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Compensation Related Costs, Share Based Payments (Notes)
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Shareholders' Equity and Share-Based Payments [Text Block]
9.Incentive Plans
The Insperity, Inc. Incentive Plan, as amended, provides for options and other stock-based awards that have been and may be granted to eligible employees and non-employee directors of Insperity or its subsidiaries. The Incentive Plan permits stock options, including nonqualified stock options and options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code, stock awards, phantom stock awards, stock appreciation rights, performance units, and other stock-based awards and cash awards, all of which may or may not be subject to the achievement of one or more performance objectives. The purpose of the Incentive Plan generally is to retain and attract persons of training, experience and ability to serve as employees of Insperity and its subsidiaries and to serve as non-employee directors of Insperity, to encourage the sense of proprietorship of such persons and to stimulate the active interest of such persons in the development and financial success of Insperity and its subsidiaries.
The Incentive Plan is administered by the Compensation Committee of the Board (the “Committee”). The Committee has the power to determine which eligible employees will receive awards, the timing and manner of the grant of such awards, the exercise price of stock options (which may not be less than market value on the date of grant), the number of shares and all of the terms of the awards. The Board may at any time amend or terminate the Incentive Plan. However, no amendment that would impair the rights of any participant, with respect to outstanding grants, can be made without the participant’s prior consent. Stockholder approval of amendments to the Incentive Plan is necessary only when required by applicable law or stock exchange rules. Assuming all outstanding performance-based awards are paid at maximum achievement of pre-established performance goals, at December 31, 2023, 1,837,540 shares of common stock were available for future grants under the Incentive Plan.
We also maintain the Insperity, Inc. Long-Term Incentive Plan (“LTIP”) under the Incentive Plan. The LTIP provides for performance-based long-term compensation awards in the form of performance units to certain employees based on the achievement of pre-established performance goals. We granted performance units under the LTIP to our named executive officers and certain other officers in 2023, 2022 and 2021.
Employees who attain a minimum age of 62 and have provided 15 years or more of continuous service may continue to vest in awards following a qualifying retirement as defined under the Incentive Plan award agreement, as though they were still an employee, provided the grant date of the award is six months or more before the employee’s last day of employment, the employee provides the Company with six months advance notice of retirement, the employee continues to work full-time during such six (6) month period, and the employee signs a waiver and release of claims. In addition, in order to avoid forfeiting any outstanding award, a retired employee must refrain from providing any services, including but not limited to, as an employee, director, advisor, or independent contractor to a business engaged in providing any
services offered by the Company and its subsidiaries and affiliates at the time of the employee’s retirement, including but not limited to PEO services, payroll services, retirement services or insurances services. For a termination following a qualifying retirement, time-vested awards will continue to vest in the normal course. For a termination following a qualifying retirement, performance-based awards with completed or in-process performance periods are adjusted for achievement of the performance criteria, prorated through the date of termination and paid in the normal course, while performance-based awards for performance periods that have not started are forfeited. Stock-based compensation expense related to time-vested and performance-based awards is accelerated over the requisite service period for employees who meet the requirements for continued vesting.
Stock-based compensation expense and other disclosures for stock-based awards follows:
Year Ended December 31,
(in thousands)202320222021
Stock-based compensation expense recognized$52,996 $50,080 $40,623 
Income tax benefit realized from stock-based compensation expense12,643 13,483 10,677 
Time-Based Restricted Stock Units
Time-based restricted stock units (“RSUs”), under equity plan accounting, are generally measured at fair value on the date of grant based on the number of shares granted, estimated forfeitures and the quoted price of the common stock. Such value is recognized as compensation expense over the corresponding vesting period, generally three years to five years for awards currently outstanding. However, for some RSUs currently outstanding, compensation expense is accelerated over the shortened requisite service period for employees who meet the requirements for continued vesting.
The following is a summary of time-based RSUs award activity for 2023:
Total Awards
(in thousands)
Weighted Average
Grant Date Fair
Value
Non-vested — December 31, 2022987 $86.34 
Granted556 123.66 
Vested(480)83.54 
Canceled(25)104.82 
Non-vested — December 31, 20231,038 $106.98 
Additional disclosures for time-based RSUs:
Year Ended December 31,
202320222021
Weighted average grant date fair value of awards granted$123.66 $90.06 $88.84 
Fair value of awards vested during the year (in millions)
58.7 30.4 28.7 
As of December 31, 2023, unrecognized compensation expense associated with the unvested RSUs outstanding was $59.3 million and is expected to be recognized over a weighted average period of 22 months.
Long-Term Incentive Program Awards
Each performance unit represents the right to receive common shares at a future date based on our performance against specified targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets, which can range from 0% to 200% of the targeted amounts. A performance unit may be comprised of either a performance-based award or a market-based award. For performance-based awards, performance units have a vesting schedule of three years and compensation expense is recognized based on the number of common shares expected to be issued and the market price per common share on
the date of grant. Over the performance period, the number of shares expected to be issued is adjusted upward or downward based upon the probability of achievement of the performance targets. For market-based awards, performance units vest at the end of a three-year period assuming continued employment and achievement of market-based performance goals. The fair value of market-based performance awards was determined through the use of the Monte Carlo simulation method. The compensation expense for the LTIP awards is recognized on a straight-line basis over the vesting terms.
The following is a summary of LTIP award activity, at 100% of targeted amount, for 2023:
Number of Performance UnitsWeighted Average
Grant Date Fair
Value
(in thousands)
Non-vested — December 31, 2022272 $85.37 
Granted67 133.08 
Vested(107)70.05 
Canceled(5)114.34 
Non-vested — December 31, 2023227 $105.92 
As of December 31, 2023, we estimate that approximately 91,000, 83,000 and 57,000 shares will vest with $0.1 million, $1.6 million and $4.2 million in unamortized compensation expense related to the 2021, 2022 and 2023 LTIP grants, respectively.
Employee Stock Purchase Plan
Our employee stock purchase plan (the “ESPP”) enables employees to purchase shares of Insperity stock at a 5% discount from the stock price at the end of the offering period. The ESPP is a non-compensatory plan under GAAP for stock-based compensation. As a result, no compensation expense is recognized in conjunction with this plan. Approximately 39,000, 36,000 and 36,000 shares were issued from treasury under the ESPP during fiscal years 2023, 2022 and 2021, respectively.