Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company has a Stock Incentive Plan (the "Plan") which permits the Board to grant share based payment awards to employees and directors.

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

 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options	$	3,792	$	5,294	$	13,394	$	18,069
Restricted stock	12,661		6,610		38,691		16,999
Stock-based compensation	$	16,453	$	11,904	$	52,085	$	35,069

The tax benefits recorded on stock-based compensation were $33.2 million and $52.1 million for the nine months ended September 30, 2021 and 2020, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of September 30, 2021 (cost in thousands):

	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	95,662	1.79
Restricted stock	40,650		0.94
Total	$	136,312

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 Board. 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, 2021 (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, 2020	4,964	$	146.69	3,994	$	130.37			$	626,107
Granted	1,081	261.27					$	66.87
Exercised	(585)	81.05							109,727
Forfeited	(20)	231.52
Outstanding at September 30, 2021	5,440	$	176.24	3,765	$	144.74			$	463,948
Expected to vest as of September 30, 2021	1,675	$	247.05

The aggregate intrinsic value of stock options exercisable at September 30, 2021 was $439.0 million. The weighted average remaining contractual term of options exercisable at September 30, 2021 was 4.5 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model, as well as the Monte-Carlo simulation model for market-based options, with the following weighted-average assumptions for grants or modifications during the nine months ended September 30, 2021 and 2020:

	September 30,
	2021		2020
Risk-free interest rate	0.55	%	0.38	%
Dividend yield	—		—
Expected volatility	35.75	%	30.91	%
Expected life (in years)	3.4		3.9

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 following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the nine months ended September 30, 2021 (shares in thousands):

 

	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020	174	$	265.29
Granted	213	272.83
Vested	(72)	258.16
Canceled or forfeited	(29)	283.14
Outstanding at September 30, 2021	286	$	278.40