Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

The Company may grant stock options and restricted stock under its stock-based compensation plans to certain officers, employees and directors. These plans are administered by a committee of the Board of Directors, and at June 30, 2022, approximately 0.8 million shares were available for grant under these stock-based compensation plans.

A Black-Scholes model is utilized to estimate the fair value of stock option grants, while the market price of the Company’s stock at the date of grant is used to estimate the fair value of restricted stock awards. The weighted average assumptions used in the Black-Scholes model for valuing stock option grants for the six months ended June 30, 2022 and 2021 were as follows.


	Six Months Ended June 30,
	2022			2021
Dividend yield	—		%	—		%
Expected volatility	30		%	30		%
Risk-free interest rate	1.77		%	1.16		%
Expected average life	7 years			7 years
Weighted average per share fair value of options	$	32.99		$	26.55

A summary of the Company’s stock option activity is summarized below.


Stock Options	Option Shares Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2021	1,833,246	$	57.69
Granted	30,429	93.68
Exercise of stock options *	(65,411)	41.32
Forfeited	(8,100)	77.56
Outstanding - June 30, 2022	1,790,164	$	58.81	6.2	$	27,369
Exercisable - June 30, 2022	1,207,235	$	50.84	5.1	$	26,444

* The terms of the stock option agreements permit having a number of shares of stock withheld, the fair market value of which as of the date of exercise is sufficient to satisfy the exercise price and/or tax withholding requirements. For the six months ended June 30, 2022, 6,073 such shares were withheld by the Company.

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock options. The intrinsic value of options exercised for the six months ended June 30, 2022 and 2021 was approximately $3.3 million and $1.5 million, respectively.

A summary of the Company’s restricted stock activity is summarized below.


Restricted Stock	Weighted Average Grant Date Fair Value		Restricted Shares Outstanding
Outstanding - December 31, 2021	$	71.42	25,801
Granted	77.06		8,424
Vested *	71.63		(12,449)
Forfeited	56.01		(600)
Outstanding - June 30, 2022	$	73.98	21,176

* The terms of the restricted stock agreements permit the surrender of shares to the Company upon vesting in order to satisfy applicable tax withholding requirements at the minimum statutory withholding rate, and accordingly, 393 shares were surrendered during the six months ended June 30, 2022.

The Company recognized approximately $3.3 million and $2.7 million of stock-based compensation expense (included in personnel on the consolidated statements of income) for the six months ended June 30, 2022 and 2021, respectively, associated with its common stock awards granted to officers and employees. In addition, during the six months ended June 30, 2022, the Company recognized approximately $0.6 million of director expense (included in other expense on the consolidated statements of income) for restricted stock grants totaling 8,424 shares with immediate vesting to directors, while during first half 2021, the Company recognized approximately $0.7 million of director expense for restricted stock grants totaling 8,562 shares with immediate vesting to directors, in each case representing the annual stock retainer fee paid to external board members for that year. As of June 30, 2022, there was approximately $14.2 million of unrecognized compensation cost related to equity award grants. The cost is expected to be recognized over the remaining vesting period of approximately four years. The Company

recognized a tax benefit of approximately $0.4 million and $0.3 million for the six months ended June 30, 2022 and 2021, respectively, for the tax impact of stock option exercises and vesting of restricted stock.