The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on the recommendation from the Compensation Committee.

Stock options generally vest ratably over four years. Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model (for options granted before March 2021) or the Black Scholes valuation model (for options granted after February 2021).


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Weighted average fair value of grants	$45.44	$31.60	$38.86	$34.22
Dividend yield	0.96%	1.18%	1.01%	1.15%
Volatility	24.60%	23.71%	23.77%	22.04%
Risk-free interest rate	0.71% - 0.82%	0.14% - 0.70%	0.12% - 1.54%	1.40% - 1.66%
Expected life (in years)	4.90	5.81	5.70	5.80


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of goods sold	$	100	$	107	$	436	$	389
Selling, general and administrative expenses	1,789		2,177		6,269		7,449
Total expense before income taxes	1,889		2,284		6,705		7,838
Income tax benefit	(180)		(216)		(628)		(801)
Total expense after income taxes	$	1,709	$	2,068	$	6,077	$	7,037

A summary of the Company’s stock option activity as of September 30, 2021 and changes during the nine months ended September 30, 2021 are presented in the following table:


Stock Options	Shares	Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2021	963,726	$	125.70	6.94	$	70,829,529
Granted	278,605	198.21
Exercised	(131,685)	111.07
Forfeited	(37,979)	165.68
Outstanding at September 30, 2021	1,072,667	$	144.92	7.07	$	66,728,398
Vested and expected to vest as of September 30, 2021	1,021,851	$	142.97	6.98	$	65,520,705
Exercisable at September 30, 2021	495,853	$	106.25	5.28	$	49,933,371

Restricted stock awards generally cliff vest after three years for employees and non-employee directors. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. A summary of the Company’s restricted stock activity as of September 30, 2021 and changes during the nine months ended September 30, 2021 are presented as follows:


Restricted Stock	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021	111,300	$	147.13
Granted	37,985	205.64
Vested	(28,874)	137.25
Forfeited	(6,735)	169.41
Unvested at September 30, 2021	113,676	$	168.24

Dividends are paid on restricted stock awards and their fair value is equal to the market price of the Company’s stock at the date of the grant.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of goods sold	$	85	$	69	$	318	$	255
Selling, general and administrative expenses	1,290		963		3,856		2,809
Total expense before income taxes	1,375		1,032		4,174		3,064
Income tax benefit	(264)		(217)		(846)		(643)
Total expense after income taxes	$	1,111	$	815	$	3,328	$	2,421

The Company also maintains a cash-settled share based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. A summary of the Company’s unvested cash-settled restricted stock activity as of September 30, 2021 and changes during the nine months ended September 30, 2021 are presented in the following table:


Cash-Settled Restricted Stock	Shares	Weighted-Average Fair Value
Unvested at January 1, 2021	63,940	$	199.20
Granted	22,385	198.85
Vested	(22,921)	199.51
Forfeited	(3,930)	206.95
Unvested at September 30, 2021	59,474	$	206.95

Dividend equivalents are paid on certain cash-settled restricted stock awards. Total compensation cost for cash-settled restricted stock is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of goods sold	$	60	$	283	$	414	$	595
Selling, general and administrative expenses	364		1,319		2,695		2,433
Total expense before income taxes	424		1,602		3,109		3,028
Income tax benefit	(21)		(150)		(233)		(286)
Total expense after income taxes	$	403	$	1,452	$	2,876	$	2,742

Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model.


	Nine Months Ended September 30,
	2021	2020
Weighted average fair value of grants	$247.49	$224.14
Dividend yield	—%	—%
Volatility	28.6%	19.5%
Risk-free interest rate	0.33%	1.30%
Expected life (in years)	2.93	2.94

A summary of the Company’s performance share unit activity as of September 30, 2021 and changes during the nine months ended September 30, 2021 are presented in the following table:


Performance Share Units	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021	58,695	$	218.16
Granted	29,020	247.49
Vested	—	—
Forfeited	(5,850)	212.44
Unvested at September 30, 2021	81,865	$	227.90

On December 31, 2020, 24,305 performance share units vested. Based on the Company’s relative total shareholder return rank during the three year period ended December 31, 2020, the Company achieved a 201% payout factor and issued 48,867 common shares in February 2021 for awards that vested in 2020.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of goods sold	$	—	$	—	$	—	$	—
Selling, general and administrative expenses	1,642		2,572		4,587		7,225
Total expense before income taxes	1,642		2,572		4,587		7,225
Income tax benefit	(84)		(49)		(195)		(157)
Total expense after income taxes	$	1,558	$	2,523	$	4,392	$	7,068

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Condensed Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees.

As of September 30, 2021, there was $11.5 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.3 years, $7.8 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.1 years, $4.3 million of total unrecognized compensation cost related to cash-settled restricted shares that is expected to be recognized over a weighted-average period of 1.0 years and $6.1 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 0.9 years.