Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Employee Stock-Based Compensation Plans
At June 30, 2021, the Company had stock-based compensation awards outstanding under the following plans: the 2010 Equity Incentive Plan, as amended, or 2010 Plan, and the 2010 Employee Stock Purchase Plan, or ESPP. Refer to the Company’s Annual Report for a summary of its stock-based compensation and equity plans as of December 31, 2020. There have been no material changes to the terms of the Company’s equity incentive plans during the six months ended June 30, 2021.
As of June 30, 2021, the number of shares of common stock available for future issuance under the 2010 Plan was 15,584,343 shares. As of June 30, 2021, the number of shares of common stock available for future issuance under the ESPP was 4,183,884 shares.
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 2021, the Company issued 0.5 million freely-tradable shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2020 performance period. At June 30, 2021, the Company has an accrual of $19.3 million for bonus awards for employees for year-to-date achievement in the 2021 performance period. The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.
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:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands) (in thousands)
Cost of net revenue $ 148  $ 126  $ 317  $ 274 
Research and development 7,267  5,040  14,429  8,786 
Selling, general and administrative 6,551  6,919  12,175  9,852 
$ 13,966  $ 12,085  $ 26,921  $ 18,912 
The total unrecognized compensation cost related to unvested restricted stock units as of June 30, 2021 was $98.9 million, and the weighted average period over which these equity awards are expected to vest is 2.81 years. The total unrecognized compensation cost related to unvested performance-based restricted stock units as of June 30, 2021 was $24.7 million, and the weighted average period over which these equity awards are expected to vest is 1.41 years. The total unrecognized compensation cost related to unvested stock options as of June 30, 2021 was $0.7 million, and the weighted average period over which these equity awards are expected to vest is 1.02 years.
Restricted Stock Units
A summary of the Company’s restricted stock unit activity is as follows:
Number of Shares
(in thousands)
Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2020 5,832  $ 20.05 
  Granted 1,998  37.00 
  Vested (1,651) 26.82 
  Canceled (327) 23.26 
Outstanding at June 30, 2021 5,852  $ 23.75 
Performance-Based Restricted Stock Units
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 baseline results 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 to date, 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 June 30, 2021, the Company believes that it is probable that it will achieve certain performance metrics specified in the respective award agreements based on its expected revenue and non-GAAP diluted EPS results over the performance periods and calculated growth rates relative to its peers’ expected results based on data available, as defined in the respective award agreements.
A summary of the Company’s performance-based restricted stock unit activity is as follows:
Number of Shares
(in thousands)
Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2020 1,722  $ 13.97 
  Granted(1)
599  35.10 
  Vested (311) 16.74 
  Canceled —  11.67 
Outstanding at June 30, 2021 2,010  $ 19.84 
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(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
Employee Stock Purchase Rights
During the six months ended June 30, 2021 and 2020, there were 113,510 and 161,171 shares respectively, of common stock purchased under the ESPP.
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:
Six Months Ended June 30,
2021 2020
Weighted-average grant date fair value per share $ 10.85  $ 6.41 
Risk-free interest rate 0.04  % 0.15  %
Dividend yield —  % —  %
Expected life (in years) 0.50 0.51
Volatility 61.10  % 93.25  %
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:
Number of Options
(in thousands)
Weighted-Average Exercise Price Weighted-Average Contractual Term (in years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020 797  $ 14.67 
Exercised (360) 11.79 
Outstanding at June 30, 2021 437  $ 17.04  3.69 $ 11,119 
Vested and expected to vest at June 30, 2021 437  $ 17.04  3.69 $ 11,119 
Exercisable at June 30, 2021 346  $ 16.68  3.59 $ 8,933 
No stock options were granted by the Company during the six months ended June 30, 2021.

The intrinsic value of stock options exercised was $6.7 million and $2.8 million in the three months ended June 30, 2021 and 2020, respectively. The intrinsic value of stock options exercised was $9 million and $3.2 million in the six months ended June 30, 2021 and 2020, respectively.
Cash received from exercise of stock options was $2.6 million and $2.2 million during the three months ended June 30, 2021 and 2020, respectively. Cash received from exercise of stock options was $3.9 million and $2.6 million during the six months ended June 30, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $10.6 million and $2.9 million during the three months ended June 30, 2021 and 2020, respectively. The tax benefit from stock options exercised was $13.3 million and $3.2 million during the six months ended June 30, 2021 and 2020, respectively.