Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation. Under this guidance, the Company recognizes share-based compensation ratably using the straight-line attribution method over the requisite service period, which is generally three years. The fair value of restricted stock awards is based on the value of the Company’s common stock on the date of the grant.

The Company’s Third Amended and Restated Perficient, Inc. 2012 Long Term Incentive Plan (as amended, the “Incentive Plan”) allows for the granting of various types of stock awards to eligible individuals. The Compensation Committee of the Board of Directors administers the Incentive Plan and determines the terms of all stock awards made under the Incentive Plan. The Company may issue stock awards of up to 8.5 million shares of Common Stock pursuant to the Incentive Plan. As of December 31, 2023, there were 2.0 million shares of Common Stock available for issuance under the Incentive Plan.

The Company recognized $28.3 million, $24.6 million and $23.1 million of share-based compensation expense during 2023, 2022 and 2021, respectively, which included $4.6 million, $4.4 million and $4.0 million of expense for retirement savings plan contributions, respectively. The associated current and future income tax benefit recognized during 2023, 2022 and 2021 was $7.8 million, $6.4 million and $3.8 million, respectively.

Restricted Stock Awards (“RSAs”)

Restricted stock activity for the year ended December 31, 2023 was as follows (in thousands, except fair value information):


	RSAs (Shares)	Weighted-Average Grant Date Fair Value
Restricted stock awards outstanding at December 31, 2022	616	$	72.02
Awards granted (1)	449	$	64.74
Awards vested (2)	(307)	$	64.29
Awards forfeited	(44)	$	71.43
Restricted stock awards outstanding at December 31, 2023	714	$	70.80

(1)The weighted average grant date fair value of shares granted during 2022 and 2021 was $75.76 and $76.48, respectively.

(2)The total fair value of restricted shares vested during the years ended December 31, 2023, 2022 and 2021 was $19.7 million, $32.0 million and $44.1 million, respectively.

As of December 31, 2023, there was $36.7 million of total unrecognized compensation cost related to non-vested restricted stock awards. This cost is expected to be recognized over a weighted-average period of two years. Restricted stock awards generally vest over a three-year service period.

Performance Stock Awards (“PSAs”)

The Company also grants PSAs under the Incentive Plan with terms determined at the discretion of the compensation committee of the Company’s Board of Directors. The actual number of PSAs that will be eligible to vest is based on the achievement of a relative total shareholder return (“TSR”) target as compared to the TSR realized by each of the companies comprising the Nasdaq Composite Index over a three-year period. The PSAs vest at the end of the TSR measurement period, and up to 100% of the target number of shares subject to each PSA are eligible to be earned. During the twelve months ended December 31, 2023, the Company awarded 10,842 PSAs with a fair market value of $80.90 per share. PSA related stock-based compensation cost recognized for the twelve months ended December 31, 2023 was $0.1 million.

The Company estimated the grant date fair value of the PSAs using a Monte Carlo simulation model that included the following assumptions:


	Year Ended December 31, 2023
Valuation assumptions:
Expected dividend yield	—
Expected volatility	52.37	%
Expected term (years)	3.44
Risk-free interest rate	4.45	%

As of December 31, 2023, there was $0.7 million of total unrecognized compensation cost related to unvested PSAs, expected to be recognized over a period of three years.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “ESPP”) is a broadly-based stock purchase plan in which any eligible employee may elect to participate by authorizing the Company to make payroll deductions in a specific amount or designated percentage to pay the exercise price of an option. In no event will the ESPP permit an employee to purchase common stock with a fair market value in excess of $25,000 in any calendar year. During the year ended December 31, 2023, 14,612 shares were purchased under the ESPP.

There are four three-month offering periods in each calendar year beginning on January 1, April 1, July 1, and October 1, respectively. The purchase price of shares offered under the ESPP is an amount equal to 95% of the fair market value of the common stock on the date of purchase (occurring on, respectively, March 31, June 30, September 30, and December 31). The ESPP is designed to comply with Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”), and thus is eligible for the favorable tax treatment afforded by Section 423.