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Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Note 13—Stock-Based Compensation

Globe Life's stock-based compensation consists of stock options, restricted stock, restricted stock units, and performance shares. Certain employees and members of the board of directors (directors) have been granted fixed equity options to buy shares of Globe Life stock at the market value of the stock on the date of grant, under the provisions of the Globe Life stock option plans. The options are exercisable during the period commencing from the date they vest until expiring according to the terms of the grant. Options generally expire the earlier of employee termination or option contract term, which are either seven-year or ten-year terms. Options generally vest in accordance with the following schedule:


		Shares vested by period
	Contract Period	6 Months	Year 1	Year 2	Year 3	Year 4	Year 5
Directors	7 years	100%	—%	—%	—%	—%	—%
Employees	7 years	—%	—%	50%	50%	—%	—%
Employees	10 years	—%	—%	25%	25%	25%	25%

All employee options vest immediately upon retirement on or after the attainment of age 65, upon death, or disability. Globe Life generally issues shares for the exercise of stock options from treasury stock. The Company generally uses the proceeds from option exercises to buy shares of Globe Life common stock in the open market to reduce the dilution from option exercises.

An analysis of shares available for grant is as follows:


	Available for Grant
	2022	2021	2020
Balance at January 1,	4,727,088	5,984,418	7,167,718


Options expired and forfeited during year(1)	13,405	5,304	3,325
Performance shares expired and forfeited during year(2)	23,250	34,255	35,495
Options granted during year(1)	(1,105,180)	(1,091,495)	(1,127,610)
Restricted stock, restricted stock units, and performance shares granted(2)	(480,677)	(205,394)	(94,510)
Balance at December 31,	3,177,886	4,727,088	5,984,418

(1)Plan allows for grant of options such that each grant reduces shares available for grant in a range from 0.85 share to 1.0 share.

(2)Plan allows for grant of restricted stock such that each stock grant reduces shares available for grant in a range from 3.10 shares to 3.88 shares.

A summary of stock compensation activity for each of the three years ended December 31, 2022, is presented below:


	2022		2021		2020
Stock-based compensation expense recognized(1)	$	35,650	$	30,272	$	35,892
Tax benefit recognized	12,738		11,954		12,550

(1)No stock-based compensation expense was capitalized in any period in accordance with applicable GAAP.

Additional stock compensation information is as follows at December 31:


	2022		2021
Unrecognized compensation(1)	$	33,977	$	26,602
Weighted average period of expected recognition (in years)(1)	0.56		0.57

(1)Includes restricted stock and performance shares.

No equity awards were cash settled during the three years ended December 31, 2022.

Options: The following table summarizes information about stock options outstanding at December 31, 2022.


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$37.40 - $83.17	2,091,530	2.65	$	77.06	2,091,530	$	77.06

87.60 - 90.21	1,025,535	3.30	87.64		910,379	87.65
92.40 - 98.32	1,283,538	4.98	98.27		14,613	93.57
100.74	1,237,167	4.03	100.74		619,080	100.74
103.23 - 105.56	1,324,604	6.10	103.29		31,269	105.56
$37.40 - $105.56	6,962,374	4.08	$	91.73	3,666,871	$	84.00

An analysis of option activity for each of the three years ended December 31, 2022, is as follows:


	2022			2021			2020
	Options	Weighted-Average Exercise Price		Options	Weighted-Average Exercise Price		Options	Weighted-Average Exercise Price
Outstanding—beginning of year	7,197,662	$	85.11	7,111,231	$	78.28	6,724,358	$	70.07
Granted:
7-year term	1,300,211	103.20		1,284,112	98.28		1,326,599	100.85

Exercised	(1,519,728)	70.14		(1,191,704)	58.59		(936,289)	51.37
Expired and forfeited	(15,771)	96.54		(5,977)	74.15		(3,437)	75.27
Outstanding—end of year	6,962,374	$	91.73	7,197,662	$	85.11	7,111,231	$	78.28

Exercisable at end of year	3,666,871	$	84.00	3,659,755	$	75.55	3,389,399	$	67.19

Additional information about Globe Life's stock option activity as of December 31, 2022 and 2021 is as follows:


	2022		2021
Outstanding options:
Weighted-average remaining contractual term (in years)	4.08		4.31
Aggregate intrinsic value	$	200,681	$	77,329
Exercisable options:
Weighted-average remaining contractual term (in years)	3.01		3.27
Aggregate intrinsic value	$	134,033	$	66,978

Selected stock option activity for the three years ended December 31, 2022, is presented below:


	2022		2021		2020
Weighted-average grant-date fair value of options granted (per share)	$	22.03	$	18.01	$	14.64
Intrinsic value of options exercised	58,201		50,641		40,517
Cash received from options exercised	106,592		69,826		48,093
Actual tax benefit received	11,907		10,545		8,508

Additional information concerning Globe Life's unvested options is as follows at December 31:


	2022		2021
Number of shares outstanding	3,295,503		3,537,907
Weighted-average exercise price (per share)	$	100.33	$	94.99
Weighted-average remaining contractual term (in years)	5.26		5.37
Aggregate intrinsic value	$	66,647	$	10,352

Globe Life expects that substantially all unvested options will vest.

Restricted Stock: Restricted stock grants consist of time-vested grants, restricted stock units, and performance shares. Time-vested restricted stock is available to directors and vests over six months. Restricted stock units are also available to directors. The restricted stock units vest over six months and are not converted to shares until the directors’ retirement, death, or disability. Director restricted stock and restricted stock units are generally granted on the first business day of the year. Performance shares are granted to a limited number of senior executives. Performance shares have a three-year performance period and are not settled in shares until the certification of the

three-year performance period. While the grant specifies a stated target number of shares, the determination of the actual settlement in shares will be based on the achievement of certain performance objectives of Globe Life over the three-year performance period. Certain executive restricted stock and performance share grants contain terms related to age that could accelerate vesting.

Following are the restricted stock units outstanding for each of the three years ended December 31, 2022.


Year of grants						Outstanding as of year end
2020						77,167
2021						84,426
2022						93,381

Below is the final determination of the performance share grants in 2018 to 2020:


Year of grants	Final settlement of shares	Final settlement date
2018	210,155	February 24, 2021
2019	66,751	February 23, 2022
2020	84,298	February 22, 2023

For the 2021 and 2022 performance share grants, actual shares that could be distributed range from 0 to 209 thousand for the 2021 grants and 0 to 220 thousand shares for the 2022 grants.

A summary of restricted stock grants for each of the years in the three-year period ended December 31, 2022, is presented in the table below.


	2022			2021			2020
Directors restricted stock:
Shares	10,746			10,031			4,548
Price per share	$	94.94		$	92.40		$	105.56
Aggregate value	$	1,020		$	927		$	480
Percent vested	100		%	97		%	100		%
Directors restricted stock units (including dividend equivalents):
Shares	8,956			7,258			6,161
Price per share	$	95.62		$	92.60		$	103.32
Aggregate value	$	856		$	672		$	637
Percent vested	100		%	96		%	100		%
Performance shares:
Target shares	146,500			139,500			151,200
Target price per share	$	103.23		$	98.32		$	100.74
Aggregate value	$	15,123		$	13,716		$	15,232
Percent vested	—		%	—		%	—		%

Time-vested restricted stockholders are entitled to dividend payments on the unvested stock. Restricted stock unit holders are entitled to dividend equivalents. These equivalents are granted in the form of additional restricted stock units and vest immediately upon grant. Dividend equivalents are applicable only to restricted stock units. Performance shareholders are not entitled to dividend equivalents and are not entitled to dividend payments until the shares are vested and settled.

An analysis of nonvested restricted stock is as follows:


	Executive Restricted Stock	Executive Performance Shares	Directors Restricted Stock	Directors Restricted Stock Units	Total
2020:
Balance at December 31, 2019	—	716,542	—	—	716,542
Grants	—	151,200	4,548	6,161	161,909
Additional performance shares(1)	—	(65,473)	—	—	(65,473)
Restriction lapses	—	(271,843)	(4,548)	(6,161)	(282,552)
Forfeitures	—	(11,450)	—	—	(11,450)
Balance at December 31, 2020	—	518,976	—	—	518,976
2021:
Grants	—	139,500	10,031	7,258	156,789
Additional performance shares(1)	—	(94,883)	—	—	(94,883)
Restriction lapses	—	(210,155)	(9,742)	(6,969)	(226,866)
Forfeitures	—	(11,050)	—	—	(11,050)
Balance at December 31, 2021	—	342,388	289	289	342,966
2022:
Grants	—	146,500	10,746	8,956	166,202
Additional performance shares(1)	—	(16,102)	—	—	(16,102)
Restriction lapses	—	(66,751)	(11,035)	(9,245)	(87,031)
Forfeitures	—	(7,500)	—	—	(7,500)
Balance at December 31, 2022	—	398,535	—	—	398,535

(1)Estimated additional (reduced) share grants expected due to achievement of performance criteria.

An analysis of the weighted-average grant-date fair values per share of nonvested restricted stock is as follows for the year 2022:


	Executive Restricted Stock		Executive Performance Shares		Directors Restricted Stock		Directors Restricted Stock Units
Grant-date fair value per share at January 1, 2022	$	—	$	94.75	$	92.56	$	92.56
Grants	—		103.23		94.94		94.94
Estimated additional performance shares	—		(81.42)		—		—
Restriction lapses	—		(82.56)		(94.88)		(94.94)
Forfeitures	—		(82.56)		—		—
Grant-date fair value per share at December 31, 2022	—		100.68		—		—