STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

STOCK-BASED COMPENSATION.

STOCK-BASED COMPENSATION

NOTE 18.           STOCK-BASED COMPENSATION

As of December 31, 2021, we had two active stock-based incentive compensation plan: the 2017 Omnibus Incentive Plan ("the 2017 Plan") and the Employee Stock Purchase Plan ("ESPP"). We issue all new equity compensation grants under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans. Our stock plans are administered by the Board of Directors Compensation Committee. On December 31, 2021, there were 3.3 million shares reserved and 2.6 million shares available for future grant under our stock-based incentive plans.

On May 4, 2017, the stockholders approved the 2017 Plan, and all shares that were then available for issuance under the 2008 Omnibus Incentive Plan ("the 2008 Plan") are now available for issuance under the 2017 Plan. The 2017 Plan and 2008 Plan provide for the grant of stock options, stock appreciation rights, restricted stock, stock units (including deferred stock units), unrestricted stock, and dividend equivalent rights. Any of the awards issued may be issued as performance-based awards to align stock compensation awards to the attainment of annual or long-term performance goals. As of December 31, 2021, there were 1.9 million shares available for grant under the 2017 Plan.

Stock-based Compensation Expense

We recognize stock-based compensation expense based on the fair value of the awards issued and the functional area of the employee receiving the award. Stock-based compensation was as follows:

	Years Ended December 31,
	2021		2020		2019
Equity classified awards	$	15,428	$	12,272	$	7,327
Liability classified awards		311		—		—
Stock-based compensation expense	$	15,739	$	12,272	$	7,327

Estimated forfeiture rates for our stock-based compensation expense applicable to stock options and RSUs were approximately 8%, 5% and 10% for the years ended December 31, 2021, 2020 and 2019, respectively.

Restricted Stock Units

Generally, we grant RSUs with a three-year time-based vesting schedule. Certain RSUs contain performance-based or market-based vesting conditions in addition to the time-based vesting requirements.

Changes in our unvested RSUs were as follows:

	Year Ended December 31, 2021
		Weighted-
		Average
	Number of	Grant Date
	RSUs	Fair Value
RSUs outstanding at beginning of period	608	$	58.15
RSUs granted	406	$	94.60
RSUs vested	(178)	$	62.82
RSUs forfeited	(209)	$	70.34
RSUs outstanding at end of period	627	$	76.37

The total intrinsic value of RSUs converted to shares for the years ended December 31, 2021, 2020 and 2019 were $19.2 million, $9.2 million, and $8.3 million, respectively. As of December 31, 2021, there was $21.4 million of total unrecognized compensation cost, net of expected forfeitures related to non-vested RSUs granted, which is expected to be recognized through December 2024, with a weighted-average remaining vesting period of 1.1 years.

Stock Options

Generally, we grant stock option awards with an exercise price equal to the market price of our stock at the date of grant and with either a three or four-year vesting schedule or performance-based vesting; however, no stock options were granted in 2021. Stock option awards generally have a term of ten years.

Changes in our stock options were as follows:

	Year Ended December 31, 2021
		Weighted-
		Average
	Number of	Exercise Price
	Options	per Share
Options outstanding at beginning of period	147	$	23.63
Options exercised	(35)	$	21.10
Options outstanding at end of period	112	$	24.41

The total intrinsic value of options exercised for the years ended December 31, 2021, 2020 and 2019 was $2.6 million, $1.9 million, and $1.6 million, respectively. All options outstanding on December 31, 2021 are vested and have aggregate intrinsic value of $7.5 million and weighted-average remaining contractual life of 3.0 years.

The following table summarizes information about the stock options outstanding on December 31, 2021:

	Options Outstanding and Exercisable
	Number	Weighted-Average	Weighted-
	Outstanding	Remaining	Average
Range of Exercise Prices	(In 000's)	Contractual Life	Exercise Price
$18.77	28	2.75 years	$	18.77
$26.32	84	3.10 years	$	26.32
$18.77 to $26.32	112	3.01 years	$	24.41

Employee Stock Purchase Plan

The ESPP, a stockholder-approved plan, provides for the issuance of rights to purchase up to 1,000,000 shares of common stock. In May 2010, stockholders approved an increase from 500,000 to 1,000,000 shares authorized for sale under our ESPP. Employees below the Vice President level are eligible to participate in the ESPP if employed by us for at least 20 hours per week during at least five months per calendar year. Participating employees may contribute up to the lesser of 15% of their eligible earnings or $5,000 during each plan period. Currently, the plan period is six months. The purchase price of common stock purchased under the ESPP is currently equal to the lower of 1) 85% of the fair market value of our common stock on the commencement date of each plan period or 2) 85% of the fair market value of our common shares on each plan period purchase date. On December 31, 2021, 0.7 million shares remained available for future issuance under the ESPP.

Purchase rights granted under the ESPP are valued using the Black-Scholes-Merton model. As of December 31, 2021, there was $0.6 million of total unrecognized compensation cost related to the ESPP that we expect to recognize over a remaining period of five months. The following table summarizes compensation expense related to the ESPP.

	Years Ended December 31,
	2021		2020		2019
Stock-based compensation expense related to the ESPP	$	1,114	$	856	$	475

The fair value of each purchase right granted under the ESPP was estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following assumptions:

	Years Ended December 31,
	2021		2020		2019
Risk-free interest rates	0.04% - 0.10	%	0.10% - 0.18%	%	1.62% - 2.31	%
Expected dividend yield rates	—	%	—	%	—	%
Expected term	0.5 years		0.5 years		0.5 years
Expected volatility	42.7	%	70.1	%	41.3	%

The risk-free interest rate is based on the six-month U.S. Treasury Bill at the time of the grant. Our term is 0.5 years as purchases are made biannually. We utilize our historical experience in determining the volatility of our common stock over the expected term.