Share-Based Awards

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

The Company has share-based compensation plans which were approved by its shareholders in April 2020 and May 2021 (the Plans) under which its Board of Directors may grant to employees share-based awards including restricted stock units (RSUs), performance shares, aspirational performance shares and nonqualified stock options. RSUs generally vest ratably over a three-year period. Performance shares include a three-year performance period with vesting based on achievement of internal performance targets and, beginning with the 2021 grant, include a vesting component based on a Total Shareholder Return (TSR) relative to a peer group. Aspirational performance shares are earned only to the extent the aspirational share price goals for the Company's stock are achieved by December 31, 2025. If a share price goal is met, then 50% of the associated aspirational performance shares vest and the remaining 50% vest on the one-year anniversary of the date on which the share price goal was achieved. Dividend or dividend equivalents are paid on RSUs, performance shares and aspirational shares that ultimately vest. Stock options granted in 2021 include a service component to vest and a market condition to become exercisable. The 2021 stock options expire 10 years from the grant date or, if the grantee's employment ceases prior to December 31, 2023, 6 years from the grant date. Stock options granted prior to 2021 expire 10 years from the date of grant. At December 31, 2022, there were 5.4 million shares of common stock available for future awards under the Plans.

The Company recognizes the cost of its share-based awards in the Consolidated statements of operations. The cost of each share-based equity award is based on the grant date fair value and the cost of each share-based cash-settled award is based on the settlement date fair value. Forfeitures for share-based awards are estimated at the grant date and adjusted when it is likely to change. Share-based award expense is recognized on a straight-line basis over the service period for RSUs. Expense for awards with performance conditions is recognized on a straight-line basis over the service period for each separately-vesting tranche, which results in accelerated recognition of expense. The expense recognized reflects the number of awards that are ultimately expected to vest based on the service and, if applicable, performance requirements of each award. Total share-based award compensation expense recognized by the Company during 2022, 2021 and 2020 was $54.4 million, $42.2 million and $23.5 million, respectively, or $41.6 million, $32.3 million and $18.0 million net of taxes, respectively.

Restricted Stock Units, Performance Shares and Aspirational Shares - Settled in Stock – The fair value of RSUs and performance shares settled in stock that do not contain a market condition was determined based on the market price of the Company’s stock on the grant date. The fair value of performance shares with a relative TSR market condition and aspirational performance shares was determined using a Monte Carlo simulation. The Monte Carlo simulation uses historical volatility to determine the expected volatility and a risk-free interest rate based on U.S. Treasury rates at the time of grant. Assumptions used to calculate the grant date fair value of the performance shares with a relative TSR market condition and the aspirational performance shares, by grant date, were as follows:

Performance Share Grants:


	February 2022		May 2021		February 2021
Expected volatility	55.0	%	55.0	%	52.0	%
Risk-free interest rate	1.58	%	0.27	%	0.18	%

Aspirational Share Grants:


	August 2022
Expected volatility	54.5	%
Risk-free interest rate	3.23	%

The activity for these awards for the year ended December 31, 2022 was as follows (in thousands, except for per share amounts):


	Shares & Units	Weighted-Average Fair Value Per Share
Nonvested, beginning of period	2,482	$	35
Granted	3,664	$	25
Vested	(1,035)	$	35
Forfeited	(551)	$	37
Nonvested, end of period	4,560	$	27

As of December 31, 2022, there was $82.0 million of unrecognized compensation cost related to RSUs and performance shares settled in stock, net of estimated forfeitures, that is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Units and Performance Shares - Settled in Cash – RSUs and performance shares settled in cash are recorded in the Consolidated balance sheets as a liability until vested. The fair value is determined based on the market price of the Company’s stock and is remeasured at each balance sheet date. The activity for these awards for the year ended December 31, 2022 was as follows (in thousands, except for per share amounts):


	Units	Weighted-Average Fair Value Per Share
Nonvested, beginning of period	265	$	36
Granted	99	$	43
Vested	(101)	$	38
Forfeited	(18)	$	44
Nonvested, end of period	245	$	38

Stock Options – The Company estimated the grant date fair value of its 2021 stock option award using a Monte Carlo simulation, assuming a 1.49% expected dividend yield, an expected volatility rate of 44.1%, a risk-free interest rate of 1.21%, and an expected term of 5.5 years. The Company uses historical volatility to determine the expected volatility of its stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury rates at the time of grant. The expected term of options granted assumes the options will be exercised halfway between the time that they are earned based on achieving the market condition and the end of the award term. There were no stock options granted in 2022 or 2020.

The Company’s policy is to issue new shares of common stock upon the exercise of employee stock options. The stock option transactions for the year ended December 31, 2022 were as follows (in thousands, except for per share amounts):


	Options	Weighted-Average Exercise Price
Outstanding, beginning of period	993	$	48
Options granted	—	$	—
Exercised	—	$	—
Forfeited	(80)	$	55
Outstanding, end of period	913	$	47

Exercisable, end of period	413	$	60

The aggregate intrinsic value related to stock options exercised, outstanding and exercisable as of and for the years ended December 31, was as follows (in thousands):


	2022		2021		2020
Exercised	$	—	$	289	$	21
Outstanding	$	2,485	$	530	$	—
Exercisable	$	—	$	—	$	—

Stock options outstanding at December 31, 2022 were as follows (options in thousands):


Price Range	Weighted-Average Contractual Life	Options	Weighted-Average Exercise Price


$30.01 to $40	8.9	500	$	37
$40.01 to $50	0.0	—	$	—
$50.01 to $60	0.1	105	$	52
$60.01 to $70	0.8	308	$	63
Options outstanding	5.2	913	$	47

Options exercisable	0.6	413	$	60