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STOCK-BASED COMPENSATION PLAN
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION PLAN STOCK-BASED COMPENSATION PLAN:
Under SJI's Omnibus Equity Compensation Plan (Plan), shares, stock appreciation rights, and options may be issued to SJI’s officers (Officers), non-employee directors (Directors) and other key employees.

Grants to Officers and other key employees - SJI grants time-based shares of restricted stock, one-third of which vest annually over a three-year period and which are limited to a 100% payout. The vesting and payout of time-based shares of restricted stock is solely contingent upon the service requirement being met in years one, two, and three of the grant. SJI also grants performance-based restricted shares which vest over a three-year period and are subject to SJI achieving certain market or earnings-based performance targets, which can cause the actual amount of shares that ultimately vest to range from 0% to 200% of the original shares granted. During the years ended December 31, 2021, 2020 and 2019, SJI granted 243,540, 225,278 and 184,791 shares of restricted stock, respectively, to Officers and other key employees under the Plan.  No options were granted or outstanding during the years ended December 31, 2021, 2020 and 2019.  No stock appreciation rights have been issued under the Plan.

Performance-based grants containing market-based performance targets use SJI's TSR relative to a peer group to measure performance. As these TSR-related performance-based grants are contingent upon market and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant on a straight-line basis over the requisite three-year period of each award. In addition, SJI identifies specific forfeitures of share-based awards, and compensation expense is adjusted accordingly over the requisite service period. Compensation expense is not adjusted based on the actual achievement of the market-based goals. The fair value of TSR-related performance-based restricted stock awards on the date of grant is estimated using a Monte Carlo simulation model.

Performance-based grants containing earnings-based performance targets use pre-defined CEGR goals for SJI to measure performance. As CEGR-based grants are contingent upon performance and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant over the requisite three-year period of each award. The fair value is measured as the market price at the date of grant. The initial accruals of compensation expense are based on the estimated number of shares expected to vest, assuming the requisite service is rendered and probable outcome of the performance condition is achieved. That estimate is revised if subsequent information indicates that the actual number of
shares is likely to differ from previous estimates. Compensation expense is ultimately adjusted based on the actual achievement of service and performance targets.

Grants to Directors - SJI granted 54,419, 38,456 and 30,961 restricted shares to Directors in 2021, 2020 and 2019, respectively.  Shares issued to Directors vest after twelve months and contain no performance conditions. As a result, 100% of the shares granted generally vest.

The following table summarizes the nonvested restricted stock awards outstanding at December 31, 2021, and the assumptions used to estimate the fair value of the awards:
 GrantsShares OutstandingFair Value Per ShareExpected VolatilityRisk-Free Interest Rate
Officers & Key Employees -2019 - TSR32,292 $32.88 23.2 %2.40 %
2019 - CEGR, Time69,265 31.38 N/AN/A
2020 - TSR38,813 $25.51 34.8 %0.21 %
2020 - CEGR, Time123,487 $25.19 N/AN/A
2021- TSR42,716 $28.11 39.9 %0.27 %
2021 - CEGR, Time185,902 $25.33 N/AN/A
Directors -202154,419 $24.75 N/AN/A

Expected volatility is based on the actual volatility of SJI’s share price over the preceding three-year period as of the valuation date. The risk-free interest rate is based on the zero-coupon U.S. Treasury Bond, with a term equal to the three-year term of the Officers' and other key employees' restricted shares. As notional dividend equivalents are credited to the holders during the three-year service period, no reduction to the fair value of the award is required. As the Directors’ restricted stock awards contain no performance conditions and dividends are paid or credited to the holder during the twelve month service period, the fair value of these awards is equal to the market value of the shares on the date of grant.

The following table summarizes the total stock-based compensation cost to SJI for the years ended December 31 (in thousands):
 202120202019
Officers & Key Employees$5,069 $4,590 $4,371 
Directors897 1,207 838 
Total Cost5,966 5,797 5,209 
Capitalized(440)(46)(275)
Net Expense$5,526 $5,751 $4,934 

The table above does not reflect the reversal of approximately $1.3 million in 2020 of previously recorded costs associated with TSR and CEGR-based grants for which performance goals were not met.

As of December 31, 2021, there was $6.0 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.6 years.

The following table summarizes information regarding restricted stock award activity for SJI during 2021, excluding accrued dividend equivalents:
 Officers & Other Key EmployeesDirectors
Weighted
Average
Fair Value
Nonvested Shares Outstanding, January 1, 2021449,786 38,456 $28.88 
Granted243,540 54,419 $25.66 
Vested(172,019)(38,456)$30.37 
Cancelled/Forfeited(28,832)— $25.71 
Nonvested Shares Outstanding, December 31, 2021492,475 54,419 $26.72 
SJI has a policy of issuing new shares to satisfy its obligations under the Plan; therefore, there are no cash payment requirements resulting from the normal operation of the Plan. However, a change in control could result in such shares becoming non-forfeitable or immediately payable in cash.  At the discretion of the Officers, Directors and other key employees, the receipt of vested shares can be deferred until future periods. These deferred shares are included in Treasury Stock on the consolidated balance sheets.

During the years ended December 31, 2021, 2020 and 2019, SJI issued 146,597, 78,149 and 125,288 shares to its Officers and other key employees at a market value of $3.6 million, $2.2 million and $3.7 million. These issued shares include shares deferred for payout in prior years.

SJG - Officers and other key employees of SJG participate in the Plan. During the years ended December 31, 2021, 2020 and 2019, SJG officers and other key employees were granted 23,010, 7,902 and 6,095 shares, respectively, of SJI restricted stock, which had an immaterial impact to SJG's financial statements for all years.