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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Total stock-based compensation expense by type of award was as follows for the years ended December 31:
In Thousands202120202019
Stock options$435 $561 $635 
Stock appreciation rights (“SARs”)22,188 3,377 2,906 
Restricted Stock Awards1,005 1,101 907 
Restricted Stock Units1,889 — — 
Stock grants489 244 $269 
Total stock-based compensation expense$26,006 $5,283 $4,717 
In 2020, the Board of Directors adopted a new stock option plan called the Encore Wire 2020 Long Term Incentive Plan (the “2020 LTIP”) which was approved by the Company’s stockholders at the 2020 Annual Meeting of Stockholders. The 2020 LTIP permits the granting of 1,000,000 securities in the form of options to purchase shares of common stock, stock appreciation rights, restricted common stock, restricted stock units, unrestricted common stock, dividend equivalents, cash awards, or performance awards to non-employee directors, officers and employees of the Company. The 2010 Stock Option Plan expired on February 20, 2020. As of December 31, 2021, 889,650 securities remained available for grant under the 2020 LTIP.
Stock Options:
No stock option awards were granted in 2021, 2020 or 2019. Options vest ratably over a period of five years from the time the options were granted. The maximum term of any option previously granted under the 2010 Stock Option Plan or granted in the future under the 2020 LTIP is ten years. New shares are issued upon the exercise of options.
The following presents a summary of stock option activity for the year ended December 31, 2021:
Number
of
Shares		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic Value
(In Thousands)
Outstanding at January 1, 2021314,500 $41.82 
Exercised(35,000)30.95 
Forfeited/Canceled— — 
Outstanding at December 31, 2021279,500 $43.18 4.5 years$27,928 
Vested and exercisable at December 31, 2021232,500 $42.06 4.3 years$23,493 
During the years ended December 31, 2021, 2020 and 2019, the total intrinsic value of options exercised was $3.1 million, $0.4 million and $0.7 million, respectively. As of December 31, 2021, total unrecognized compensation cost related to non-vested stock options of $0.3 million was expected to be recognized over a weighted average period of 1.0 year.
Stock Appreciation Rights:
In 2014, the Board of Directors adopted a new stock appreciation rights plan called the Encore Wire 2014 Stock Appreciation Rights Plan (the “2014 SARs Plan”). The 2014 SARs Plan permits the grant of SARs that may only be settled in cash to non-executive officers and employees of the Company. SARs granted to employees vest ratably over a period of five years from the time the SARs were granted. The maximum term of any SARs granted under the 2014 SARs Plan is ten years. These awards are classified as liability awards. The liability balances were $22.1 million and $5.3 million at December 31, 2021 and 2020, respectively, and are included in accrued liabilities. Compensation cost for these awards is determined using a fair value method and remeasured at each reporting date until the date of settlement. As of December 31, 2021, a total of 467,668 SARs were outstanding under the 2014 SARs Plan.
The following presents a summary of SARs activity for the year ended December 31, 2021:
Cash-settled SARsWeighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic Value
(In Thousands)
Outstanding at January 1, 2021679,500 $51.99 
Exercised(205,832)48.41 
Forfeited/Canceled(6,000)53.01 
Outstanding at December 31, 2021467,668 $53.55 7.1 years$41,880 
Vested and exercisable at December 31, 202189,968 $50.85 6.5 years$8,300 
There were no SARs granted in 2021. The fair value of SARs outstanding during the years ended December 31, 2021, 2020 and 2019, are revalued each quarter using a Black-Scholes option pricing model and the following weighted average assumptions:
Year Ended December 31,
202120202019
Risk-free interest rate0.70 %0.18 %1.62 %
Expected dividend yield0.06 %0.13 %0.14 %
Expected volatility38.64 %35.51 %28.46 %
Expected lives2.1 years2.8 years3.0 years
The Company bases expected volatilities on historical volatilities of Encore's common stock. The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting periods and management’s consideration of historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected life of the option. The expected dividend yield is based on the annualized dividend payment paid on common shares.
During the years ended December 31, 2021, 2020 and 2019, the weighted average fair value of SARs was $90.04, $17.94 and $17.19, respectively, and the total intrinsic value of SARs exercised was $5.4 million, $1.1 million and $2.1 million, respectively. As of December 31, 2021, total unrecognized compensation cost related to non-vested SARs of $20.3 million was expected to be recognized over a weighted average period of 2.4 years.
Restricted Stock Awards:
There were zero restricted shares issued in 2021. Restricted shares granted to employees vest ratably over a period of five years from the time the restricted shares were granted. During the years ended December 31, 2020 and 2019, the Company granted 37,000 shares and 60,000 shares, respectively, of restricted stock to employees pursuant to the 2010 Stock Option Plan, with weighted grant date fair values of $58.90 and $54.49 per share, respectively. As of December 31, 2021, there was $2.43 million of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 2.5 years. The total fair value of shares vested during the year ending December 31, 2021 was $1.13 million.
The following presents a summary of restricted stock activity for the year ended December 31, 2021:
Weighted Average
Number of SharesGrant Date Fair Value
Outstanding at January 1, 202175,000 $56.77 
Granted— — 
Vested(17,000)56.61 
Unvested at December 31, 2021$58,000 $56.88 
Restricted Stock Units:
The Company granted restricted units for the first time in 2021. Restricted units granted to employees vest ratably over a period of three years from the time the restricted units were granted. During the year ended December 31, 2021, the Company granted 98,600 units of restricted stock to employees pursuant to the 2020 Long Term Incentive Plan, with a weighted grant date fair values of $61.92 per unit. There were zero restricted units issued in 2020 or 2019. As of December 31, 2021, there was $4.22 million of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 2.4 years.
The following presents a summary of restricted stock activity for the year ended December 31, 2021:
Weighted Average
Number of SharesGrant Date Fair Value
Outstanding at January 1, 2021— $— 
Granted98,600 61.92 
Vested— — 
Forfeited/Canceled— — 
Unvested at December 31, 202198,600 $61.92 
Stock Grants:
In May 2021, the Company granted 1,250 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $78.29 per share. In May 2020, the Company granted 1,100 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $44.31 per share. In June 2019, the Company granted 1,000 shares of stock to each of the 5 non-employee directors with a grant date fair value of $53.81 per share.