Equity Awards

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock Options

The Company did not grant any stock option awards during the nine months ended September 30, 2020. Information related to stock options at September 30, 2020 is as follows:


	Number of Stock Options	Weighted Average Option Price		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2020	150,000	$	17.87
Granted	—	—
Exercised	—	—
Cancelled	—	—
Expired	—	—
Outstanding at September 30, 2020	150,000	$	17.87	5.8	$	739,500

As of September 30, 2020, the 150,000 stock options outstanding were exercisable under the Company's long-term equity incentive plans. As of September 30, 2020, there was no unrecognized compensation cost related to stock options remaining.

The Company recognized no stock-based compensation expense related to stock options during the three and nine months ended September 30, 2020 and approximately $0.1 million of stock-based compensation expense during the three and nine months ended September 30, 2019. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

Restricted Stock Units

The Company awarded the following restricted stock units ("RSUs") during the nine months ended September 30, 2020:

•granted 189,349 RSUs to certain employees, which are subject only to a service condition and vest ratably over three years so long as the employee remains with the Company;

•granted 31,816 RSUs to certain employees, which are subject only to a service condition and fully vest at the end of three years so long as the employee remains with the Company;

•granted 2,558 RSUs to certain employees, which are subject only to a service condition and fully vest one year from the date of grant so long as the employee remains with the Company;

•granted 30,590 RSUs to its non-employee independent directors, which fully vest one year from date of grant so long as the director and/or Company does not terminate the director's service prior to the vesting date; and

•issued 3,222 RSUs related to director fee deferrals during the nine months ended September 30, 2020 as certain of the Company's directors elected to defer all or a portion of their directors fees and to receive the amount in Company common stock at a future date.

During 2020, the Company awarded 113,146 performance-based RSUs to certain Company key employees which vest three years from the grant date as long as the employee remains with the Company. These awards are earned 50% based upon the Company's achievement of an earnings per share compound annual growth rate ("EPS CAGR") metric over a period beginning January 1, 2020 and ending December 31, 2022. The remaining 50% of the awards are earned based on the Company's total shareholder return ("TSR") relative to the TSR of the common stock of a pre-defined industry peer-group, measured over the performance period. TSR is calculated as the Company's average closing stock price for the 20 trading days at the end of the performance period plus Company dividends, divided by the Company's average closing stock price for the 20 trading days prior to the start of the performance period. The Company estimates the grant-date fair value subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free rate of 0.56% and annualized volatility of 26.2%. Depending on the performance achieved for these two metrics, the amount of shares earned, if any, can vary for each metric from 0% of the target award to a maximum of 200% of the target award.

In addition, the Company awarded 87,034 performance-based RSUs to certain Company key divisional employees which vest three years from the grant date as long as the employee remains with the Company. These awards are earned based upon the Company's stock price performance over the period from January 1, 2020 and ending December 31, 2022. The stock price achievement is calculated based on the Company's average closing stock price for each quarter end for the 20 trading days up to and including March 31, June 30, September 30, and December 31, 2022, respectively. The Company estimates the grant-date fair value subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free rate of 0.85% and annualized volatility of 25.2%. Depending on the performance achieved for this metric, the amount of shares earned if any, can vary from 0% of the target award to a maximum of 160% of the target award, although it automatically is earned at the target award level if the Company's stock price is equal to or greater than a specified stock price for either five consecutive trading days or 20 total trading days during the performance period.

During 2017, the Company awarded performance-based RSUs to certain Company key employees which were earned based upon the Company's TSR relative to the TSR of the common stock of a pre-defined industry peer-group and measured over a period beginning January 1, 2017 and ending on December 31, 2019. Depending on the performance achieved, the amount of shares earned could vary from 0% of the target award to a maximum of 200% of the target award. The Company attained 127.4% of the target, resulting in an increase of 27,567 shares during the nine months ended September 30, 2020.

Information related to RSUs at September 30, 2020 is as follows:


	Number of Unvested RSUs	Weighted Average Grant Date Fair Value		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2020	622,528	$	30.77
Granted	485,282	21.42
Vested	(302,087)	27.88
Cancelled	(17,207)	28.24
Outstanding at September 30, 2020	788,516	$	26.46	1.5	$	17,978,165

As of September 30, 2020, there was approximately $10.3 million of unrecognized compensation cost related to unvested RSUs that is expected to be recorded over a weighted average period of 2.1 years years.

The Company recognized stock-based compensation expense related to RSUs of approximately $0.9 million and $1.0 million during the three months ended September 30, 2020 and 2019, respectively and approximately $5.6 million and $3.9 million during the nine months ended September 30, 2020 and 2019, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.