Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
During the nine months ended September 30, 2023, the Company paid $191.8 million, or $0.39 per share, in cash dividends compared to $147.6 million, or $0.30 per share, during the same period in 2022.
On September 6, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with LOR, Inc. (“LOR”), and Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC, as representatives of the several underwriters (the “Underwriters”), relating to the sale by LOR of 38,724,100 shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”), at a public offering price of $35.00 per share (the “Offering”). In connection with the Offering, LOR granted the Underwriters an option to purchase up to an additional 5,785,714 shares of Common Stock (the “Optional Shares”). The Offering, including the sale of the Optional Shares, closed on September 11, 2023. The Company did not sell any shares in the Offering and did not receive any proceeds from the Offering. In addition, the Company completed the repurchase of 8,724,100 of the shares of Common Stock offered in the Offering for approximately $300 million at $34.39 per share.
As we repurchase our common stock, we reduce common stock for par value of the shares repurchased, with the excess of the purchase price over par value recorded as a reduction to additional paid-in capital and retained earnings.
The Company did not repurchase shares on the open market during the nine months ended September 30, 2022.
The Company repurchases shares from employees for the payment of their taxes on restricted shares that have vested. The Company repurchased $10.7 million and $7.0 million during the nine month periods ended September 30, 2023 and 2022, respectively.
During the nine months ended September 30, 2023, the Company also purchased shares on behalf of employees for the Employee Stock Purchase Plan ("ESPP") discussed below.
Restricted Shares and Performance Share Unit Awards
As more fully discussed in Note 14 of the Company’s notes to the consolidated financial statements in its 2022 Annual Report on Form 10-K, time-lapse restricted awards and restricted stock units (“restricted shares”) have been issued to officers and other management employees under the Company’s Employee Stock Incentive Plans. Beginning with the 2023
grant, restricted shares vest in 25 percent increments over four years from the date of the grant. Prior grants vest either over five years or over six years from the date of grant, depending on the year of the grant. Additionally, during 2023, certain executives were granted Performance Share Unit awards (PSUs) in addition to restricted shares. These awards will be expensed on a straight-line basis over the three-year vesting period.
The Company issues new shares from its authorized but unissued share pool. As of September 30, 2023, approximately 5.3 million shares of the Company’s common stock were reserved for issuance.
The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2023 2022 2023 2022
Restricted shares and PSUs:
Pre-tax compensation expense $ 6,096  $ 4,957  $ 18,044  $ 15,914 
Tax benefit (1,572) (1,298) (4,655) (3,894)
Compensation expense, net of tax $ 4,524  $ 3,659  $ 13,389  $ 12,020 
The following table summarizes information on unvested awards outstanding as of September 30, 2023:
(number of shares in thousands) Number of
Fair Value
Unvested restricted shares and PSUs at December 31, 2022 2,685 $ 28.97 
Forfeited (86) 29.77 
Vested (823) 26.90 
Granted 673 36.40 
Unvested restricted shares and PSUs at September 30, 2023 2,449 $ 31.68 
As of September 30, 2023 and December 31, 2022, the Company had $56.3 million and $52.3 million of total unrecognized compensation cost, respectively, related to restricted shares and PSUs that are expected to be recognized over a weighted average period of approximately 3 years and 3.5 years, respectively.
Employee Stock Purchase Plan
As more fully discussed in Note 14 of the Company’s notes to the consolidated financial statements in its 2022 Annual Report on Form 10-K, shareholders approved the Rollins, Inc. 2022 Employee Stock Purchase Plan which provides eligible employees with the option to purchase shares of Company common stock, at a discount, through payroll deductions. The most recent purchase period for the ESPP began on July 1, 2023, and will end on December 31, 2023. The Company recorded compensation expense associated with its ESPP of $0.4 million during the nine months ended September 30, 2023. Compensation expense for the ESPP is included in cost of services provided and sales, general and administrative expenses in our condensed consolidated statements of income.