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SHARE-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2022
Share-based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Stock Options The Company has issued non-qualified and incentive stock options to employees and non-employee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of September 30, 2022 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $26.52 to $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponds to the expected term of the option. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield is computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the nine months ended September 30, 2022 and 2021, the Company did not grant stock options. The following table is a summary of our stock option activity (in thousands, except per share data):
| Nine months ended September 30,
| 2022 |  | 2021
| Awards |  | Weighted-Average Exercise Price |  | Awards |  | Weighted-Average Exercise Price
Outstanding at beginning of period | 33 |  |  | $ | 54.98 |  |  | 61 |  |  | $ | 48.19 |
Exercised | — |  |  | — |  |  | (16) |  |  | 49.69 |
Outstanding at end of the period | 33 |  |  | $ | 54.98 |  |  | 45 |  |  | $ | 47.66 |
Exercisable at end of the period | 28 |  |  | $ | 52.76 |  |  | 35 |  |  | $ | 42.00 |
As of September 30, 2022, the weighted-average remaining contractual life for outstanding stock options was 55 months with an aggregate intrinsic value of $1.8 million and the weighted-average remaining contractual life for exercisable stock options was 53 months with an aggregate intrinsic value of $1.5 million. The unrecognized compensation expense calculated under the fair value method for stock options expected to vest as of September 30, 2022 was less than $0.1 million and is expected to be recognized over a weighted-average period of 4 months. For the nine months ended September 30, 2022, there was no exercise activity of stock options. For the nine months ended September 30, 2021, the Company received $0.8 million in cash proceeds from the exercise of stock options. The total intrinsic value for stock options exercised during the nine months ended September 30, 2021 was $3.3 million. Restricted Stock The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to five years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes our restricted stock activity (in thousands, except per share data):
| Nine months ended September 30,
| 2022 |  | 2021
| Shares |  | Weighted-Average Grant Date Fair Value |  | Shares |  | Weighted-Average Grant Date Fair Value
Outstanding at beginning of period | 44 |  |  | $ | 183.51 |  |  | 50 |  |  | $ | 116.06 |
Granted | 38 |  |  | 176.60 |  |  | 21 |  |  | 266.99 |
Vested | (19) |  |  | 156.16 |  |  | (26) |  |  | 116.62 |
Forfeited | (1) |  |  | 186.53 |  |  | (3) |  |  | 166.02 |
Outstanding at end of the period | 62 |  |  | $ | 187.83 |  |  | 42 |  |  | $ | 183.04 |
The Company withheld approximately 8 thousand and 7 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the nine months ended September 30, 2022 and 2021, respectively. The total fair value of restricted stock awards vested during the nine months ended September 30, 2022 and 2021 was $3 million and $7 million, respectively. Market and Performance-based Share Awards The Company has issued market and performance-based share awards to certain key executives who were granted deferred shares and may earn between 0% and 250% of the target number depending upon both the Company’s total stockholder return (“TSR”) and the Company’s performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s TSR are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period. Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Income. The total expenses during the three months ended September 30, 2022 and 2021 are as follows (in thousands):
| Three months ended September 30,
| 2022 |  | 2021
| Shares |  | Share-Based Compensation Expense |  | Shares |  | Share-Based Compensation Expense
Options and restricted stock | 90 |  |  | $ | 1,392 |  |  | 89 |  |  | $ | 1,116 |
Market and performance-based share awards granted in 2022 | 25 |  |  | 438 |  |  | — |  |  | — |
Performance-based share awards granted in 2021 | 15 |  |  | 654 |  |  | 14 |  |  | 309 |
Performance-based share awards granted in 2020 | 26 |  |  | 479 |  |  | 26 |  |  | 479 |
Performance-based share awards granted in 2019 | — |  |  | — |  |  | 16 |  |  | 365 |
Total share-based compensation | 156 |  |  | $ | 2,963 |  |  | 145 |  |  | $ | 2,269 |
The total expenses during the nine months ended September 30, 2022 and 2021 are as follows (in thousands):
| Nine months ended September 30,
| 2022 |  | 2021
| Shares |  | Share-Based Compensation Expense |  | Shares |  | Share-Based Compensation Expense
Options and restricted stock | 90 |  |  | $ | 3,789 |  |  | 89 |  |  | $ | 3,175 |
Market and performance-based share awards granted in 2022 | 25 |  |  | 950 |  |  | — |  |  | — |
Performance-based share awards granted in 2021 | 15 |  |  | 1,941 |  |  | 14 |  |  | 666 |
Performance-based share awards granted in 2020 | 26 |  |  | 1,423 |  |  | 26 |  |  | 1,329 |
Performance-based share awards granted in 2019 | — |  |  | — |  |  | 16 |  |  | 1,443 |
Total share-based compensation | 156 |  |  | $ | 8,103 |  |  | 145 |  |  | $ | 6,613 |
The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Income for restricted stock awards was $0.4 million and $0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $1.2 million and $2.3 million for the nine months ended September 30, 2022 and 2021, respectively. There was $7.6 million of total unrecognized compensation cost related to restricted stock awards as of September 30, 2022, which is expected to be recognized over a weighted-average period of 23 months. There was $7.9 million of unrecognized compensation costs related to the 66 thousand market and performance-based shares presented in the table above as of September 30, 2022, which is expected to be recognized over a weighted-average period of 23 months.

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