In the first quarter of 2023, the Company updated its Long-Term Incentive Program (“LTIP”) to provide employees with an award of stock options and initial grants of restricted stock units (“RSUs”), and made an initial grant of performance share units ("PSUs") to members of the Company's Executive Leadership Team ("ELT"). In connection with this update, the awards, which were granted in the second quarter in previous years, were granted in the first quarter of 2023 and are expected to be granted in the first quarter in subsequent years. The Company recognizes the grant-date fair value for each of these awards, less estimated forfeitures, as compensation expense ratably over the vesting period. For employees and Directors that meet retirement eligibility requirements, the expense related to share-based compensation is recognized on the date of grant as there is no future service period required to vest in the awards.

The Company has non-qualified options outstanding under the LTIP. Stock options outstanding are issued at market value on the date of grant, vest on the third anniversary of the date of grant and must be exercised within 10 years of the date of grant.

However, upon a participant’s termination of employment (other than termination for cause, death, disability or retirement), a participant will generally have 30 days (90 days for grants made after May 13, 2022) to exercise any vested stock options, subject to specified conditions. If, upon termination of a participant’s employment (other than a termination for cause), a participant is at least 55 years old, has at least five years of service, and the sum of the participant’s age and years of service is at least 65, the participant may exercise any vested stock options granted between 2007 through 2017 within a period of three years from the date of termination or, if earlier, the date such stock options otherwise would have expired, subject to specified conditions. Starting with stock options granted in 2018, a terminated employee who meets the above conditions may exercise any stock options until the date such stock options otherwise would have expired, subject to specified conditions. Issuances of Common Stock to satisfy employee stock option exercises currently are made from treasury stock.

Stock option transactions for the year ended December 31, 2023 were as follows:


						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
Outstanding as of December 31, 2022		11.9		$	62.64
Granted		1.0			83.64
Exercised		(2.5	)		44.72
Cancelled		(0.2	)		81.33
Outstanding as of December 31, 2023		10.2		$	68.77		5.8	$	265.1
Exercisable as of December 31, 2023		6.4		$	59.26		4.3	$	226.4

The following table summarizes information relating to options outstanding and exercisable as of December 31, 2023:


	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
	Outstanding		Average		Average		Exercisable		Average
Range of	as of		Remaining		Exercise		as of		Exercise
Exercise Prices	12/31/2023		Contractual Life		Price		12/31/2023		Price
$30.01 - $40.00		0.2		0.5	$	34.81		0.2	$	34.81
$40.01 - $50.00		1.3		2.1	$	44.25		1.3	$	44.25
$50.01 - $60.00		2.3		4.0	$	51.85		2.3	$	51.85
$60.01 - $70.00		0.0		0.0	$	0.0		0.0	$	0.0
$70.01 - $80.00		2.5		6.0	$	75.33		2.5	$	75.33
$80.01 - $90.00		3.8		8.3	$	84.35		0.0	$	0.0
$90.01 - $100.00		0.1		8.1	$	94.13		0.1	$	90.83
		10.2		5.8	$	68.77		6.4	$	59.26

The table above represents the Company’s estimate of stock options fully vested and expected to vest. Expected forfeitures are not material and, therefore, are not reflected in the table above.

The following table provides information regarding the intrinsic value of stock options exercised and stock compensation expense related to stock option awards:


	2023		2022		2021
Intrinsic Value of Stock Options Exercised	$	125.5	$	32.1	$	157.3
Stock Compensation Expense Related to Stock Option Awards	$	26.3	$	25.7	$	23.3
Issued Stock Options		1.0		1.6		1.5
Weighted Average Fair Value of Stock Options issued (per share)	$	24.06	$	21.50	$	17.32
Fair Value of Stock Options Issued	$	24.9	$	33.6	$	26.6

The following table provides a summary of the assumptions used in the valuation of issued stock options:


	2023			2022			2021
Risk-free interest rate		4.0	%		2.9	%		1.3	%
Expected life in years		7.3			7.1			7.2
Expected volatility		22.4	%		21.7	%		20.7	%
Dividend yield		1.3	%		1.2	%		1.2	%

The fair value of stock options is based upon the Black Scholes option pricing model. The Company determined the stock options’ lives based on historical exercise behavior and their expected volatility and dividend yield based on the historical changes in stock price and dividend payments. The risk-free interest rate is based on the yield of an applicable term Treasury instrument.

As of December 31, 2023, there was a fair value of $19.1 related to unamortized stock option compensation expense, which is expected to be recognized over the next three years. The Company’s Consolidated Statements of Cash Flow reflect an add back related to stock option awards of $26.3, $25.7 and $23.3 in 2023, 2022 and 2021, respectively, for non-cash compensation expense.

The Company granted employees 120,080 RSUs with a total fair value of $10.4 at a weighted average grant date fair value of $86.20 per RSU during the year ended December 31, 2023. The annual RSU grants vest one-third on each of the first, second and third anniversaries of the grant date, subject to the recipient’s continued employment with the Company from the grant date through the applicable vesting date, and are settled with shares of the Company’s Common Stock within 60 days following the applicable vesting date.

Additionally, in connection with the Hero Acquisition (see Note 6), 854,882 shares of restricted stock were issued in October 2022 with a total fair value of $61.5. The restricted stock will be recognized as compensation expense as the stock is subject to vesting requirements for individuals who received the restricted stock and will continue to be employed by the Company. The vesting requirements are satisfied at various dates over a three-year period from the date of the acquisition. The restricted stock expense associated with the Hero Acquisition for

the twelve months ended December 31, 2023 and 2022 was $29.2 and $6.0, respectively, and is included in the non-cash compensation expense caption in the consolidated statement of cash flows.

In January 2021, the Company issued cash-settled stock units under the Omnibus Equity Plan to all employees at the level of vice president and below. These restricted stock units are scheduled to vest and be settled on the third anniversary of the date of grant, subject to continued employment through such date.

As a result of the issued cash-settled stock units, the Company recorded stock compensation expense of $1.3, $0.3 and $1.9 in 2023, 2022 and 2021, respectively. The liability was approximately $3.5 and $2.2 as of December 31, 2023 and 2022, respectively.

In the first quarter of 2023, the Company granted PSUs to members of the ELT including the CEO, with an aggregate award fair value equal to $2.2. 19,650 PSUs were issued at a weighted average grant date fair value equal to $110.95 per PSU using a Monte Carlo model. The performance target is based on the Company's total shareholder return ("TSR") relative to a Company selected peer group. The PSUs vest on the later of (i) the third anniversary of the grant date, and (ii) the date that the Compensation & Human Capital Committee certifies the achievement of the applicable performance goals, in each case, subject to the recipient’s continued employment with the Company from the grant date through the vesting date. The number of shares that may be issued ranges from 0% to 200% based on relative TSR during the three-year performance period. Vested PSUs will be settled into shares of the Company’s Common Stock, if at all, within 60 days following the vesting date.

The Company maintains a non-qualified deferred compensation plan under which certain members of management are eligible to defer a maximum of 85% of their regular compensation (i.e., salary) and, in general, up to 85% of their incentive bonus. As of January 1, 2024, the limit was decreased from 85% to a maximum of 70% for both regular compensation and incentive bonus. The amounts deferred under this plan are credited with earnings or losses based upon changes in values of notional investments selected by the plan participant. The investment options available include notional investments in various stock, bond and money market funds as well as the Company’s Common Stock. Each plan participant is fully vested in the amounts the participant defers. The plan permits the Company to make profit sharing contributions that cannot otherwise be contributed to the qualified savings and profit-sharing plan due to limitations established by the Internal Revenue Service. These contributions vest under the same vesting schedule applicable to the qualified plan.

The liability to plan participants for contributions designated for notional investment in Common Stock is based on the quoted fair value of the Common Stock plus any dividends credited. The Company uses cash-settled hedging instruments to minimize the cost related to the volatility of Common Stock. At December 31, 2023 and 2022, the amount of the Company’s liability under the deferred compensation plan is included in Current and Deferred and Other Long-term Liabilities and was $118.2 and $105.8, respectively and the funded balances recorded in Other Assets amounted to $112.9 and $92.6, respectively. The amounts charged to earnings, including the effect of the hedges, totaled expense of $3.7, $1.2 and $2.2 in 2023, 2022 and 2021, respectively.

Non-employee members of the Company’s Board are eligible to defer up to 100% of their directors’ compensation into a similar plan; however, the only option for investment is Common Stock. Members of the Board are fully vested in their account balance. As of December 31, 2023, there were approximately 109,000 shares of Common Stock from shares held as Treasury Stock in a rabbi trust to protect the interest of the directors’ deferred compensation plan participants in the event of a change of control.