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STOCK-BASED COMPENSATION | 6 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Long Term Incentive Plans On June 4, 2024, in connection with our stockholders’ approval at our 2024 annual meeting of stockholders, we adopted the 2024 Long Term Incentive Plan (the “2024 LTIP”), which provides for the issuance of restricted stock units, performance stock units, stock options, and various other forms of awards, and reserved 3,100,000 shares of common stock for issuance under the 2024 LTIP. The 2024 LTIP supersedes and replaces all of our previous long-term incentive plans (“the “Prior Plans”), such that awards may not be granted under the Prior Plans on or following June 4, 2024. Awards granted under the Prior Plans will remain subject to the terms and conditions set forth in the applicable Prior Plan. The Prior Plans and 2024 LTIP are collectively referred to herein as the “LTIP.” We record compensation expense associated with the issuance of awards under the LTIP on a straight-line basis over the vesting period based on the fair value of the awards as of the date of grant within general and administrative expense in the accompanying statements of operations. The following table outlines the compensation expense recorded by type of award (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Restricted and deferred stock units | $ | 7,198 |  |  | $ | 4,769 |  |  | $ | 13,798 |  |  | $ | 9,194 |
Performance stock units | 5,064 |  |  | 5,126 |  |  | 9,663 |  |  | 8,081 |
Total stock-based compensation | $ | 12,262 |  |  | $ | 9,895 |  |  | $ | 23,461 |  |  | $ | 17,275 |
As of June 30, 2024, unrecognized compensation expense related to the awards granted under the LTIP will be amortized through the relevant periods as follows (in thousands):
| Unrecognized Compensation Expense |  | Final Year of Recognition
Restricted and deferred stock units | $ | 50,357 |  |  | 2027
Performance stock units | 33,306 |  |  | 2026
Total unrecognized stock-based compensation | $ | 83,663 |  |  |
Restricted Stock Units and Deferred Stock Units We grant time-based restricted stock units (“RSUs”) to our officers, executives, and employees and time-based deferred stock units (“DSUs”) to our non-employee directors under the LTIP. Each RSU and DSU represents a right to receive one share of our common stock after the RSU or DSU vests and is settled as described below. RSUs generally vest ratably either over a one, two, or three-year service period on each anniversary following the grant date. Each RSU is entitled to a dividend equivalent right to receive, upon settlement, a cash payment based on the regular cash dividends that would have been paid on a share of our common stock during the period between the grant date and the date the RSUs are settled. Accrued but unpaid dividend equivalents are recognized in other liabilities and other long-term liabilities on the accompanying balance sheets, until the recipients receive the dividend equivalents upon settlement. DSUs generally vest over a one-year period following the grant date. DSUs are settled in shares of our common stock upon the non-employee director’s separation of service from our Board of Directors (our “Board”). Each DSU is entitled to a dividend equivalent right to receive a cash payment based on the regular cash dividends that would have been paid on a share of our common stock. All amounts payable as a result of such dividend equivalent right are paid (1) with respect to vested DSUs, at the same time dividends are paid to our stockholders and (2) with respect to unvested DSUs, when such underlying DSUs vest. Accrued but unpaid dividend equivalents in respect of unvested DSUs are recognized in other liabilities and other long-term liabilities on the accompanying balance sheets, until the recipients receive the dividend equivalents upon vesting. The grant-date fair value of RSUs and DSUs is equal to the closing price of our common stock on the date of the grant. A summary of the status and activity of non-vested RSUs and DSUs for the six months ended June 30, 2024 is presented below:
| RSUs and DSUs |  | Weighted-Average Grant-Date Fair Value
Non-vested, beginning of year | 855,627 |  |  | $ | 66.31 |
Granted | 458,106 |  |  | 64.48 |
Vested | (165,223) |  |  | 59.46 |
Forfeited | (43,206) |  |  | 66.97 |
Non-vested, end of period | 1,105,304 |  |  | $ | 66.55 |
The aggregate grant-date fair value of the RSUs and DSUs granted under the LTIP during the six months ended June 30, 2024 was $29.5 million. Performance Stock Units We grant market-based performance stock units (“PSUs”) to our officers and certain executives under the LTIP. The number of shares of our common stock issued to settle PSUs ranges from zero to 225% (or, for PSUs granted prior to fiscal year 2023, 200%) of the number of PSUs granted and is determined based on performance achievement against certain market-based criteria over a three-year performance period. PSUs generally vest on December 31 of the year preceding the third anniversary of the date of grant and settle by March 15 of the following year upon the determination and approval of performance achievement by the Compensation Committee of our Board. Each PSU is entitled to a dividend equivalent right to receive, upon settlement, a cash payment based on the regular cash dividends that would have been paid on a share of our common stock during the period between the grant date and the date the PSUs are settled. Accrued but unpaid dividend equivalents are recognized in other liabilities and other long-term liabilities on the accompanying balance sheets until the recipients receive the dividend equivalents upon settlement. Performance achievement is determined based on either, or a combination of, (1) our annualized absolute total stockholder return (“TSR”) or (2) for certain PSUs granted prior to fiscal year 2023, our absolute TSR relative to that of a defined peer group. Absolute TSR is determined based upon the change in our stock price over the performance period plus dividends paid. For awards with a relative TSR component, our absolute TSR is compared with the absolute TSRs of a group of peer companies over the performance period. The absolute TSR for us 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, plus (iii) dividends paid by (B) the volume-weighted average share price for the 30 trading days preceding the beginning of the performance period. The resultant amount is then annualized based on the length of the performance period. The grant-date fair value of the PSUs was estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and repeated numerous times to achieve a probabilistic assessment. Significant assumptions used in this valuation include our expected volatility as well as the volatilities for each of our peers and an interpolated risk-free interest rate based on U.S. Treasury yields with maturities consistent with the performance period. A summary of the status and activity of non-vested PSUs for the six months ended June 30, 2024, is presented below:
| PSUs |  | Weighted-Average Grant-Date Fair Value
Non-vested, beginning of year | 472,593 |  |  | $ | 92.08 |
Granted(1) | 270,509 |  |  | 74.55 |
Additional shares based on performance(2) | 59,504 |  |  | 97.45 |
Vested(2) | (139,218) |  |  | 91.59 |
Forfeited | (10,818) |  |  | 103.15 |
Non-vested, end of period(1) | 652,570 |  |  | $ | 85.23 |
___________________________ (1)The number of awards assumes that the associated performance condition is met at the target amount (multiplier of one). The final number of shares of our common stock issued may vary depending on the performance multiplier, which ranges from zero to 225% (or, for PSUs granted prior to fiscal year 2023, 200%), depending on the level of satisfaction of the performance condition. (2)Upon completion of the performance period for the PSUs granted in 2021, a performance achievement of 200% or 141%, as applicable, was applied to each of the grants, resulting in a number of shares greater than the target amount of such PSUs vesting and being settled during the six months ended June 30, 2024. The aggregate grant-date fair value of the PSUs granted under the LTIP during the six months ended June 30, 2024 was $20.2 million.

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