Share-Based Payments

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

SHARE-BASED PAYMENTSThe Company's shareholders approved an Incentive Plan in 2016 which provides for the grant of any or all of the following types of awards to eligible employees: (1) stock options, including incentive stock options and nonqualified stock options; (2) stock appreciation rights ("SARs"), in tandem with stock options or freestanding; (3) restricted stock or restricted stock units; and, (4) performance awards. The number of shares of Class A, $1.00 par value, common stock allowed to be issued under the Incentive Plan, or as to which SARs or other awards are allowed to be granted, cannot exceed 300,000. The Incentive Plan includes additional provisions, most notably regarding the definition of performance objectives which can be used in the issuance of the fourth type of award noted above (performance awards). The term of the Incentive Plan is for ten years from the date of stockholder approval.

All of the employees of the Company and its subsidiaries are eligible to participate in the Incentive Plan. In addition, directors of the Company are eligible to receive the same types of awards as employees except that they are not eligible to receive incentive stock options. Company directors, including members of the Compensation and Stock Option Committee, are eligible for nondiscretionary stock options. SARs granted prior to 2016 vest 20% annually following three years of service following the grant date. Employee SARs granted 2016 and thereafter vest 33.3% annually following one year of service from the date of the grant. Directors' SARs grants vest 20% annually following one year of service from the date of grant.

The Incentive Plan allows for certain other share or unit awards which are solely paid out in cash based on the value of the Company's shares, or changes therein, as well as the financial performance of the Company under pre-determined target performance metrics. Certain awards, such as restricted stock units ("RSUs") provide solely for cash settlement based upon the market price of the Company's Class A common shares, often referred to as "phantom stock-based awards" in equity compensation plans. Unlike share-settled awards, which have a fixed grant-date fair value, the fair value of unsettled or unvested liability awards is remeasured at the end of each reporting period based on the change in fair value of a share. The liability and corresponding expense are adjusted accordingly until the award is settled. For employees, the vesting period for RSUs is 100% at the end of 3 years from the grant date. RSUs granted prior to 2019 were payable in cash at the vesting date equal to the closing price of the Company's Class A common share on the three year anniversary date. RSUs granted in 2019 and forward are payable in cash at the 3 years vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

Other awards may involve performance share units ("PSUs") which are units granted at a specified dollar amount per unit, typically linked to the Company's Class A common share price, that are subsequently multiplied by an attained performance factor to derive the number of PSUs to be paid as cash compensation at the vesting date. PSUs also vest three years from the date of grant. For PSUs, the performance period begins the first day of the calendar year for which the PSUs are granted and runs three calendar years. At that time, the three-year performance outcome will be measured against the pre-defined target amounts to determine the number of PSUs earned as compensation. PSUs granted prior to 2019 were paid at the closing price of the Company's Class A common share on the vesting date. PSUs granted in 2019 and forward are payable at the 20-day moving average closing price of the Company’s Class A common share at the vesting date.

PSU awards covering the three year measurement period ended December 31, 2021 were paid out in the first quarter of 2022. The performance factor during the measurement period used to determine compensation payouts was 110.19% of the pre-defined metric target.

PSU awards covering the three year measurement period ended December 31, 2020 were paid out in April 2021. The performance factor during the measurement period used to determine compensation payouts was 85.16% of the pre-defined metric target.

Directors of the Company are eligible to receive RSUs under the Incentive Plan. Unlike RSUs granted to officers, the RSUs granted to directors vest one year from the date of grant and are payable in cash at the vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

No awards were granted to officers and directors during the three months ended March 31, 2022 and 2021.

The Company uses the current fair value method to measure compensation costs for awards granted under the share-based plans. As of March 31, 2022 and December 31, 2021, the liability balance was $8.4 million and $7.9 million, respectively. A summary of awards by type and related activity is detailed below.


		Stock Options Outstanding
	Shares Available For Grant	Shares	Weighted- Average Exercise Price

Stock Options:
Balance at January 1, 2022	291,000	—	$	—
Exercised	—	—	$	—
Forfeited	—	—	$	—
Expired	—	—	$	—
Stock options granted	—	—	$	—

Balance at March 31, 2022	291,000	—	$	—


	Liability Awards
	SAR	RSU	PSU

Other Share/Unit Awards:
Balance at January 1, 2022	186,994	18,955	24,485
Exercised	—	—	(4,213)
Forfeited	(1,342)	(256)	(805)
Granted	—	—	—

Balance at March 31, 2022	185,652	18,699	19,467

SARs, RSUs, and PSUs shown as forfeited in the above tables represent vested and unvested awards not exercised by plan participants upon their termination from the Company in accordance with the expiration provisions of the awards.

The total intrinsic value of share-based compensation exercised and paid was $1.0 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. The total fair value of SARs, RSUs, and PSUs vested during the three months ended March 31, 2022 and 2021 was $0.0 million and $0.0 million, respectively. No cash amounts were received from the exercise of stock options under the Plans during the periods reported.

The following table summarizes information about SARs outstanding at March 31, 2022.


	SARs Outstanding
	Number Outstanding		Weighted- Average Remaining Contractual Life	Number Exercisable

Exercise prices:
$210.22	22,750		1.7 years	22,750
$216.48	11,086		3.9 years	11,086
$311.16	9,295		4.9 years	9,295
$310.55	203		5.1 years	203
$334.34	8,880		5.7 years	8,880
$303.77	10,764		6.7 years	10,764
$252.91	18,852		7.6 years	12,637
$192.10	39,917		8.6 years	13,504
$218.44	63,905		9.7 years	—

Totals	185,652			89,119

Aggregate intrinsic value (in thousands)	$	735		$	251

The aggregate intrinsic value in the table above is based on the closing Class A stock price of $210.40 per share on March 31, 2022.

In estimating the fair value of the SARs outstanding at March 31, 2022 and December 31, 2021, the Company employed the Black-Scholes option pricing model with assumptions detailed below.


	March 31, 2022		December 31, 2021

Expected term	1.7 to 9.7 years		1.9 to 10.0 years
Expected volatility weighted-average	34.66	%	35.05	%
Expected dividend yield	0.17	%	0.17	%
Risk-free rate weighted-average	2.24	%	1.01	%

The Company reviewed the contractual term relative to the SARs as well as perceived future behavior patterns of exercise. Volatility is based on the Company’s historical volatility over the expected term of the SARs by expected exercise date.

The pre-tax compensation cost/(benefit) recognized in the financial statements related to these plans was $1.6 million and $4.4 million for the three months ended March 31, 2022 and 2021, respectively. The related tax expense/(benefit) recognized was $(0.3) million and $(0.9) million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the total pre-tax compensation expense related to non-vested share-based awards not yet recognized was $10.0 million. This amount is expected to be recognized over a weighted-average period of 1.3 years. The Company recognizes compensation cost over the graded vesting periods.