The Company issues stock-based awards, including stock options, restricted stock units and performance stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Equity Incentive Plan”). At June 30, 2024, a maximum of 12,700,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock units and performance stock units or other share-based compensation under the Equity Incentive Plan, of which 2,068,284 were available for future grant. Stock options may be granted for terms of up to ten years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25% or 33% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Company’s common stock on the most recent trading date prior to the date of grant.

The Company recognized $8.9 million and $7.3 million in equity-based compensation expense for the three months ended June 30, 2024 and 2023, respectively, and $17.5 million and $15.0 million for the six months ended June 30, 2024 and 2023, respectively. Stock compensation expense for the six months ended June 30, 2024 and 2023 is impacted by forfeiture adjustments and performance stock unit adjustments based on actual performance compared to vesting targets. At June 30, 2024, there was $89.1 million of unrecognized compensation expense related to unvested options, restricted stock units and performance stock units, which is expected to be recognized over the remaining weighted average vesting period of 1.3 years.

The Company recognized a deferred income tax benefit of $2.4 million and $2.0 million for the three months ended June 30, 2024 and 2023, respectively, and $4.8 million and $4.1 million for the six months ended June 30, 2024 and 2023, respectively, related to equity-based compensation expense.

Stock option activity during 2023 and 2024 was as follows:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding at January 1, 2023		979,277		$	46.27
Options granted		296,340			78.94
Options exercised		(198,527	)		41.29
Options cancelled		(140,545	)		55.95
Options outstanding at December 31, 2023		936,545			56.21
Options granted		3,000			78.59
Options exercised		(121,468	)		45.94
Options cancelled		(45,560	)		67.12
Options outstanding at June 30, 2024		772,517		$	57.27		6.85	$	10,819
Options exercisable at June 30, 2024		422,652		$	48.06		5.80	$	8,872

Fair values are estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the six months ended June 30, 2024 and year ended December 31, 2023:


	June 30, 2024			December 31, 2023
Weighted average grant-date fair value of options	$	28.34		$	30.99
Risk-free interest rate		4.4	%		4.2	%
Expected volatility		33	%		37	%
Expected life (in years)		4.7			5.0

The Company’s estimate of expected volatility for stock options is based upon the volatility of its stock price over the expected life of the award. The risk-free interest rate is the approximate yield on U.S. Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

Restricted stock unit activity during 2023 and 2024 was as follows:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2023		1,045,202		$	54.89
Granted		587,239			76.32
Cancelled		(198,740	)		57.21
Vested		(403,223	)		50.48
Unvested at December 31, 2023		1,030,478		$	68.38
Granted		492,602			76.45
Cancelled		(61,121	)		70.45
Vested		(287,340	)		61.41
Unvested at June 30, 2024		1,174,619		$	73.36

Performance stock unit activity during 2023 and 2024 was as follows:


	Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2023		1,273,800		$	20.69
Granted		177,509			70.98
Performance adjustment		407,825			17.69
Cancelled		(114,908	)		69.07
Vested		(1,408,195	)		10.60
Unvested at December 31, 2023		336,031		$	69.35
Granted		75,909			67.85
Performance adjustment		(9,241	)		72.99
Cancelled		(15,723	)		70.37
Vested		(98,504	)		61.52
Unvested at June 30, 2024		288,472		$	71.45

Restricted stock unit awards are time-based vesting awards that vest over a period of three or four years and are subject to continuing service of the employee or non-employee director over the ratable vesting periods. The fair values of the restricted stock unit awards were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date.

Performance stock units are granted to employees and are subject to Company performance compared to pre-established targets. In addition to Company performance, these performance-based stock units are subject to the continuing service of the employee during the three-year period covered by the awards. The performance conditions for the performance stock units are based on the Company’s achievement of annually established targets for diluted earnings per share, Adjusted EBITDA and/or revenue. The number of shares issuable at the end of the applicable vesting period of performance stock units ranges from 0% to 200% of the targeted units based on the Company’s actual performance compared to the targets.

The fair values of performance stock units were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions.