Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v3.22.2
Share-Based Compensation
6 Months Ended
Jun. 30, 2022
Share-Based Compensation.  
Share-Based Compensation

11. SHARE-BASED COMPENSATION

Effective July 1, 2015, our eligible employees commenced participation in the 2015 LTIP.  The 2015 LTIP authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents.  All grants are made by issuing new shares and no more than 4.0 million shares of common stock may be issued under the 2015 LTIP.  As of June 30, 2022, we had 1.9 million shares remaining available for issuance under the 2015 LTIP.

Share-based compensation expense is included in selling, general, and administrative expense.  The income tax effect associated with share-based compensation awards is included in income tax expense.  The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands:

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

2021

2022

2021

Share-based compensation expense

$

3,334

$

2,266

$

7,061

$

5,377

Income tax (expense) benefit

$

(32)

$

228

$

1,573

$

3,320

The following table presents a summary of our share-based compensation activity for the three months ended June 30, 2022, in thousands, except per share amounts:

RSAs

Stock Options

Number of Shares

   

Weighted Average Grant Date Fair Value Per Share

   

Number of Shares

   

Weighted Average Grant Date Fair Value Per Share

   

Weighted Average Exercise Price Per Share

   

Aggregate
Intrinsic
Value

Balance December 31, 2021

244.4

$

119.41

210.5

$

32.35

$

87.30

$

39,692.4

Granted

105.5

$

181.82

$

$

Converted/Exercised

(166.8)

$

75.10

(18.1)

$

27.85

$

80.14

$

2,282.9

Forfeited/Expired

(9.3)

$

222.20

(3.1)

$

68.81

$

174.76

Balance June 30, 2022

173.8

$

194.70

189.3

$

32.19

$

86.57

$

16,311.0

Exercisable June 30, 2022 (a)

155.5

$

25.82

$

70.45

$

15,391.1

(a) The weighted average remaining contractual term for vested stock options is approximately 5.8 years.

Unrecognized share-based compensation expense related to unvested awards is shown in the following table, dollars in thousands:

As of June 30, 2022

Unrecognized Compensation Expense
on Unvested Awards

Weighted Average
Remaining
Vesting Period

RSAs

$

17,630

1.6

Stock options

826

0.8

Total unrecognized compensation expense related to unvested awards

$

18,456

Our RSAs with performance-based conditions are evaluated on a quarterly basis with adjustments to compensation expense based on the likelihood of the performance target being achieved or exceeded.  The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands:

Payout Ranges and Related Expense

RSAs with Performance-Based Conditions

Grant Date Fair Value

0%

25%

100%

200%

February 17, 2020

$

2,535

$

0

$

634

$

2,535

$

5,070

February 16, 2021

$

2,404

$

0

$

601

$

2,404

$

4,808

February 15, 2022

$

3,464

$

0

$

866

$

3,464

$

6,928

During the first quarter of 2022, RSAs with performance-based conditions that were granted on February 18, 2019 vested based on cumulative three-year achievement of 200%. Total compensation expense recognized over the three-year performance period, net of forfeitures, was $4.4 million.

The fair value of our RSAs with a market-based condition granted under the 2015 LTIP was determined using a Monte Carlo simulation.  The following are key inputs in the Monte Carlo analysis for awards granted in 2022 and 2021:

2022

2021

Measurement period (years)

2.87

2.87

Risk free interest rate

1.76

%

0.22

%

Dividend yield

0.00

%

0.00

%

Estimated fair value of market-based RSAs at grant date

$

298.20

$

298.66

The fair values of stock options granted under the 2015 LTIP were calculated using the Black-Scholes Options Pricing Model.  The following table presents the assumptions used to estimate the fair values of stock options granted in 2021. There were no stock options issued in the first six months of 2022.

2021

Risk free interest rate

0.76

%

Expected volatility, using historical return volatility and implied volatility

43.29

%

Expected life (in years)

6.0

Dividend yield

0.00

%

Estimated fair value of stock options at grant date

$

89.59