ROCE portion of the PSUs granted in 2019 to vest and has accordingly adjusted the related compensation expense.
The fair value of the PSUs was measured at the grant date. The portion of the PSUs tied to the TSR required a stochastic process method using a Brownian Motion simulation. A stochastic process is a mathematically defined equation that can create a series of outcomes over time. These outcomes are not deterministic in nature, which means that by iterating the equations multiple times, different results will be obtained for those iterations. In the case of the Company's TSRs, the Company could not predict with certainty the path its stock price or the stock prices of its peers would take over the performance period. By using a stochastic simulation, the Company created multiple prospective stock pathways, statistically analyzed these simulations, and ultimately made inferences regarding the most likely path the stock price would take. As such, because future stock prices are stochastic, or probabilistic with some direction in nature, the stochastic method, specifically the Brownian Motion Model, was deemed an appropriate method by which to determine the fair value of the portion of the PSUs tied to the TSR. Significant assumptions used in this simulation include the Company's expected volatility, risk-free interest rate based on U.S. Treasury yield curve rates with maturities consistent with the performance period, as well as the volatilities for each of the Company's peers.
During the nine months ended September 30, 2021, the Company granted 64,258 PSUs with a fair value of $4.4 million. The PSUs granted in 2018 expired as of December 31, 2020, with zero distribution of shares to the recipients, as neither the TSR nor the ROCE performance criteria were met. A summary of the status and activity of performance stock units for the nine months ended September 30, 2021 is presented below:
 
Performance Stock Units(1)
Weighted-Average Grant-Date Fair Value
Non-vested, beginning of year
185,588 $22.63 
Granted
64,258 68.99 
Vested
— — 
Forfeited
— — 
Non-vested, end of quarter249,846 $34.56 
___________________________
(1)The number of awards assumes that the associated performance condition is met at the target amount. The final number of shares of the Company's common stock issued may vary depending on the performance multiplier, which ranges from zero to two, depending on the level of satisfaction of the performance condition.
Stock Options
The LTIP allows for the issuance of stock options to the Company's employees at the sole discretion of the Board. Options expire ten years from the grant date unless otherwise determined by the Board. Compensation expense on the stock options is recognized as general and administrative expense over the vesting period of the award.
There were no stock options granted during the nine months ended September 30, 2021. A summary of the status and activity of stock options for the nine months ended September 30, 2021 is presented below:
 Stock OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (in years)Aggregate Intrinsic Value (in thousands)
Outstanding, beginning of year72,368 $34.36 
Granted— — 
Exercised(21,878)34.36 
Forfeited(510)34.36 
Outstanding, end of quarter49,980 $34.36 5.6$677 
Number of options outstanding and exercisable49,980 $34.36 5.6$677 
The aggregate intrinsic value of options exercised during the nine months ended September 30, 2021 was $0.2 million.