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Stock Based Compensation
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock Based Compensation Stock Based Compensation
Determining Fair Value of Share-Based Option Awards. Most options that we grant contain only a service condition (“Service-Based” option) and therefore vest over a specified number of years as long as the employee is employed by the Company. For Service-Based options, we use the Black-Scholes option pricing model to determine the grant date fair value.
The fair values for Service-Based options granted for the years ended December 31, 2022 and 2021 were estimated using the Black-Scholes option pricing model with the below weighted-average assumptions.
Year Ended December 31,
202320222021
Expected lives of options (years)N/A9.45.4
Expected volatilityN/A43.3 %40.4 %
Risk free interest rateN/A3.7 %0.8 %
Dividend yield rateN/A5.0 %3.0 %
Based on calculations using the Black-Scholes option pricing model, the weighted-average grant date fair values of stock options granted, restated as applicable for stock dividends, during 2022 and 2021 were $8.36 and $14.66, respectively. There were no stock options granted during the year ended 2023. The expected life of options in the table above represents the weighted-average period for which the options are expected to remain outstanding and are derived primarily from historical exercise patterns. The expected volatility is determined based on our review of the implied volatility that is derived from the price of exchange traded options of the Company. The risk-free interest rate assumption is determined based upon observed interest rates appropriate for the expected term of our employee stock options. The dividend yield assumption is based on our history of dividend payouts.
Stock Option Award Activity.  Stock option activity under our option plans, restated as applicable for stock dividends, for the years ended December 31, 2023, 2022 and 2021 were as follows.
Year Ended December 31,
202320222021
Number of
Shares		Weighted-
Average
Exercise
Price		Number of
Shares		Weighted-
Average
Exercise
Price		Number of
Shares		Weighted-
Average
Exercise
Price
Outstanding Stock Option Activity
Outstanding, beginning of year4,684,481 $26.30 4,240,004 $23.64 4,364,161 $23.37 
Granted— N/A1,846,534 28.97 15,000 53.32 
Exercised(1,500,008)21.74 (1,402,057)21.77 (139,157)19.87 
Forfeited— N/A— N/A— N/A
Cancelled— N/A— N/A— N/A
Outstanding, end of year3,184,473 $28.45 4,684,481 $26.30 4,240,004 $23.64 
Year Ended December 31,
202320222021
Number of
Shares		Weighted-
Average
Fair Value		Number of
Shares		Weighted-
Average
Fair Value		Number of
Shares		Weighted-
Average
Fair Value
Unvested Stock Option Activity
Outstanding, beginning of year144,000 $8.73 432,000 $8.25 875,519 $7.76 
Granted— — 1,846,534 8.36 15,000 14.66 
Vested(144,000)8.73 (2,134,534)8.32 (458,519)7.52 
Forfeited— — — — — — 
Unvested, end of year— $— 144,000 $8.73 432,000 $8.25 
The total intrinsic value of options (difference between price per share as of the exercise date and the exercise price, times the number of options outstanding) exercised during the years ended December 31, 2023, 2022 and 2021 was $33.7 million, $16.2 million and $5.1 million, respectively.
The following table provides data for our stock options that are vested or expected to vest as of December 31, 2023.
Exercisable or expected to vest
Number outstanding3,184,473 
Weighted-average exercise price$28.45 
Aggregate intrinsic value (in thousands)$85,342 
Weighted-average remaining contractual term (years)7.31
Exercisable
Number outstanding3,184,473 
Weighted-average exercise price$28.45 
Aggregate intrinsic value (in thousands)$85,342 
Weighted-average remaining contractual term (years)7.31
The aggregate intrinsic values in the tables above represent the total pretax intrinsic values (the difference between the closing price of MDC’s common stock on the last trading day of fiscal 2023 and the exercise price, multiplied by the number of in-the-money stock option shares) that would have been received by the option holders had all in-the-money outstanding stock options been exercised on December 31, 2023.
The following table summarizes information associated with outstanding and exercisable stock options at December 31, 2023.
Options OutstandingOptions Exercisable
Range of Exercise PriceNumber
Outstanding		Weighted-
Average
Remaining
Contractual
Life (in
years)		Weighted-
Average
Exercise
Price		Number
Outstanding		Weighted-
Average
Remaining
Contractual
Life (in
years)		Weighted-
Average
Exercise
Price
$15.01 -$20.00 14,879 2.03$17.20 14,879 2.03$17.20 
$20.01 -$25.00 432,000 6.3223.90 432,000 6.3223.90 
$25.01 -$30.00 2,266,560 7.8528.29 2,266,560 7.8528.29 
$30.01 -$35.00 432,000 5.5932.92 432,000 5.5932.92 
$35.01 -$40.00 24,034 8.5836.48 24,034 8.5836.48 
$50.01 -$55.00 15,000 7.5853.32 15,000 7.5853.32 
Total3,184,473 7.31$28.45 3,184,473 7.31$28.45 
Total compensation expense relating to stock options was $0.2 million, $17.4 million and $3.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Our recognized tax benefit from this expense for the years ended December 31, 2023, 2022 and 2021 was $0.0 million, $0.1 million and $0.1 million, respectively.
As of December 31, 2023, there was no unrecognized compensation cost related to stock options that is expected to be recognized as an expense by the Company in the future.
For the years ended December 31, 2023, 2022 and 2021 the Company received cash from the exercise of stock option awards of $32.6 million, $30.5 million and $2.6 million, respectively. Our realized tax benefit from stock options exercised for the years ended December 31, 2023, 2022 and 2021 was $6.7 million, $2.5 million and $1.1 million, respectively.
Restricted Stock Award Activity. Non-vested restricted stock awards, restated as applicable for stock dividends, at December 31, 2023, 2022 and 2021 and changes during those years were as follows:
Year Ended December 31,
202320222021
Number of
Shares		Weighted-
Average
Grant Date
Fair Value		Number of
Shares		Weighted-
Average
Grant Date
Fair Value		Number of
Shares		Weighted-
Average
Grant Date
Fair Value
Unvested, beginning of year363,801 $46.58 347,552 $47.27 413,274 $35.94 
Granted289,694 43.14 240,536 45.21 208,386 53.47 
Vested(205,193)44.66 (210,157)45.88 (257,430)38.49 
Forfeited(3,653)51.96 (14,130)50.67 (16,678)49.21 
Unvested, end of year444,649 $45.18 363,801 $46.58 347,552 $47.27 
Total compensation expense relating to restricted stock awards was $16.2 million, $10.2 million and $10.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Our recognized tax benefit from this expense for the years ended December 31, 2023, 2022 and 2021 was $1.2 million, $1.1 million and $1.4 million, respectively.
At December 31, 2023, there was $6.9 million of unrecognized compensation expense related to non-vested restricted stock awards that is expected to be recognized as an expense by us in the future over a weighted-average period of approximately 1.8 years. The total intrinsic value of unvested restricted stock awards (the closing price of MDC’s common stock on the last trading day of fiscal 2023 multiplied by the number of unvested awards) at December 31, 2023 was $24.6 million. The total intrinsic value of restricted stock which vested during each of the years ended December 31, 2023, 2022 and 2021 was $7.9 million, $9.5 million and $13.4 million, respectively.
Performance Share Unit Awards. The Company has made annual grants of long term performance share unit awards ("PSUs") to each of the Executive Chairman, CEO and the Chief Financial Officer ("CFO"), as detailed in the table below. The PSUs are earned based upon the Company’s performance, over a period of three years (the “Performance Period”), measured by increasing home sale revenues over a “Base Period.” Each award is conditioned upon the Company achieving an average gross margin from home sales (excluding impairments) of at least fifteen percent (15%) over the Performance Period. Target goals will be earned if the Company’s three year average home sale revenues over the Performance Period (“Performance Revenues”) exceed the home sale revenues over the Base Period (“Base Revenues”) by at least 10% but less than 20%. If Performance Revenues exceed the Base Revenues by at least 5% but less than 10%, 50% of the Target Goals will be earned (“Threshold Goals”). If Performance Revenues exceed the Base Revenues by at least 20%, 200% of the Target Goals will be earned (“Maximum Goals”). The number of PSUs earned shall be adjusted to be proportional to the partial performance between the Threshold Goals, Target Goals and Maximum Goals. Details for each defined term above for each grant have been provided in the table below.
Threshold GoalTarget GoalMaximum Goal
Maximum Potential Expense to be Recognized *
Maximum Remaining Expense to be Recognized *
Date of AwardPerformance PeriodBase PeriodBase Period RevenuesPSUsHome Sale RevenuesPSUsHome Sale RevenuesPSUsHome Sale RevenuesFair Value per Share
Aug 23, 2023January 1, 2023 - December 31, 2025January 1, 2023 - December 31, 2023$4.520 billion198,750 $4.746 billion397,500 $4.972 billion795,000 $5.424 billion$42.18 $33,536 $33,536 
Jul 14, 2021January 1, 2021 - December 31, 2023January 1, 2020 - December 31, 2020$3.765 billion198,750 $3.953 billion397,500 $4.142 billion795,000 $4.518 billion$44.35 $35,255 $— 
_______________________
* Dollars in thousands
In accordance with ASC 718, the PSUs were valued on the date of grant at their fair value. The fair value of these grants was equal to the closing price of MDC stock on the date of grant less the discounted cash flows of expected future dividends over the respective vesting period (as these PSUs do not participate in dividends). The grant date fair value and maximum potential expense if the Maximum Goals were met for these awards has been provided in the table above. ASC 718 does not permit recognition of expense associated with performance-based stock awards until achievement of the performance targets are probable of occurring.
2018 PSU Grants. The 2018 PSU awards vested on April 29, 2021. For the year ended December 31, 2021 the Company recorded share-based award expense of $1.3 million.
2019 PSU Grants. The 2019 PSU awards vested on February 3, 2022. For the year ended December 31, 2021 the Company recorded the required share-based award expense related to the awards of $7.3 million related to these awards.
2020 PSU Grants. The 2020 PSU awards vested on February 3, 2023. For the year ended December 31, 2022 and 2021, the Company recorded the required share-based award expense related to the awards of $9.8 million and $13.4 million, respectively, based on its assessment of the probability for achievement of the performance targets.
2021 PSU Grants. For the year ended December 31, 2023, 2022 and 2021, the Company recorded the required share-based award expense related to the awards of $7.1 million, $23.7 million and $4.4 million, based on its assessment of the probability for achievement of the performance targets.
2023 PSU Grants. For the year ended December 31, 2023, the Company concluded that achievement of any of the performance metrics had not met the level of probability required to record compensation expense and as such, no expense related to these awards was recognized in year-ended 2023.
Our employee equity incentive plans permit us to withhold from the total number of shares that otherwise would be released to a restricted stock or performance share unit award recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due. For the years ended December 31, 2023, 2022, and 2021, 293,366, 294,160 and 316,620 shares were withheld, respectively, resulting in $11.8 million, $13.7 million and $18.8 million of income tax withholding, respectively, being remitted on behalf of the employees.