Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Stock-Based Compensation Plans

STOCK-BASED COMPENSATION PLANS

Pursuant to our Amended and Restated Incentive Compensation Plan (the “Incentive Plan”), at any time prior to April 12, 2031, we can grant stock-based awards in the form of restricted stock, restricted stock units, and stock options to team members, officers, directors, and contractors. On April 10, 2023, our board of directors approved an amendment to the Incentive Plan, subject to shareholder approval, increasing the number of shares authorized for issuance by 250,000 shares, to 3,000,000 shares. Shareholder approval was received at our annual meeting of shareholders on June 2, 2023. The shares available for future grants under the Incentive Plan totaled 455,100 as of December 31, 2023.

Stock option grants

We grant time-based stock options to team members and directors in accordance with the Incentive Plan. Based on the terms of individual stock option grant agreements, the stock options:

•vest and become exercisable in three or four equal annual installments beginning on the first anniversary of the date on which the options were granted, based on continuous employment or service, and

•expire either six or ten years from the date of the grant.

A summary of the stock option activity under the Incentive Plan for the year ended December 31, 2023, is presented below:

Stock Options	Number of Stock Options	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value (1) (in millions)		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2022	682,074	$	365.34
Exercised	(15,624)	333.94
Forfeited	(11,250)	374.68
Outstanding as of December 31, 2023	655,200	$	365.93	$	110.1	4.0
Exercisable as of December 31, 2023	406,288	$	352.67	$	73.3	3.7
Unvested as of December 31, 2023	248,912	$	387.58	$	36.8	4.4

(1)The intrinsic value of stock options is the amount by which the market price of the stock as of December 31, 2023 exceeded the exercise price of the options.

The total intrinsic value of stock options exercised during 2023 was $2.8 million. Net cash proceeds from the exercise of stock options in 2023 was $5.2 million.

Restricted Stock Units

We grant performance-based and time-based restricted stock units to team members and directors in accordance with the Incentive Plan. The grant-date fair value per share is estimated to equal the market price of our common stock on the date of grant. Each restricted stock unit represents and has a value equal to one share of common stock. Based on the terms of individual restricted stock unit grant agreements, restricted stock units vest under one of the following methods:

•For our former Chief Executive Officer, over a period of ten years, based on continuous employment and the cumulative improvement in our annual adjusted economic profit.

•For certain team members, over a period of three or four years, based on continuous employment.

•For independent directors, over a period of three years, based on continuous service as a director.

•For certain independent directors, over a period of five years, based upon the compounded annual growth rate in our adjusted net income per diluted share, a non-GAAP financial measure.

A summary of the restricted stock unit (“RSU”) activity under the Incentive Plan for the year ended December 31, 2023, is presented below:

Restricted Stock Units	Number of Restricted Stock Units	Weighted Average Grant-Date Fair Value Per Share		Aggregate Intrinsic Value (2) (in millions)		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2022	341,228	$	169.28
Granted	22,261	454.04
Converted	(159,205)	194.97
Forfeited	(840)	462.46
Outstanding as of December 31, 2023 (1)	203,444	$	179.13	$	108.4	1.5
Vested as of December 31, 2023	163,948	$	110.92	$	87.3	1.5

(1)No RSUs outstanding at December 31, 2023 were convertible to shares of common stock.

(2)The intrinsic value of RSUs is measured by applying the closing stock price as of December 31, 2023 to the applicable number of units.

The grant-date weighted average fair value of RSUs granted in 2023, 2022, and 2021 was $454.04, $488.27, and $366.07, respectively. The total intrinsic value of RSUs converted to common stock during 2023, 2022, and 2021 was $84.8 million, $27.5 million, and $7.9 million, respectively. During 2021, we recognized a $3.0 million reversal of stock-based compensation expense due to the forfeiture of 31,000 unvested RSUs upon the retirement of our former Chief Executive Officer in May 2021.

Restricted Stock

Prior to 2020, we granted performance-based and time-based shares of restricted stock to team members in accordance with the Incentive Plan. As of December 31, 2023 and December 31, 2022, there were no unvested shares of restricted stock. During 2021, we recognized an $8.5 million reversal of stock-based compensation expense due to the forfeiture of 109,000 shares of unvested restricted stock upon the retirement of our former Chief Executive Officer in May 2021.

Stock-based compensation expense

Stock-based compensation expense consists of the following:

(In millions)	For the Years Ended December 31,
	2023		2022		2021
Stock options	$	33.5	$	33.8	$	33.7
Restricted stock units	5.6		2.7		(1.1)
Restricted stock	—		—		(7.8)
Total	$	39.1	$	36.5	$	24.8

Assuming performance targets are achieved in the periods currently estimated, we expect to recognize the remaining expense for stock-based awards outstanding as of December 31, 2023 over a weighted average period of 0.9 years, as follows:

(In millions)
For the Years Ended December 31,	Stock Options		Restricted Stock Units		Total Projected Expense
2024	$	33.4	$	5.8	$	39.2
2025	5.2		5.0		10.2
2026	1.2		3.2		4.4
2027	—		0.1		0.1
Total	$	39.8	$	14.1	$	53.9