Company: EHC
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000785161-25-000009
Chunk: 62

Company: Encompass Health Corp
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 62
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5 %28.3 %Risk-free interest rate4.2 %4.2 %1.7 %Expected life (years)7.26.97.8Dividend yield1.0 %1.1 %1.9 %

F-36

Encompass Health Corporation and SubsidiariesNotes to Consolidated Financial Statements

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, the Black-Scholes option-pricing model requires the input of highly subjective assumptions, including the expected stock price volatility. We estimate our expected term through an analysis of actual, historical post-vesting exercise, cancellation, and expiration behavior by our officers and projected post-vesting activity of outstanding options. We calculate volatility based on the historical volatility of our common stock over the period commensurate with the expected term of the options. The risk-free interest rate is the implied daily yield currently available on U.S. Treasury issues with a remaining term closely approximating the expected term used as the input to the Black-Scholes option-pricing model. We estimated our dividend yield based on our annual dividend rate and our stock price on the dividend payment dates. Under the Black-Scholes option-pricing model, the weighted-average grant date fair value per share of employee stock options granted during the years ended December 31, 2024, 2023, and 2022 was $26.14, $19.23, and $17.29, respectively.A summary of our stock option activity and related information is as follows: Shares(In Thousands)Weighted- Average Exercise Price per ShareWeighted- Average Remaining Life (Years)Aggregate Intrinsic Value(In Millions)Outstanding, December 31, 2023853 $49.52   Granted64 74.20   Exercised(77)31.66   Outstanding, December 31, 2024840 53.05 5.1$33.0 Exercisable, December 31, 2024686 50.72 4.328.6 We recognized approximately $1.9 million, $2.5 million, and $1.2 million of compensation expense related to our stock options for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31,