Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2020

Share-Based Compensation Plans [Abstract]

Share-based incentive awards are granted to employees under the 2013 Incentive Award Plan, or the 2013 Plan, which is administered by the Compensation Committee of the Board of Directors, or the Compensation Committee. Awards include stock options, restricted stock and other stock awards. The maximum number of shares of common stock that can be granted under the 2013 Plan is 33 million shares plus any shares awarded under the 2013 Plan and any prior plan that have been forfeited or have expired. Stock option awards reduce the number of shares available for grant on a one-for-one basis and all other awards reduce the number of shares available for grant by 3.5 shares for each share awarded. The terms of each award and the exercise date are determined by the Compensation Committee. The 2013 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, 2020, there were 21,419,944 shares available for grant under the 2013 Plan. If all shares available for grant were for awards other than stock options, shares available for grant would be 6,119,984.

Share-based compensation expense in 2020, 2019 and 2018 was $70.8 million, $72.5 million and $70.5 million, respectively. At December 31, 2020, unamortized share-based compensation that will be expensed over the next five years is $168.0 million.

We record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return. Any excess tax benefit or deficiency related to share-based compensation is recorded as compensation expense in results of operations upon vesting of restricted stock awards or exercise of stock options. Excess tax benefits and deficiencies represent the difference between the actual compensation deduction for tax purposes, which is calculated as the difference between the grant date price of the award, and the price of our common stock on the vesting or exercise date. In 2020, we recognized a tax deficiency of $3.6 million, and in 2019, we recognized a tax benefit of $2.8 million.

Stock Options

The exercise price of stock option awards cannot be less than 100% of the market price of our common stock on the grant date and have a maximum contractual life of 10 years.

Stock option activity was:


	Year Ended December 31,
	2020		2019			2018
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
January 1	866,000	$83.80		988,050	$80.37		1,593,422	$63.11

Exercised	—	—		(57,300)	$23.40		(500,122)	$24.43
Forfeited	(97,250)	$84.94		(64,750)	$84.94		(105,250)	$84.94
December 31	768,750	$83.65		866,000	$83.80		988,050	$80.37

Exercisable December 31	768,750	$83.65		60,000	$68.42		117,300	$46.43

At December 31, 2020, options outstanding and exercisable were:


			Options Outstanding			Options Exercisable
Exercise Price Range			Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price

$66.00	to	$71.00	60,000	3.4 years	$68.42	60,000	$68.42
$84.00	to	$85.00	708,750	2.3 years	$84.94	708,750	$84.94
			768,750			768,750

Restricted Stock

Restricted stock activity was:


	Year Ended December 31,
	2020	2019	2018
January 1	2,547,001	2,553,902	2,859,373
Granted	1,511,719	956,135	815,810
Vested	(874,431)	(798,468)	(944,048)
Forfeited	(171,301)	(164,568)	(177,233)
December 31	3,012,988	2,547,001	2,553,902

Weighted average grant date fair value of shares granted in the period	$51.26	$72.13	$67.62

Weighted average grant date fair value at December 31	$61.44	$70.89	$69.77

Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

Performance Restricted Stock Units

The Compensation Committee grants certain employees performance restricted stock units, or PRSU. Each PRSU represents the right to receive one share of common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period. The PRSUs vest three years from the grant date. The PRSUs have a service and performance vesting condition and compensation expense is recognized on a graded-vesting basis. Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition. We have assumed that all the PRSUs will vest.

PRSU activity was:


	Year Ended December 31,
	2020			2019				2018
	Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
January 1	538,134	$	77.99		509,844	$	80.41		488,887	$	82.01
Granted	186,197	61.36			181,782	75.64			182,582	73.72
Distributed	(173,770)	84.94			(153,492)	83.23			(161,625)	77.68

December 31	550,561	$	70.17		538,134	$	77.99		509,844	$	80.41

Employee Stock Purchase Plan

The employee stock purchase plan, or ESPP, enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974, or ERISA. In 2020, 2019 and 2018, employees purchased 91,605 shares, 76,040 shares and 91,086 shares, respectively. All shares purchased were treasury stock, for which we received $5.2 million, $5.6 million and $6.5 million, respectively. At December 31, 2020, there were 8,507,706 shares available under the ESPP.