Earnings Per Common Share and Share Awards

12 Months Ended

Dec. 31, 2021

Earnings Per Common Share and Share Awards

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, when share-based awards are assumed to be exercised, (a) the exercise price of a share-based award and (b) the amount of compensation cost, if any, for future services that the Company has not yet recognized, are assumed to be used to repurchase shares in the current period.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31:


(in thousands, except per share amounts)	2021		2020
Net income	$	67,020	$	39,420
Weighted average common shares outstanding – Basic	1,894		1,892
Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled)	6		4
Weighted average common shares outstanding – Diluted	1,900		1,896
Basic earnings per common share	$	35.38	$	20.84
Diluted earnings per common share	$	35.28	$	20.80

There were 14 thousand and 18 thousand potential shares excluded from the computation of diluted earnings per share in 2021 and 2020, respectively, due to the out-of-the-money status of the related share-based awards rendering them anti-dilutive.

The Company historically has adopted employee stock award plans under which restricted stock, options or stock appreciation rights ("SARs") exercisable for the Company's stock may be granted to key employees or directors of the Company. There is currently one active plan from which the Company may grant share-based awards. The awards eligible to be granted under the active plan are limited to SARs, and the maximum aggregate number of shares of common stock of the Company available pursuant to the plan for the grant of SARs is 250 thousand shares.

As of December 31, 2021, the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant. All outstanding SARs vest and are exercisable within five years or less from the date of grant, and all SARs issued to date have been share-settled only. There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant.

During both 2021 and 2020, the Company issued share-settled SARs to directors of the Company. During 2020, the Company also issued share-settled SARs to certain non-executive employees of the Company. SARs give the holder the right to receive stock equal to the appreciation in the value of shares of stock from the grant date for a specified period of time, and as a result, are accounted for as equity instruments. A summary of share-based award transactions for all share-based award plans follows:


(in thousands, except weighted average exercise price and average remaining contractual term)	Number Of Shares	Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2020	30	$	124.13	3.53	$	1,352
SARs granted	14	137.40
SARs exercised	(8)	75.75
Outstanding as of December 31, 2020	36	$	139.16	4.38	$	903
SARs granted	5	184.26
SARs exercised	(6)	106.71
Outstanding as of December 31, 2021	35	$	150.36	3.96	$	1,643

Exercisable as of December 31, 2021	28	$	151.17	3.51	$	1,269

Unvested as of December 31, 2021	7	$	147.41	5.59	$	374

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock at December 31. The intrinsic values of SARs exercised during 2021 and 2020 were approximately $484 thousand and $583 thousand, respectively.

There were no options outstanding at December 31, 2021. The following table summarizes information about SARs outstanding at December 31, 2021:


(in thousands, except exercise prices and average remaining contractual term)					SARs Outstanding at Year-End				SARs Exercisable at Year-End
Range of Exercise Prices					Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$	60.00	—	$	99.99	6	0.88	$	83.44	6	$	83.44
100.00		—	149.99		11	5.45	134.89		5	126.00
150.00		—	199.99		18	4.09	181.27		17	181.07
$	60.00	—	$	199.99	35	3.96	$	150.36	28	$	151.17

In 2021, 6 thousand SARs vested with a fair value of approximately $299 thousand.

The fair value of each SAR is estimated on the date of grant using the Black-Scholes option valuation model with the weighted average assumptions noted in the table shown below. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair values for the SARs issued during 2021 and 2020 were $59.83 and $36.30, respectively, and were estimated using the weighted average assumptions shown in the table below:


	2021			2020
Expected life in years	7.0	-	7.0	6.2	-	7.0
Volatility	33.9%			29.4%
Interest rate	1.3%			0.7%
Yield rate	1.1%			1.2%

There was approximately $299 thousand and $229 thousand of compensation expense relating to SARs vesting on or before December 31, 2021 and 2020, respectively, included in personnel expenses in the Consolidated Statements of Operations. As of December 31, 2021, there was approximately $308 thousand of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock award plans. That cost is expected to be recognized over a weighted average period of approximately two years.