Stock-Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation |
17. Stock-Based Compensation:
The Company has an equity incentive plan under which it grants common stock awards to employees, directors and affiliates of the Company. At September 30, 2023, 9,413,264 shares of common stock were available for issuance under the plan. The Company historically has settled these awards through the issuance of new shares. Beginning on July 1, 2023, the Company commenced reissuing shares from treasury in connection with the settlement of awards under its equity incentive plan.
Restricted Stock Units and Performance Stock Units
Restricted Stock Units
During the nine months ended September 30, 2023, the Company granted 1,195,835 restricted stock units under its equity incentive plan. Each restricted stock unit provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the nine months ended September 30, 2023, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees. The value of the restricted stock units granted during the nine months ended September 30, 2023 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards. Compensation expense related to the restricted stock units is recognized on a straight-line basis over the respective vesting period.
Performance Stock Units
2023 Grants
During the nine months ended September 30, 2023, the Company granted 721,537 performance stock units (at target) under its equity incentive plan. The performance stock units granted during the nine months ended September 30, 2023 provide the recipients with the right to receive shares of common stock dependent on the achievement of a total shareholder return (“TSR”) goal, and are generally subject to the provision of service through the vesting date of the award. The performance period for the TSR goal is measured based on a three-year performance period from January 1, 2023 through December 31, 2025. The TSR goal is based on the Company’s actual TSR percentage increase over the performance period. Depending on the Company’s performance relative to the TSR goal, each performance stock unit award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from zero to 200%. The performance stock units, to the extent earned, will vest on the date the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) certifies the achievement of the performance metric for the three-year period ending December 31, 2025, which will occur subsequent to the end of the performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2025.
The TSR goal is considered a market condition as opposed to a vesting condition. Because a market condition is not considered a vesting condition, it is reflected in the grant date fair value of the award and the associated compensation cost based on the fair value of the award is recognized over the performance period, regardless of whether the Company actually achieves the market condition or the level of achievement, as long as service is provided by the recipient. The Company used a Monte Carlo simulation to estimate the $12.28 weighted average fair value of the awards granted during the nine months ended September 30, 2023, with the following weighted average assumptions:
2020 Grants
In March 2023, the Compensation Committee certified the achievement of the performance metrics for the three-year period ended December 31, 2022, related to the performance stock units (“PSUs”) granted during the year ended December 31, 2020. Fifty percent of the target number of such PSUs could be earned depending on performance against a Company-specific financial performance target, and 50% of the target number of such PSUs could be earned depending on performance against a TSR goal, subject to the provision of service through the vesting date of the awards. The Company-specific financial performance target and the TSR goal were measured independently of each other, and each PSU award recipient was eligible to earn a percentage of the target number of shares granted to the recipient, ranging from zero to 200%. The awards vested during the nine months ended September 30, 2023 as follows: 53.3% of target with respect to the portion of the PSU award subject to the Company-specific financial measure, and 56.0% of target with respect to the portion of the PSU award subject to the TSR goal.
Award Activity
The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the nine months ended September 30, 2023:
(1)Based on target.
During the nine months ended September 30, 2023, the Company also granted 5,081 restricted stock awards with a weighted average grant date fair value of $9.84 per share that immediately vested.
Stock-Based Compensation Expense
For the three months ended September 30, 2023 and 2022, stock-based compensation expense for the Company was $3,477 and $4,740, respectively. The associated income tax benefit recognized in the condensed consolidated statements of income for the three months ended September 30, 2023 and 2022 was $826 and $1,162, respectively. For the nine months ended September 30, 2023 and 2022, stock-based compensation expense for the Company was $12,547 and $17,419, respectively. The associated income tax benefit based on the applicable statutory rate recognized in the condensed consolidated statements of income for the nine months ended September 30, 2023 and 2022 was $2,980 and $4,271, respectively.
Performance-based restricted stock awards and performance-based stock options would vest only on the achievement with respect to shares of our common stock of an average closing trading price equal or exceeding, in any ten trading-day period, the lowest amount which, when multiplied by the number of shares of our common stock then held by investment funds affiliated with CCMP Capital Advisors, LP (“CCMP”) and added to the aggregate net proceeds received by investment funds affiliated with CCMP with respect to their shares of capital stock of the Company, would yield a quotient of equal or greater than two when divided by the equity investment in the Company by investment funds affiliated with CCMP (such quotient, the “MOI Target”). On March 7, 2023, all of the outstanding performance-based stock options (284,956 options) and performance-based restricted shares (277,056 shares) that would vest upon the achievement of the MOI Target were canceled due to the failure of the MOI Target to be achieved upon the sale by investment funds affiliated with CCMP of all of their remaining shares of our common stock. No expense had previously been recognized for either the restricted stock awards or the stock options subject to this performance condition, as the condition was not achieved nor was previously considered probable of achievement.
In addition to the forfeitures described above, 328,677 vested stock options expired unexercised during the nine months ended September 30, 2023. Cash proceeds received by the Company from the exercise of stock options were not material for the nine months ended September 30, 2023. As of September 30, 2023, unrecognized compensation cost was $13,205 for restricted stock units and $7,377 for performance stock units, and the weighted-average period over which these costs are expected to be recognized at September 30, 2023 was 2.02 years for the restricted stock units and 2.31 years for the performance stock units.
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