Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

The Company accounts for stock-based compensation pursuant to relevant authoritative guidance, which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of estimated forfeitures, over the requisite service period for awards expected to vest.

The Company has a Stock Incentive Plan (the "Plan"), pursuant to which the Company's board of directors is permitted to grant equity to employees and directors. Under the Plan, a maximum of 20.65 million shares of our common stock is approved to be issued for grants of restricted stock and stock options. At December 31, 2022, there were 4.6 million shares available to be granted under the Plan. The Company does not issue shares from treasury stock under the Plan.

The table below summarizes the expense recognized within general and administrative expenses in the Consolidated Statements of Income related to stock-based compensation for the years ended December 31 (in thousands):


	2022		2021		2020
Stock options	$	61,993	$	30,057	$	23,407
Restricted stock	59,423		50,014		19,977
Stock-based compensation	$	121,416	$	80,071	$	43,384

The tax benefits recorded upon the exercises of options and vesting of restricted stock were $25.5 million, $32.8 million and $70.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of December 31, 2022 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	45,659	1.58
Restricted stock	41,570		0.70
Total	$	87,229

Stock Options

The following summarizes the changes in the number of shares of common stock under option for the following periods (shares and aggregate intrinsic value in thousands):


	Shares	Weighted Average Exercise Price		Options Exercisable at End of Year	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Year		Aggregate Intrinsic Value
Outstanding at December 31, 2019	6,263	$	124.38	5,137	$	109.03			$	1,022,860
Granted	503	215.36					$	53.18
Exercised	(1,681)	80.84							322,823
Forfeited	(121)	194.61
Outstanding at December 31, 2020	4,964	146.69		3,994	130.37				626,107
Granted	1,097	261.85					$	72.84
Exercised	(592)	82.50							83,686
Forfeited	(22)	230.14
Outstanding at December 31, 2021	5,447	176.52		3,798	145.18				257,707
Granted	649	223.66					$	65.23
Exercised	(544)	94.79							64,783
Forfeited	(251)	230.60
Outstanding at December 31, 2022	5,301	$	188.12	3,512	$	159.46			$	113,681
Expected to vest at December 31, 2022	1,422	$	240.05

The following table summarizes information about stock options outstanding at December 31, 2022 (shares in thousands):


Exercise Price	Options Outstanding	Weighted Average Remaining Vesting Life in Years	Options Exercisable
$87.61 – $199.75	3,182	0.04	3,051
$202.02 – $216.18	117	0.20	83
$220.13 – $231.70	685	1.12	151
$235.52 – $248.28	38	1.39	5
$249.77 – $252.50	202	0.11	146
$256.55 – $261.27	1,000	0.21	48
$263.21 – $319.55	78	0.82	28
	5,301		3,512

The aggregate intrinsic value of stock options exercisable at December 31, 2022 was $113.6 million. The weighted average remaining contractual term of options exercisable at December 31, 2022 was 3.4 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 years ended December 31 as follows:


	2022		2021		2020
Risk-free interest rate	1.65	%	0.45	%	0.37	%
Dividend yield	—		—		—
Expected volatility	34.62	%	34.44	%	31.00	%
Expected term (in years)	3.9		4.0		3.9

The weighted-average remaining contractual term for options outstanding was 4.1 years at December 31, 2022.

The fair value of stock options granted with market based vesting conditions was estimated using the Monte Carlo simulation valuation model with the following assumptions during the year ended December 31 as follows. There were no performance options granted with market based vesting conditions in 2022 or 2020.


	2021
Risk-free interest rate	0.59	%
Dividend yield	—
Expected volatility	36.10	%
Expected term (in years)	3.3

Restricted Stock

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the following periods (shares in thousands):


	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019	243	$	246.34
Granted	171	252.36
Cancelled	(100)	249.17
Issued	(140)	227.20
Outstanding at December 31, 2020	174	265.29
Granted	215	272.59
Cancelled	(38)	265.76
Issued	(73)	258.13
Outstanding at December 31, 2021	278	278.57
Granted	386	229.22
Cancelled	(83)	267.53
Issued	(146)	283.60
Outstanding at December 31, 2022	435	$	237.68

The total fair value of restricted stock and restricted stock units vested was $34.4 million, $20.2 million and $33.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.