Stock-Based and Other Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

At December 31, 2023, we maintained the stock-based compensation plans described below. The total compensation expense (net of forfeitures) for awards issued under these plans was $34.5 million, $32.8 million, and $24.9 million for the years ended December 31, 2023, 2022, and 2021, respectively, which was included in Stock-based compensation expense in the consolidated financial statements. The tax (expense) benefit recognized by us related to these awards totaled $(4.3) million and $0.8 million for the years ended December 31, 2022 and 2021, respectively. No such benefit was recorded during the year ended December 31, 2023. The tax (expenses) benefits for the years ended December 31, 2022 and 2021 were reflected as a deferred tax (expense) benefit within Provision for income taxes in the consolidated financial statements.

2017 Share Incentive Plan

We maintain the 2017 Share Incentive Plan, which authorizes the issuance of up to 4,000,000 shares of our common stock. The 2017 Share Incentive Plan provides for the grant of various stock- and cash-based awards, including (i) share options, (ii) RSUs, (iii) PSUs, (iv) RSAs, and (v) dividend equivalent rights. At December 31, 2023, 1,646,877 shares remained available for issuance under the 2017 Share Incentive Plan, which is more fully described in the 2019 Annual Report.

Nonvested RSAs, RSUs, and PSUs at December 31, 2023 and changes during the years ended December 31, 2023, 2022, and 2021 were as follows:


	RSA and RSU Awards			PSU Awards
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2021	260,977	$	74.75	262,013	$	88.99
Granted	194,940	66.40		134,290	86.19
Vested (a)	(137,267)	71.99		(151,678)	76.04
Forfeited	(11,656)	60.98		(16,463)	93.91
Adjustment (b)	—	—		170,093	71.17
Nonvested at December 31, 2021	306,994	71.21		398,255	86.86
Granted	235,348	80.28		144,311	104.97
Vested (a)	(154,028)	72.80		(165,615)	92.16
Forfeited	(12,016)	75.93		(4,262)	98.26
Adjustment (b)	—	—		159,092	80.90
Nonvested at December 31, 2022	376,298	74.78		531,781	89.14
Granted (c)	260,193	82.43		150,989	144.54
Vested (a)	(173,883)	76.50		(218,147)	104.65
Forfeited	(3,581)	82.58		(3,487)	107.72
Adjustment (b)	(11,669)	80.75		65,277	113.99
Nonvested at December 31, 2023 (d)	447,358	$	77.69	526,413	$	105.92

__________

(a)The grant date fair value of shares vested during the years ended December 31, 2023, 2022, and 2021 was $36.1 million, $26.5 million, and $21.4 million, respectively. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date pursuant to previously made deferral elections. At December 31, 2023 and 2022, we had an obligation to issue 1,196,955 and 1,181,947 shares, respectively, of our common stock underlying such deferred awards, which is recorded within Total stockholders’ equity as a Deferred compensation obligation of $62.0 million and $57.0 million, respectively.

(b)Vesting and payment of the PSUs is conditioned upon certain company and/or market performance goals being met during the relevant three-year performance period. The ultimate number of PSUs to be vested will depend on the extent to which the performance goals are met and can range from zero to three times the original awards. As a result, we recorded adjustments to reflect the number of shares expected to be issued when the PSUs vest.

(c)The grant date fair value of RSAs and RSUs reflect our stock price on the date of grant on a one-for-one basis. The grant date fair value of PSUs was determined utilizing a Monte Carlo simulation model to generate an estimate of our future stock price over the three-year performance period. To estimate the fair value of PSUs granted during the year ended December 31, 2023, we used a risk-free interest rate of 3.8%, an expected volatility rate of 38.2%, and assumed a dividend yield of zero.

(d)At December 31, 2023, total unrecognized compensation expense related to these awards was approximately $41.9 million, with an aggregate weighted-average remaining term of 1.9 years.

At the end of each reporting period, we evaluate the ultimate number of PSUs we expect to vest (based upon the extent to which we have met and expect to meet the performance goals) and where appropriate, revise our estimate and associated expense. We do not revise the associated expense on PSUs expected to vest based on market performance. Upon vesting, the RSUs and PSUs may be converted into shares of our common stock. Both the RSUs and PSUs carry dividend equivalent rights. Dividend equivalent rights on RSUs issued under the predecessor employee plan are paid in cash on a quarterly basis, whereas dividend equivalent rights on RSUs issued under the 2017 Share Incentive Plan are accrued and paid in cash only when the underlying shares vest, which is generally on an annual basis. Dividend equivalents on PSUs accrue during the performance period and are converted into additional shares of common stock at the conclusion of the performance period to the extent the PSUs vest. Dividend equivalent rights are accounted for as a reduction to retained earnings to the extent that the awards are expected to vest.

In connection with the Spin-Off (Note 3), each RSU and PSU outstanding at November 1, 2023 received an equitable adjustment equal to the ratio of the five-day volume weighted average per-share price of our common stock prior to the Spin-Off divided by the five-day volume weighted average per-share of our common stock following the Spin-Off. Concurrently, our Board approved amending the performance vesting conditions assigned to the 2021 and 2022 PSU outstanding awards. The equitable adjustment and the amended performance vesting conditions were considered modifications in accordance with the provisions of ASC 718, Compensation-Stock Compensation. As a result, we compared the fair value of each award immediately prior to the modification to the fair value immediately after the modification to measure incremental compensation cost, if any. The modification resulted in minimal incremental fair value. The table above is inclusive of these adjustments.

Employee Share Purchase Plan

We sponsor an employee share purchase plan (“ESPP”) pursuant to which eligible employees may contribute up to 10% of compensation, subject to certain limits, to purchase our common stock semi-annually at a price equal to 90% of the fair market value at certain plan defined dates. Compensation expense under this plan for each of the years ended December 31, 2023, 2022, and 2021 was less than $0.1 million. Cash received from purchases under the ESPP during the years ended December 31, 2023, 2022, and 2021 was $0.3 million, $0.2 million, and $0.3 million, respectively.

Profit-Sharing Plan

We sponsor a qualified profit-sharing plan and trust that generally permits all employees, as defined by the plan, to make pre-tax contributions into the plan. We are under no obligation to contribute to the plan and the amount of any contribution is determined by and at the discretion of our Board. In December 2023, 2022, and 2021, our Board determined that the contribution to the plan for each of those respective years would be 10% of an eligible participant’s cash compensation, up to the legal maximum allowable in each of those years of $33,000 for 2023, $30,500 for 2022, and $29,000 for 2021. For the years ended December 31, 2023, 2022, and 2021, amounts expensed for contributions to the trust were $2.6 million, $2.3 million, and $2.2 million, respectively, which were included in General and administrative expenses in the consolidated financial statements. The profit-sharing plan is a deferred compensation plan and is therefore considered to be outside the scope of current accounting guidance for stock-based compensation.