Stock Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

The Company’s share-based compensation plans include the 2007 Stock Plan (the “2007 Plan”), 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of the Company’s common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of the Company’s common

stock on the date of grant for incentive stock options and not less than 85% of the fair market value of the Company’s common stock on the date of grant for non-statutory stock options. As of March 31, 2022, zero shares underlying options and zero shares of restricted stock units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of the Company’s common stock subject to the option on the date the option is granted. As of March 31, 2022, 435,135 shares underlying options and 503,994 shares of restricted stock units were outstanding under the 2015 Plan.

The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four or five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer. The Company granted 112,324 and 74,834 shares of restricted stock and restricted units (excluding awards with market conditions below) during the three months ended March 31, 2022 and 2021, respectively.

The Company has awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the three months ended March 31, 2022 and 2021, the Company awarded 100,193 and 73,094 market-based restricted stock awards, respectively. The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the three months ended March 31, 2022 and 2021 were $87.11 and $94.40, respectively.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:


	March 31, 2022			March 31, 2021
Underlying stock price at valuation date	$	99.32		$	113.27
Expected volatility	36.7		%	30.3		%
Risk-free interest rate	1.8		%	1.3		%

Restricted stock award activity for the three months ended March 31, 2022 is set forth below:


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2022	383,963	$	41.45
Granted	—	—
Vested	(38,875)	77.75
Canceled	(777)	88.54
Nonvested at March 31, 2022	344,311	$	38.38

Restricted stock unit activity for the three months ended March 31, 2022 is set forth below:


	Number of Shares	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2022	360,743
Granted	212,517
Vested	(62,509)
Canceled	(7,557)
Outstanding at a March 31, 2022	503,194	3.1	$	48,776,539
Vested and expected to vest at March 31, 2022	503,194	3.1	$	48,699,115

As of March 31, 2022 and December 31, 2021, the Company had unrecognized share-based compensation cost of approximately $58.0 million and $44.3 million, respectively, associated with these awards. This cost is expected to be recognized over a weighted-average period of 3.3 for awards and 4.1 for units.