Stock-Based Compensation and Employee Benefit Plans |
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| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation and Employee Benefit Plans | Stock-Based Compensation and Employee Benefit Plans Employee Stock-Based Benefit Plans
At September 30, 2019, the Company had stock-based compensation awards outstanding under the following plans: the 2004 Stock Plan, the 2010 Equity Incentive Plan, as amended, or 2010 Plan, the 2010 Employee Stock Purchase Plan, or ESPP. Refer to the Company’s Annual Report for a summary of the Company's stock-based compensation and equity plans as of December 31, 2018. There have been no material changes to the terms of the Company's equity incentive plans during the nine months ended September 30, 2019. All current stock awards are issued under the 2010 Plan and ESPP.
As of September 30, 2019, the number of shares of common stock available for future issuance under the 2010 Plan and awards outstanding under the 2004 Plan was 14,003,701 shares and 6,874 shares, respectively. As of September 30, 2019, the number of shares of common stock available for future issuance under the ESPP was 2,858,240 shares.
Stock-Based Compensation
The Company recognizes stock-based compensation in the consolidated statements of operations, based on the department to which the related employee reports, as follows:
The total unrecognized compensation cost related to unvested restricted stock units and restricted stock awards as of September 30, 2019 was $54.6 million, and the weighted average period over which these equity awards are expected to vest is 2.71 years. The total unrecognized compensation cost related to performance stock units as of September 30, 2019 was $3.7 million, and the weighted average period over which these equity awards are expected to vest is 1.82 years. The total unrecognized compensation cost related to unvested stock options as of September 30, 2019 was $2.4 million, and the weighted average period over which these equity awards are expected to vest is 2.47 years.
Restricted Stock Units
The Company calculates the fair value of restricted stock units based on the fair market value of the Company's common stock on the grant date. Stock based compensation is recognized over the vesting period using the straight-line method.
A summary of the Company’s restricted stock unit activity is as follows:
Performance-Based Restricted Stock Units
The Company calculates the fair value of performance-based restricted stock units based upon the fair market value of the Company's common stock on the grant date. Stock-based compensation expense is then determined based on the number of performance-based restricted stock units that are expected to vest during the performance period if it is probable that the Company will achieve the performance metrics specified in the award agreement.
Performance-based restricted stock units are eligible to vest at the end of each fiscal year in a three-year performance period based on the Company’s annual growth rate in net sales and non-GAAP diluted earnings per share (subject to certain adjustments) over a multiple of four times the related results for the fourth quarter of 2018 relative to the growth rates for a peer group of companies for the same metrics and periods.
For the performance-based restricted stock units granted in 2019, 60% of each performance-based award is subject to the net sales metric for the performance period and 40% is subject to the non-GAAP diluted earnings per share metric for the performance period. The maximum percentage for a particular metric is 250% of the target number of units subject to the award related to that metric, however, vesting of the performance stock units is capped at 30% and 100%, respectively, of the target number of units subject to the award in years one and two, respectively, of the three-year performance period.
As of September 30, 2019, the Company believes that it is probable that the Company will achieve performance metrics specified in the award agreement based on its expected revenue and non-GAAP diluted EPS results over the performance
period and calculated growth rates relative to its peers’ expected results based on data available, as defined in the award agreement.
A summary of the Company’s performance-based restricted stock unit activity is as follows:
(1) Number of shares granted is based on the maximum percentage achievable in the performance-based restricted stock unit award.
Employee Stock Purchase Rights and Stock Options
The Company uses the Black-Scholes valuation model to calculate the grant-date fair value of employee stock purchase rights and stock options. Stock based compensation expense is recognized over the vesting period using the straight-line method.
Employee Stock Purchase Rights
During the nine months ended September 30, 2019, there were 142,013 shares of common stock purchased under the ESPP at a weighted average price of $16.21.
The fair values of employee stock purchase rights were estimated using the Black-Scholes option pricing model at their respective grant date using the following assumptions:
The risk-free interest rate assumption was based on rates for United States (U.S.) Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The expected term is the duration of the offering period for each grant date. In addition, the estimated volatility incorporates the historical volatility over the expected term based on the Company's daily closing stock prices.
Stock Options
A summary of the Company’s stock options activity is as follows:
No stock options were granted by the Company during the nine months ended September 30, 2019.
The intrinsic value of stock options exercised was $1.4 million and $0.1 million in the three months ended September 30, 2019 and 2018, respectively. The intrinsic value of stock options exercised was $21.5 million and $4.0 million in the nine months ended September 30, 2019 and 2018, respectively.
Cash received from exercise of stock options was $0.3 million and $0.1 million during the three months ended September 30, 2019 and 2018, respectively. Cash received from exercise of stock options was $4.0 million and $1.3 million during the nine months ended September 30, 2019 and 2018, respectively.
The tax benefit from stock options exercised was $0.2 million and $1.2 million during the three months ended September 30, 2019 and 2018, respectively. The tax benefit from stock options exercised was $19.5 million and $3.7 million during the nine months ended September 30, 2019 and 2018, respectively.
Employee Incentive Bonus
The Company settles a majority of bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan. When bonus awards are settled in common stock issued under the 2010 Equity Incentive Plan, the number of shares issuable to plan participants is determined based on the closing price of the Company's common stock as determined in trading on the New York Stock Exchange on a date approved by the Board of Directors. In connection with the Company's bonus programs, in February 2019, the Company issued 0.3 million freely-tradable shares of the Company's common stock in settlement of bonus awards to employees, including executives, for the 2018 performance period. At September 30, 2019, the Company has an accrual of $2.4 million for bonus awards for employees for year-to-date achievement in the 2019 performance period. The Company's compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.
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