Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company has Stock Incentive Plans (the "Plans") pursuant to which the Company’s Board of Directors may grant stock options or restricted stock to employees.

The table below summarizes the expense related to share-based payments recognized in the three and nine months ended September 30, 2020 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock options	$	5,294	$	7,038	$	18,069	$	26,901
Restricted stock	6,610		8,235		16,999		19,219
Stock-based compensation	$	11,904	$	15,273	$	35,069	$	46,120

The tax benefits recorded on stock based compensation were $52.1 million and $36.8 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of September 30, 2020 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	39,576	1.90
Restricted stock	33,479		2.07
Total	$	73,055

Stock Options

Stock options are granted with an exercise price estimated to be equal to the fair market value on the date of grant as authorized by the Company’s Board of Directors. Options granted have vesting provisions ranging from one to five years and vesting of the options is generally based on the passage of time or performance. Stock option grants are subject to forfeiture if employment terminates prior to vesting.

The following summarizes the changes in the number of shares of common stock under option for the nine months ended September 30, 2020 (shares/options and aggregate intrinsic value in thousands):


	Shares	Weighted Average Exercise Price		Options Exercisable at End of Period	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value
Outstanding at December 31, 2019	6,263	$	124.38	5,137	$	109.03			$	1,022,860
Granted	488	214.31					$	52.76
Exercised	(1,240)	86.52							188,010
Forfeited	(122)	192.81
Outstanding at September 30, 2020	5,389	$	139.73	4,135	$	121.04			$	530,017
Expected to vest as of September 30, 2020	1,253	$	201.40

The aggregate intrinsic value of stock options exercisable at September 30, 2020 was $484.0 million. The weighted average remaining contractual term of options exercisable at September 30, 2020 was 4.6 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions for grants or modifications during the nine months ended September 30, 2020 and 2019:


	September 30,
	2020		2019
Risk-free interest rate	0.38	%	2.40	%
Dividend yield	—		—
Expected volatility	30.91	%	26.41	%
Expected life (in years)	3.9		3.7

Restricted Stock

Awards of restricted stock and restricted stock units are independent of stock option grants and are subject to forfeiture if employment terminates prior to vesting. The vesting of shares granted is generally based on the passage of time, performance or market conditions, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one to four years.

The fair value of restricted stock units granted with market based vesting conditions was estimated using the Monte Carlo simulation valuation model with the following assumptions during 2019. There were no restricted stock shares granted with market based vesting conditions during the first nine months of 2020.


						2019
Risk-free interest rate						1.48%
Dividend yield						—
Expected volatility						25.40%
Expected life (in years)						2.36

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the nine months ended September 30, 2020 (shares in thousands):


	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019	243	$	246.34
Granted	171	259.35
Vested	(130)	223.48
Canceled or forfeited	(97)	256.92
Outstanding at September 30, 2020	187	$	261.94