Share-Based Compensation and Capital Stock

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation and Capital Stock

The components of the Company’s pretax share-based compensation activity and associated income tax (expense) benefit are as follows for the three and six months ended June 30, 2020 and 2019:



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Stock options	$	490		$	535		$	981		$	1,126
Restricted stock	2,099			2,170			4,043			4,146
Performance vested restricted stock units	(324		)	1,338			(5,511		)	2,489
Total share-based compensation expense (benefit)	$	2,265		$	4,043		$	(487	)	$	7,761
Income tax expense (benefit)	$	(539	)	$	(966	)	$	116		$	(1,854	)

Refer to the discussion of Performance Vested Restricted Stock Units (“PVRSUs”) leveraging for unvested grants below.

A summary of stock-based award activity as of June 30, 2020 and changes during the six months ended are presented below:



	Stock Options					Restricted Stock				Performance Vested Restricted Stock Units
	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020	873,895		$	61.69		312,097		$	75.23	330,716		$	70.03
Granted	158,620		91.28			131,268		88.59		93,388		91.28
Performance-Based Leveraging⁽¹⁾	—		—			—		—		30,116		61.31
Exercised/Vested	(52,010	)	53.21			(114,549	)	69.48		(176,471	)	58.68
Expired	—		—			—		—		(16,117	)	60.50
Forfeited	(3,696	)	91.28			(34,926	)	81.94		(16,039	)	82.23
Outstanding at June 30, 2020	976,809		$	66.84	2.5 years	293,890		$	82.64	245,593		$	85.03
Options exercisable at June 30, 2020	634,948		$	57.51	2.5 years

⁽¹⁾PVRSUs outstanding have been increased by 30,116 units due to the Company exceeding the targeted performance conditions contained in PVRSUs granted in prior periods which vested in the three months ending June 30, 2020.

The stock options granted by the Company had an exercise price equal to the market price of the Company's common stock on the date of grant. The fair value of the options granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:



	2020 Grants
Risk-free interest rate	0.99		%
Expected volatility	20.88		%
Expected life of stock option	5.9 years
Dividend yield	0.99		%
Requisite service period	4 years
Contractual life	10 years
Weighted average fair value of options granted (per option)	$	17.25

Restricted stock awards generally vest ratably over the service period beginning with the first anniversary of the grant date. Vesting service period of shares granted during the six months ended June 30, 2020 range from 12 to 48 months.

The Company has granted PVRSUs to certain employees. The vesting of these stock awards is contingent upon the Company achieving performance targets over a 36 month requisite service period and the employees' continued employment. The performance conditions affect the number of shares that will ultimately vest and can range between 0% and 200% of the shares

granted. Management monitors the leveraging of unvested PVRSUs and adjusts the leveraging percentages based on estimated achievement of performance targets. During the six months ended June 30, 2020, the Company reduced the leveraging factor for 239,437 unvested PVRSUs to 0%, based on management's estimate of achievement of performance targets with contemplation to impacts from the COVID-19 pandemic, contained in PVRSUs granted in the current and prior periods.

Share Repurchases and Redemptions

There were no purchases of common stock under the share repurchase program during the three months ended June 30, 2020. The Company purchased 548,031 shares of common stock under the share repurchase program at a total cost of $43.3 million during six months ended June 30, 2020. During the three and six months ended June 30, 2020, the Company redeemed 6,525 and 115,525 shares of common stock at a total cost of approximately $0.5 million and $11.2 million, respectively, from employees to satisfy the option exercise price and statutory minimum tax-withholding requirements related to the exercising of stock options and vesting of performance vested restricted stock units and restricted stock grants. These redemptions were outside the share repurchase program.

In light of uncertainty resulting from the COVID-19 pandemic, the Company has temporarily suspended activity under the share repurchase program. Refer to the Liquidity and Capital Resources header of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.