Share-Based Compensation

12 Months Ended

Dec. 31, 2021

Deferred Compensation Arrangements [Abstract]

We recognize share-based compensation for all stock options granted over the requisite service period using the fair value of these grants as estimated at the date of grant using the Black-Scholes pricing model over the requisite service period using the market value of our publicly traded common stock on the date of grant.

Share-Based Compensation Plans

The Compensation Committee of the Board of Directors (the “Committee”) has the authority to select the participants to be granted options; to designate whether the option granted is an incentive stock option (“ISO”), a non-qualified option, or a stock appreciation right; to establish the number of shares of common stock that may be issued upon exercise of the option; to establish the vesting provision for any award; and to establish the term any award may be outstanding. The exercise price of any ISO’s granted will not be less than 100% of the fair market value of the shares of common stock on the date granted and the term of an ISO may not be more than ten years. The exercise price of any non-qualified options granted will not be less than 100% of the fair market value of the shares of common stock on the date granted unless so determined by the Committee.

The Company’s outstanding stock incentive awards have been granted under two incentive plans – the 2012 Stock Incentive Plan (“2012 Plan”) and the 2019 Stock Incentive Plan (“2019” Plan”). The individual option grant awards may vest over periods up to five years. The term of the options under the 2019 Plan is up to ten years from the date of grant. As of December 31, 2021, shares available for future grants totaled 2,117,336 all under the 2019 Plan.

Compensation expense is recognized only for the awards that ultimately vest. Accordingly, forfeitures that were not expected may result in the reversal of previously recorded compensation expense. The following is a summary of share-based compensation expense, net of forfeitures, included in “General and administrative expenses” in the Consolidated Statements of Income ($ in thousands):


	December 31, 2021		December 31, 2020		December 31, 2019
Non-cash share-based compensation expense	$	8,415	$	3,061	$	3,646

Determining Fair Value of Option Awards

The fair value of each option award was estimated on the grant date using the Black-Scholes option valuation model with the weighted average assumptions indicated in the following table. Each grant is valued as a single award with an expected term based upon expected employee and termination behavior. Compensation cost is recognized on the graded vesting method over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. The expected volatility is derived using daily historical data for periods preceding the date of grant. The risk-free interest rate is the approximate yield on the United States Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

Stock Options

The weighted average fair value of options granted was $14.54, $5.57 and $6.30 for December 31, 2021, 2020 and 2019, respectively. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:


	December 31, 2021	December 31, 2020	December 31, 2019
Dividend yield	6.7%	5.1%	5.5%
Expected volatility	48.1%	17.1%	18.2%
Expected lives	2.9 years	2.9 years	2.7 years
Risk-free interest rate	0.33%	1.30%	2.39%

Stock Option Activity

The following tables summarize our outstanding stock options, after giving effect to modifications of 83,334 options in November 2019 as, in substance, the forfeiture of old and issuance of new options concurrent with an employee’s retirement:


			Weighted Average
	Number	Weighted Average	Remaining
	of Shares	Exercise Price	Contractual Life (Years)
Outstanding December 31, 2018	920,346	$69.24
Options granted under 2012 Plan	685,334	$79.08


Options exercised under 2012 Plan	(501,664)	$71.52
Options forfeited under 2012 Plan	(100,002)	$73.89

Outstanding December 31, 2019	1,004,014	$74.35
Options granted under 2012 Plan	319,669	$90.79
Options granted under 2019 Plan	272,331	$89.76
Options exercised under 2012 Plan	(512,509)	$72.98
Options forfeited under 2012 Plan	(16,669)	$81.37
Options forfeited under 2019 Plan	(32,998)	$90.79
Outstanding December 31, 2020	1,033,838	$83.54
Options granted under 2012 Plan	12,500	$69.20
Options granted under 2019 Plan	639,500	$69.20
Options exercised under 2012 Plan	(20,000)	$60.52


Options forfeited under 2019 Plan	(13,333)	$90.79
Options outstanding, December 31, 2021	1,652,505	$78.10	3.37

Exercisable at December 31, 2021	1,169,991	$79.12	3.08


				Remaining
Grant	Number	Exercise		Contractual
Date	of Shares	Price		Life in Years
2/22/2017	55,331	$	74.78	0.14
2/20/2018	88,170	$	64.33	1.14
2/21/2019	313,504	$	79.96	2.14
2/21/2020	536,000	$	90.79	3.15
5/1/2020	7,500	$	53.76	3.33
2/25/2021	652,000	$	69.20	4.15
Options outstanding, December 31, 2021	1,652,505

Including outstanding stock options, our stockholders have authorized an additional 3,769,841 shares of common stock that may be issued under the share-based payments plans.

The following table summarizes our outstanding non-vested stock options:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested December 31, 2020	431,844	$5.79
Options granted under 2012 Plan	12,500	$14.54
Options granted under 2019 Plan	639,500	$14.54
Options vested under 2012 Plan	(212,838)	$5.18
Options vested under 2019 Plan	(388,492)	$6.98


Non-vested December 31, 2021	482,514	$7.51

As of December 31, 2021, unrecognized compensation expense totaling $1.8 million associated with unvested stock options is expected to be recognized over the following periods: 2022 - $1.6 million and 2023 - $0.2 million. Share-based compensation is included in “General and administrative expense” in the Consolidated Statements of Income.

At December 31, 2021, there was no material intrinsic value of stock options outstanding and exercisable. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $0.2 million or $9.27 per share; $8.1 million or $15.84 per share, and $5.7 million or $11.28 per share, respectively.