Compensation Plans

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Payment Transactions

The Company maintains the shareholder-approved Diamond Hill Investment Group, Inc. 2022 Equity and Cash Incentive Plan (the “2022 Plan”), which authorizes the issuance of 300,000 common shares of DHIL stock in various forms of equity awards. As of March 31, 2023, there were 243,580 common shares available for grants under the 2022 Plan. Previously, the Company issued equity awards under the Diamond Hill Investment Group, Inc. 2014 Equity and Cash Incentive Plan (the “2014 Plan”). There are no longer any common shares available for issuance under the 2014 Plan, although grants previously made under the 2014 Plan remain issued and outstanding.

Restricted stock grants represent common shares issued and outstanding upon grant subject to vesting restrictions. The Company issues restricted stock grants that cliff vest after five years to all new employees upon hire and additional awards annually to key employees in the form of three-year graded vesting stock grants.

Restricted stock grants are valued based upon the fair market value of the common shares on the applicable grant date. The restricted stock grants are recorded as deferred compensation in the equity section of the balance sheet on the grant date and then recognized as compensation expense on a straight-line basis over the vesting period of the respective grant. The Company’s policy is to adjust compensation expense for forfeitures as they occur.

The following table represents a roll-forward of outstanding restricted stock and related activity for the three months ended March 31, 2023:


	Shares	Weighted-Average Grant Date Price per Share
Outstanding restricted stock as of December 31, 2022	219,459	$	165.62
Grants issued	49,099	191.47
Grants vested	(14,000)	211.83
Grants forfeited	—	—
Total outstanding restricted stock as of March 31, 2023	254,558	$	168.06

Total deferred equity compensation related to unvested restricted stock was $23.6 million as of March 31, 2023. The recognition of compensation expense related to deferred compensation over the remaining vesting periods is as follows:


Nine Months Remaining In
2023		2024		2025		2026		2027		Thereafter	Total
$	9,035,909	$	8,786,455	$	4,524,579	$	1,085,868	$	135,745	—	$	23,568,556

Employee Stock Purchase Plan

Under the Diamond Hill Investment Group, Inc. Employee Stock Purchase Plan (the “ESPP”), eligible employees may purchase shares of DHIL common stock at 85% of the fair market value on the last day of each offering period. Each offering period is approximately three months, which coincides with the Company’s fiscal quarters. During the three-month period ended March 31, 2023, ESPP participants purchased 1,963 shares of common stock for $0.3 million, and the Company recorded $0.1 million of share-based payment expense related to these purchases. During the three-month period ended March 31, 2022, ESPP participants purchased 2,335 shares of common stock for $0.4 million and the Company recorded $0.1 million of share-based payment expense related to these purchases.

Stock Grant Transactions

The following table represents common shares issued as part of the Company's incentive compensation program during the three-month periods ended March 31, 2023, and 2022:


	Shares Issued	Grant Date Value
March 31, 2023	—	—
March 31, 2022	2,743	$	487,870

401(k) Plan

The Company sponsors a 401(k) plan in which all employees are eligible to participate. Employees may contribute a portion of their compensation subject to certain limits based on federal tax laws. The Company matches employee contributions equal to 250.0% of the first 6.0% of an employee’s compensation contributed to the plan. The Company settles the 401(k) plan matching contributions in cash or common shares of the Company based on the election of the employees.

Deferred Compensation Plans

The Company offers two deferred compensation plans: the Diamond Hill Fixed Term Deferred Compensation Plan and the Diamond Hill Variable Term Deferred Compensation Plan (together, the “DC Plans”). Under the DC Plans, participants may elect to voluntarily defer, for a minimum of five years, certain incentive compensation that the Company then contributes into the DC Plans. Participants are responsible for designating investment options for the assets they contribute, and the distribution paid to each participant reflects any gains or losses on the assets realized in connection with the DC Plans. Assets held in the DC Plans are included in the Company’s investment portfolio, and the associated obligation to participants is included in deferred compensation liability. Deferred compensation liability was $31.2 million and $30.7 million as of March 31, 2023 and December 31, 2022, respectively.