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.

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 Income is consistent with the classification of cash compensation for the same employees.

Stock options granted under the Company’s plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The fair value of each option grant was estimated on the date of the grant using the Black Scholes valuation model. Stock options generally vest ratably over four years, with vesting beginning one year from the date of grant, and generally expire 10 years from the date of grant. The service period for certain retiree eligible participants is accelerated. Weighted average stock option fair values and assumptions for the periods presented are disclosed below.


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Weighted average fair value of grants	$57.13	$46.33	$60.70	$41.74
Dividend yield	1.13%	1.14%	1.07%	1.14%
Volatility	27.20%	25.39%	27.19%	25.15%
Risk-free interest rate	3.81%	2.98%	4.12%	1.85%
Expected life (in years)	4.50	4.90	4.50	4.90


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of goods sold	$	0.1	$	—	$	0.4	$	0.3
Selling, general and administrative expenses(1)	1.4		2.8		7.1		5.9
Total expense before income taxes	1.5		2.8		7.5		6.2
Income tax benefit	(0.2)		(0.2)		(0.6)		(0.5)
Total expense after income taxes	$	1.3	$	2.6	$	6.9	$	5.7

(1) The three months ended June 30, 2023 include $1.5 million of lower expense compared with the same period in 2022 while the six months ended June 30, 2023 include $1.1 million of higher expense compared with the same period in 2022 as it relates to the timing of accelerated stock compensation costs for retiree eligible participants.

A summary of the Company’s stock option activity as of June 30, 2023 and changes during the six months ended June 30, 2023 are presented in the following table:


Stock Options	Shares	Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(Dollars in millions except weighted average price)
Outstanding at January 1, 2023	1,015,572	$	161.45	6.94	$	67.9
Granted	213,865	225.52
Exercised	(59,643)	134.89
Forfeited	(22,370)	198.67
Outstanding at June 30, 2023	1,147,424	$	174.05	7.09	$	49.5
Vested and expected to vest as of June 30, 2023	1,103,113	$	172.66	7.01	$	49.0
Exercisable at June 30, 2023	617,095	$	148.13	5.69	$	41.5

As of June 30, 2023, there was $12.3 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.5 years.

Restricted stock awards generally cliff vest after three years for employees and non-employee directors. The service period for certain retiree eligible participants is accelerated. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. 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. A summary of the Company’s restricted stock activity as of June 30, 2023 and changes during the six months ended June 30, 2023 are presented in the following table:


Restricted Stock	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2023	104,382	$	179.45
Granted	35,845	219.69
Vested	(20,802)	170.41
Forfeited	(9,150)	202.31
Unvested at June 30, 2023	110,275	$	192.34


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of goods sold	$	0.1	$	—	$	0.3	$	0.2
Selling, general and administrative expenses	1.6		1.6		3.0		3.2
Total expense before income taxes	1.7		1.6		3.3		3.4
Income tax benefit	(0.4)		(0.2)		(0.7)		(0.6)
Total expense after income taxes	$	1.3	$	1.4	$	2.6	$	2.8

As of June 30, 2023, there was $7.9 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.

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. The service period for certain retiree eligible participants is accelerated. 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. Dividend equivalents are paid on certain cash-settled restricted stock awards. A summary of the Company’s unvested cash-settled restricted stock activity as of June 30, 2023 and changes during the six months ended June 30, 2023 are presented in the following table:


Cash-Settled Restricted Stock	Shares	Weighted-Average Fair Value
Unvested at January 1, 2023	57,356	$	228.33
Granted	19,970	225.53
Vested	(15,481)	229.12
Forfeited	(1,985)	215.26
Unvested at June 30, 2023	59,860	$	215.26


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of goods sold	$	0.1	$	0.1	$	0.2	$	—
Selling, general and administrative expenses	0.5		(0.5)		1.5		—
Total expense before income taxes	0.6		(0.4)		1.7		—
Income tax benefit	(0.1)		—		(0.1)		—
Total expense after income taxes	$	0.5	$	(0.4)	$	1.6	$	—

As of June 30, 2023, there was $5.7 million of total unrecognized compensation cost related to cash-settled restricted shares that is expected to be recognized over a weighted-average period of 1.2 years.

Weighted average performance share unit fair values and assumptions for the periods 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.


	Six Months Ended June 30,
	2023	2022
Weighted average fair value of grants	$308.18	$235.54
Dividend yield	—%	—%
Volatility	27.00%	28.09%
Risk-free interest rate	4.37%	1.73%
Expected life (in years)	2.94	2.93

A summary of the Company’s performance share unit activity as of June 30, 2023 and changes during the six months ended June 30, 2023 are presented in the following table:


Performance Share Units	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2023	70,915	$	236.66
Granted	28,030	308.18
Vested	(18,105)	226.86
Forfeited	(1,725)	261.13
Unvested at June 30, 2023	79,115	$	264.89

On January 31, 2023, 18,105 performance share units vested. Based on the Company’s relative total shareholder return rank during the three year period ended January 31, 2023, the Company achieved a 173% payout factor and issued 31,334 common shares in February 2023 for awards that vested in 2023.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of goods sold	$	—	$	—	$	—	$	—
Selling, general and administrative expenses(1)	0.8		2.5		6.0		3.8
Total expense before income taxes	0.8		2.5		6.0		3.8
Income tax benefit	(0.1)		—		(0.2)		(0.1)
Total expense after income taxes	$	0.7	$	2.5	$	5.8	$	3.7

(1) The three months ended June 30, 2023 include $1.8 million of lower expense compared with the same period in 2022 while the six months ended June 30, 2023 include $1.6 million of higher expense compared with the same period in 2022 as it relates to the timing of accelerated stock compensation costs for retiree eligible participants.

As of June 30, 2023, there was $4.9 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.1 years.