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Stock Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock Based Compensation | Stock Based Compensation The Company’s share-based compensation plans include the 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below. 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 December 31, 2022, 435,135 shares underlying options and 464,354 shares of restricted stock units were outstanding under the 2015 Plan. At December 31, 2022, there were 1,496,619 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan. In connection with the Separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each stock-based award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the related exercise price for the stock options was divided by a factor of approximately 1.09, which was intended to preserve the intrinsic value of the awards prior to the Separation. Further, the price targets for the Company’s market-based restricted stock units were reduced by $21.41. These adjustments to the Company’s equity compensation awards did not result in additional compensation expense. Stock based compensation awards that were held by Consensus employees were terminated and replaced with awards issued under the Consensus stock compensation plan (including under the Purchase Plan). Stock-based compensation expense through the Separation date for Consensus employees is included in results from discontinued operations. Stock Options At December 31, 2022, 2021 and 2020, options to purchase 217,567, 168,614 and 175,601 shares of common stock were exercisable under and outside of the 2015 Plan, at weighted average exercise prices of $68.97, $67.62, $60.35, respectively. Stock options generally expire after 10 years and vest over a 5-year period. All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m). Stock option activity for the years ended December 31, 2022, 2021 and 2020 is summarized as follows:
| Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value
Options outstanding at January 1, 2020 | 518,341 |  |  | $ | 65.77 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (42,740) |  |  | 23.11 |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Options outstanding at December 31, 2020 | 475,601 |  |  | $ | 69.61 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (70,776) |  |  | 41.63 |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Adjustment due to Consensus Separation (1) | 35,749 |  |  | $ | 68.25 |  |  |  |  |
Options outstanding at December 31, 2021 | 440,574 |  |  | $ | 68.45 |  |  |  |  |
Granted | — |  |  | $ | — |  |  |  |  |
Exercised | (5,439) |  |  | $ | 27.15 |  |  |  |  |
Canceled | — |  |  | $ | — |  |  |  |  |
Options outstanding at December 31, 2022 | 435,135 |  |  | $ | 68.97 |  |  | 5.0 |  | $ | 4,407,918 |
Exercisable at December 31, 2022 | 217,567 |  |  | $ | 68.97 |  |  | 5.0 |  | $ | 2,203,954 |
Vested and expected to vest at December 31, 2022 | 396,185 |  |  | $ | 68.97 |  |  | 5.0 |  | $ | 4,013,353 |
(1)As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each stock option outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the related exercise price for the stock options was divided by a factor of approximately 1.09, which was intended to preserve the intrinsic value of the awards prior to the Separation. The total intrinsic values of options exercised during the years ended December 31, 2022, 2021 and 2020 was $0.4 million, $5.8 million and $3.0 million, respectively. The total fair value of options vested during the years ended December 31, 2022, 2021 and 2020 was $1.1 million, $1.0 million and $1.0 million, respectively. Cash received from options exercised under all share-based payment arrangements for the years ended December 31, 2022, 2021 and 2020 was $0.1 million, $2.9 million and $1.6 million, respectively. The actual tax benefit realized for the tax deductions from option exercises under the share-based payment arrangements totaled $0.3 million, $1.9 million and $0.7 million, respectively, for the years ended December 31, 2022, 2021 and 2020, respectively. The following table summarizes information concerning outstanding and exercisable options as of December 31, 2022:
|  | Options Outstanding |  | Exercisable Options
Exercise Price |  | Number Outstanding December 31, 2022 |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  | Number Exercisable December 31, 2022 |  | Weighted Average Exercise Price
$ | 68.97 |  |  | 435,135 |  |  | 5.0 years |  | $ | 68.97 |  |  | 217,567 |  |  | $ | 68.97 |
As of December 31, 2022, there was $3.9 million of total unrecognized compensation expense related to nonvested share-based compensation options granted under the 2015 Plan. That expense is expected to be recognized ratably over a weighted average period of 3.0 years (i.e., the remaining requisite service period). Fair Value Disclosure The Company uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. There were no dividends declared during the years ended December 31, 2022, 2021 and 2020. Estimated forfeiture rates were 13.0%, 12.4% and 13.0% as of December 31, 2022, 2021 and 2020, respectively. Restricted Stock and Restricted Stock Units 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 four to eight years for the Chief Executive Officer. The Company granted 154,022, 246,251 and 129,786 shares of restricted stock and restricted units (excluding awards with market conditions below) during the years ended December 31, 2022, 2021 and 2020, respectively. Restricted Stock and Restricted Stock Units with Market Conditions The Company has awarded certain key employees market-based restricted stock and market-based restricted stock units 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 years ended December 31, 2022, 2021, and 2020 the Company awarded 100,193, 73,094 and 82,112 market-based restricted stock units, respectively. The per share weighted average grant-date fair values of the market-based restricted stock units granted during the years ended December 31, 2022, 2021 and 2020 were $87.11, $94.40 and $70.99, respectively. The weighted-average fair values of market-based restricted stock units granted have been estimated utilizing the following assumptions:
| December 31,
| 2022 |  | 2021 |  | 2020
Underlying stock price at valuation date | $ | 99.32 |  |  | $ | 113.27 |  |  | $ | 91.17 |
Expected volatility | 36.7 | % |  | 30.3 | % |  | 27.0 | %
Risk-free interest rate | 1.8 | % |  | 1.3 | % |  | 0.7 | %
Restricted stock activity for the years ended December 31, 2022, 2021 and 2020 is set forth below:
| Shares |  | Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2020 | 1,105,059 |  |  | $ | 64.76 |
Granted | 1,268 |  |  | 98.63 |
Vested | (264,172) |  |  | 70.25 |
Canceled | (21,589) |  |  | 79.34 |
Nonvested at December 31, 2020 | 820,566 |  |  | $ | 62.66 |
Granted | — |  |  | — |
Vested | (435,529) |  |  | 60.52 |
Canceled | (33,194) |  |  | 83.23 |
Adjustment due to Consensus Separation (1) | 32,120 |  |  | 74.62 |
Nonvested at December 31, 2021 | 383,963 |  |  | $ | 62.66 |
Granted | — |  |  | — |
Vested | (67,762) |  |  | 80.64 |
Canceled | (4,920) |  |  | 84.77 |
Nonvested at December 31, 2022 | 311,281 |  |  | $ | 59.90 |
(1)As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each restricted stock award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock awards was also adjusted. Restricted stock unit activity for the years ended December 31, 2022, 2021 and 2020 is set forth below:
| Number of Shares |  | Weighted-Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value
Outstanding at January 1, 2020 | 20,874 |  |  |  |  |
Granted | 210,630 |  |  |  |  |
Vested | (9,029) |  |  |  |  |
Canceled | (12,691) |  |  |  |  |
Outstanding at December 31, 2020 | 209,784 |  |  |  |  |
Granted | 319,345 |  |  |  |  |
Vested | (124,761) |  |  |  |  |
Canceled | (60,201) |  |  |  |  |
Adjustment due to Consensus Separation (1) | 16,576 |  |  |  |  |
Outstanding at December 31, 2021 | 360,743 |  |  |  |  |
Granted | 254,215 |  |  |  |  |
Vested | (115,523) |  |  |  |  |
Canceled | (35,081) |  |  |  |  |
Outstanding at December 31, 2022 | 464,354 |  |  | 2.61 |  | $ | 36,730,401 |
Vested and expected to vest at December 31, 2022 | 334,674 |  |  | 2.12 |  | $ | 26,472,675 |
(1) As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each restricted stock unit outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock units was also adjusted. As of December 31, 2022, the Company had unrecognized share-based compensation cost of $40.1 million associated with these restricted stock and restricted stock units. This cost is expected to be recognized over a weighted-average period of 2.8 years for restricted stock and 3.4 years for restricted stock units. The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2022, 2021 and 2020 was $12.4 million, $68.1 million and $18.6 million, respectively. The actual tax benefit realized for the tax deductions from the vesting of restricted stock and restricted stock units totaled $2.8 million, $9.5 million and $2.1 million, respectively, for the years ended December 31, 2022, 2021 and 2020. Employee Stock Purchase Plan The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of the common stock on the beginning or the end of the offering period. On February 2, 2018, the Company approved an amendment to the Company’s Amended and Restated 2001 Employee Stock Purchase Plan, to be effective May 1, 2018, such that (i) the purchase price for each offering period shall be 85% of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the beginning or the end of the offering period, rather than 95% of the fair market value of a Share at the end of the offering period, and (ii) each offering period will be six months, rather than three months. The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.83%, 11.15% and 11.15% as of December 31, 2022, 2021, and 2020, respectively. The increase in forfeiture rate comes as a result of the Purchase Plan being offered to all employees regardless of employment location. During 2022, 2021 and 2020, 139,992, 109,248 and 118,629 shares, respectively were purchased under the Purchase Plan at price ranging from $66.33 to $68.22 per share during 2022. Cash received upon the issuance of the Company’s common stock under the Purchase Plan was $9.4 million, $9.2 million and $7.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, 1,155,699 shares were available under the Purchase Plan for future issuance. The compensation expense related to the Purchase Plan has been estimated utilizing the following weighted average assumptions:
|  | December 31,
|  | 2022 |  | 2021 |  | 2020
Risk-free interest rate |  | 1.17% |  | 0.05% |  | 0.73%
Expected term (in years) |  | 0.5 |  | 0.5 |  | 0.5
Dividend yield |  | 0.0% |  | 0.0% |  | 0.0%
Expected volatility |  | 40.7% |  | 35.0% |  | 25.3%

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