XML 37 R23.htm IDEA: XBRL DOCUMENT v3.20.4
Stock-based Compensation
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]  
Stock-based Compensation Stock-Based Compensation
 
The Company accounts for the cost of all share-based payments, including stock options, by measuring the payments at fair value on the grant date and recognizing the cost in the results of operations. The fair values of stock options are estimated using the Black-Scholes option-pricing model based on certain assumptions. The fair values of service and performance based stock awards are estimated based on the fair market value of the Company’s stock price on the grant date. The fair value of market based performance share awards are estimated using the Monte Carlo valuation method. Estimated forfeiture rates are applied to outstanding awards.

Refer to Note 18 for a description of the Company’s stock-based compensation plans and their general terms. As of December 31, 2020, incentives have been awarded in the form of performance share awards and restricted stock unit awards (collectively, “Rights”) and stock options. The Company has elected to use the straight-line method to recognize compensation costs. Stock options and awards typically vest over a period ranging from six months to five years. The maximum term of stock option awards is 10 years. Upon exercise of a stock option or upon vesting of Rights, shares may be issued from treasury shares held by the Company or from authorized shares.
 
During 2020, 2019 and 2018, the Company recognized $10,300, $13,306, and $12,158 respectively, of stock-based compensation cost and $2,198, $2,805, and $2,613 respectively, of related tax benefits in the accompanying consolidated statements of income. Additionally, the Company recognized excess tax (expense) benefits in the tax provision of $(579), $1,952 and $1,687 in 2020, 2019 and 2018, respectively. The Company has realized all available tax benefits related to deductions from excess stock awards exercised or restricted stock unit awards and performance share awards vested. At December 31, 2020, the Company had $13,894 of unrecognized compensation costs related to unvested awards which are expected to be recognized over a weighted average period of 1.95 years.

The following table summarizes information about the Company’s stock option awards during 2020:
Number of
Shares		Weighted-Average
Exercise
Price
Outstanding, January 1, 2020620,285 $45.35 
Granted107,924 64.65 
Exercised(55,895)28.55 
Forfeited(26,709)63.26 
Outstanding, December 31, 2020645,605 49.29 
 
The following table summarizes information about stock options outstanding at December 31, 2020:
 Options OutstandingOptions Exercisable
Range of
Exercise
Prices		Number
of Shares		Average
Remaining
Life (Years)		Average
Exercise
Price		Number
of Shares		Average
Exercise
Price
$20.69 to $26.59
11,600 1.24$24.93 11,600 $24.93 
$30.71 to $36.31
197,905 4.7233.49 197,905 33.49 
$37.13 to $47.04
124,423 5.7845.52 118,999 45.90 
$58.92 to $59.46
124,194 7.2359.26 71,992 59.25 
$60.72 to $66.10
187,483 8.2963.38 45,420 61.49 
 
The Company received cash proceeds from the exercise of stock options of $1,596, $5,029 and $673 in 2020, 2019 and 2018, respectively. The total intrinsic value (the amount by which the stock price exceeds the exercise price of the option on the date of exercise) of the stock options exercised during 2020, 2019 and 2018 was $781, $5,324 and $1,589, respectively.
 
The weighted-average grant date fair value of stock options granted in 2020, 2019 and 2018 was $14.69, $14.04 and $12.80, respectively. The fair value of each stock option grant on the date of grant was estimated using the Black-Scholes option-pricing model based on the following weighted average assumptions:
202020192018
Risk-free interest rate1.45 %2.43 %2.60 %
Expected life (years)5.55.55.3
Expected volatility26.0 %25.0 %24.1 %
Expected dividend yield1.25 %1.43 %1.74 %
 
The risk-free interest rate is based on the term structure of interest rates at the time of the option grant. The expected life represents an estimate of the period of time that options are expected to remain outstanding. Assumptions of expected volatility of the Company’s common stock and expected dividend yield are estimates of future volatility and dividend yields based on historical trends.

The following table summarizes information about stock options outstanding that are expected to vest and stock options outstanding that are exercisable at December 31, 2020:
Options Outstanding, Expected to VestOptions Outstanding, Exercisable
SharesWeighted-
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted-
Average
Remaining
Term (Years)		SharesWeighted-
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted-
Average
Remaining
Term (Years)
636,577$49.29 $4,285 6.38445,916 $43.59 $4,273 5.43
 
The following table summarizes information about the Company’s Rights during 2020:
Service Based RightsService and Performance Based RightsService and Market Based Rights
Number of UnitsWeighted-Average Grant Date Fair ValueNumber of UnitsWeighted-Average Grant Date Fair ValueNumber of UnitsWeighted-Average Grant Date Fair Value
Outstanding, January 1, 2020256,187 $51.33 141,244 $56.58 90,327 $85.21 
Granted97,842 45.79 56,249 29.86 28,125 104.35 
Forfeited(24,037)71.43 (11,174)42.52 (6,347)103.26 
Additional Earned— — 39,029 47.11 15,271 73.29 
Issued(102,567)41.86 (76,922)47.11 (53,163)73.29 
Outstanding, December 31, 2020227,425 148,426 74,213 

The Company granted 97,842 restricted stock unit awards and 84,374 performance share awards in 2020. All of the restricted stock unit awards vest upon meeting certain service conditions. "Additional Earned" reflects performance share awards earned above target that have been issued. The performance share awards are part of the long-term Performance Share Award Program (the "Awards Program"), which is designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index or to pre-established goals. The performance goals are independent of each other and based on equally weighted metrics. For awards granted in 2020, 2019 and 2018, the metrics included the Company's total shareholder return ("TSR"), operating income before depreciation and amortization growth ("EBITDA growth") and return on invested capital ("ROIC"). The TSR and EBITDA growth metrics are designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index over a three year period. ROIC is designed to assess the Company’s performance compared to pre-established goals over a three year performance period. The participants can earn from zero to 250% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. Compensation expense for the awards is recognized over the three year service period based upon the value determined under the intrinsic value method for EBITDA growth and ROIC portions of the award and the Monte Carlo simulation valuation model for the TSR portion of the award since it contains a market condition. The assumptions used to determine the weighted-average fair values of the market based portion of the 2020 awards include a 1.42% risk-free interest rate and a 26.70% expected volatility rate.
Compensation expense for the TSR portion of the awards is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the TSR performance goal. Compensation expense for the EBITDA growth and the ROIC portions of the awards is recorded each period based upon a probability assessment of achieving the goals with a final adjustment at the end of the service period based upon the actual achievement of those performance goals.