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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation STOCK-BASED COMPENSATION
Non-Qualified Employee Stock Award Plan
The United Fire Group, Inc. 2008 Stock Plan (the "2008 Stock Plan") authorized the issuance of restricted and unrestricted stock awards, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 1,900,000 shares of United Fire common stock to employees. In May 2014, the Registrant's shareholders approved an additional 1,500,000 shares of UFG common stock issuable at any time and from time to time pursuant to the 2008 Stock Plan, among other amendments, and renamed such plan as the United Fire Group, Inc. Stock Plan. In May 2021, the Registrant's shareholders approved an additional 650,000 shares of UFG common stock issuable at any time and from time to time pursuant to the Stock Plan, and among other amendments, renamed such plan as the United Fire Group, Inc. 2021 Stock and Incentive Plan (as amended, the "Stock Plan"). At December 31, 2023, there were 1,150,834 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees who are in positions of substantial responsibility with United Fire.
Options granted pursuant to the Stock Plan are granted to buy shares of United Fire's common stock at the market value of the stock on the date of grant. Options granted prior to March 2017 vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. Options granted after March 2017 vest and are exercisable in installments of 33.3 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of our common stock on the date of the grant. Restricted stock awards fully vest after three years or five years from the date of issuance, unless accelerated upon the approval of the Board of Directors, at which time United Fire common stock will be issued to the awardee. All awards are generally granted free of charge to the eligible employees of United Fire as designated by the Board of Directors. Forfeitures of awards under the plan are recognized as they occur.
The activity in the Stock Plan is displayed in the following table:
Year Ended From Inception to
Authorized Shares Available for Future Award GrantsDecember 31, 2023December 31, 2023
Beginning balance1,334,790  1,900,000 
Additional shares authorized— 2,150,000 
Number of awards granted(351,716) (3,973,857)
Number of awards forfeited or expired167,760  1,074,691 
Ending balance1,150,834  1,150,834 
Number of option awards exercised4,000  1,537,336 
Number of unrestricted stock awards granted— 10,090 
Number of restricted stock awards vested32,591  300,436 

Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan
The United Fire Group, Inc. Non-Employee Director Stock Plan (formerly known as the 2005 Non-Qualified Non- Employee Director Stock Option and Restricted Stock Plan) (the "Director Stock Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of UFG's common stock to non-employee directors. On May 20, 2020, the Company's shareholders approved amendments to the Director Stock Plan, previously approved by the Company's Board of Directors, to (i) increase the number of shares available for future awards under the Director Stock Plan from 300,000 to 450,000, (ii) extend the expiration date of the Director Stock Plan from December 31, 2020 to December 31, 2029, (iii) allow for the grant of awards of restricted stock units, and
(iv) rename the Director Stock Plan as the "United Fire Group, Inc. Non-Employee Director Stock Plan." At December 31, 2023, the Company had 103,600 authorized shares available for future issuance.
The Board of Directors has the authority to determine which non-employee directors receive awards, when options and restricted stock shall be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options or whether the options shall be immediately vested, the terms and conditions of options and restricted stock (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option agreement or restricted stock agreement (subject to limits set forth in the plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Stock Plan. Forfeitures of awards under the plan are recognized as they occur.
The activity in the Director Stock Plan is displayed in the following table:
Year EndedFrom Inception to
Authorized Shares Available for Future Award GrantsDecember 31, 2023December 31, 2023
Beginning balance123,397  300,000 
Additional authorization— 150,000 
Number of awards granted(31,380) (386,618)
Number of awards forfeited or expired11,583  40,218 
Ending balance103,600  103,600 
Number of option awards exercised1,755  152,336 
Number of restricted stock awards vested20,955 137,956 

Stock-Based Compensation Expense
In 2023, 2022 and 2021, we recognized stock-based compensation expense of $3,246, $2,827 and $3,441, respectively. Stock-based compensation expense is recognized over the vesting period of the stock options.
As of December 31, 2023, we had $5,655 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized in subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.
20243,394 
20251,865 
2026367 
202729 
Total$5,655 
Analysis of Award Activity
The analysis below details the option award activity for 2023 and the awards outstanding at December 31, 2023, for both of our plans and ad hoc options, which were granted prior to the adoption of the other plans:
OptionsSharesWeighted-Average Exercise Price
Weighted-Average Remaining Life (in years)
Aggregate Intrinsic Value
Outstanding at January 1, 2023776,338 $36.47 
Granted117,026 28.08 
Exercised(5,755)27.35 
Cancelled/Forfeited(74,350)35.95 
Expired(17,583)27.23 
Outstanding at December 31, 2023795,676 $35.55 3.01$— 
Exercisable at December 31, 2023645,476 $37.21 1.64$— 
Intrinsic value is the difference between our share price on the last day of trading (i.e., December 31, 2023) and the price of the options when granted and represents the value that would have been received by option holders had they exercised their options on that date. These values change based on the fair market value of our shares. The intrinsic value of options exercised totaled $18, $261 and $133 in 2023, 2022 and 2021, respectively.
The analysis below details the award activity for the restricted stock and restricted stock unit awards outstanding at December 31, 2023:
Restricted stock awardsSharesWeighted-Average Grant Date Fair Value
Non-vested at January 1, 2023157,387 $30.56 
Adjustment to prior year PSU performance prediction7,329 30.56 
Granted266,070 26.42 
Vested(67,488)32.99 
Forfeited(31,117)31.89 
PSU projected performance adjustment(40,742)28.42 
Non-vested at December 31, 2023291,439 $27.42 
In 2023, 2022 and 2021 we recognized $2,637, $2,048 and $2,610, respectively, in compensation expense related to the restricted stock and restricted stock unit awards. At December 31, 2023, we had $4,632 in compensation expense that has yet to be recognized through our results of operations related to the restricted stock and restricted stock unit awards. The intrinsic value of the non-vested restricted stock and restricted stock unit awards outstanding totaled $5,864 and $4,306 at December 31, 2023 and 2022, respectively.
Assumptions
The weighted-average grant-date fair value of the options granted under our plans has been estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
December 31,202320222021
Risk-free interest rate4.09 %2.18 %0.98 %
Expected volatility (historical)
41.85 %40.56 %56.49 %
Expected option life (in years)
777
Expected dividends (in dollars)
$0.64 $0.61 $0.60 
Weighted-average grant-date fair value of options granted during the year (in dollars)
$10.95 $10.49 $13.48 
The following table summarizes information regarding the stock options outstanding and exercisable at December 31, 2023:
 Options OutstandingOptions Exercisable
Range of Exercise Prices
Number Outstanding (in shares)
Weighted-Average Remaining Contractual Life (in years)
Weighted-Average Exercise Price
Number Exercisable (in shares)
Weighted-Average Exercise Price
$20.24 28.76136,617 7.74$27.36 26,954 $24.50 
28.77 29.44171,963 1.5829.20 165,469 29.19 
29.45 34.76128,246 3.3629.56 94,203 29.59 
34.77 43.54189,022 1.2440.79 189,022 40.79 
43.55 54.26169,828 2.3447.27 169,828 47.27 
$20.24 54.26795,676 3.01$35.55 645,476 $37.21