SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATIONIn April 2021, the Company’s shareholders approved an amended and restated 2010 Incentive Award Plan to provide for an increase in the number of shares of common stock reserved for issuance thereunder from 32,450,000 to 34,450,000. As of June 30, 2021, approximately 8.7 million shares were reserved for future issuance under the Company’s stock plans. A maximum of approximately 3.8 million of these shares can be awarded as restricted stock units (“RSUs”).

Stock Option Information

A summary of stock option activity under all stock plans for the six months ended June 30, 2021, is presented as follows (in millions, except per share amounts):


	Stock Options Outstanding
	Number Outstanding	Weighted Average Exercise Price Per Share
Balance at December 31, 2020	4.5	$	305.06

Options granted	0.2	$	744.83
Options exercised	(0.5)	$	213.18
Options forfeited/expired	(0.1)	$	564.48
Balance at June 30, 2021	4.1	$	335.91

As of June 30, 2021, options to purchase an aggregate of 3.3 million shares of common stock were exercisable at a weighted average price of $264.33 per share.

Restricted Stock Units Information

A summary of RSUs activity under all stock plans for the six months ended June 30, 2021, is presented as follows (in millions, except per share amounts):


	Shares	Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2020	1.8	$	489.91
RSUs granted	0.6	$	742.47
RSUs vested	(0.7)	$	428.83
RSUs forfeited	(0.1)	$	563.37
Unvested balance at June 30, 2021	1.6	$	601.49

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (“ESPP”), employees purchased approximately 0.1 million shares for $41.4 million and approximately 0.1 million shares for $36.6 million during the six months ended June 30, 2021, and 2020, respectively.

Share-based Compensation Expense

The following table summarizes share-based compensation expense for the three and six months ended June 30, 2021, and 2020 (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of sales – products	$	16.6	$	14.2	$	31.9	$	27.0
Cost of sales – services	5.2		5.2		10.9		10.7
Total cost of sales	21.8		19.4		42.8		37.7
Selling, general, and administrative	55.7		49.6		108.8		95.3
Research and development	32.6		27.4		62.7		54.6
Share-based compensation expense before income taxes	110.1		96.4		214.3		187.6
Income tax benefit	22.5		20.0		43.1		38.9
Share-based compensation expense after income taxes	$	87.6	$	76.4	$	171.2	$	148.7

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans and rights to acquire stock granted under the ESPP. The weighted average estimated fair values of stock options and the rights to acquire stock under the ESPP, as well as the weighted average assumptions used in calculating the fair values of stock options and the rights to acquire stock under the ESPP that were granted during the three and six months ended June 30, 2021, and 2020, were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Stock Options
Risk-free interest rate	0.8%	0.4%	0.7%	0.8%
Expected term (in years)	4.0	4.2	4.3	4.3
Expected volatility	27%	38%	33%	30%
Fair value at grant date	$190.94	$165.18	$209.89	$138.24
ESPP
Risk-free interest rate	—	—	0.1%	1.5%
Expected term (in years)	—	—	1.2	1.1
Expected volatility	—	—	35%	27%
Fair value at grant date	—	—	$223.17	$149.85