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STOCK-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and nine months ended September 30, 2018 and 2017 was as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Cost of sales | $ | 2.7 |  |  | $ | 2.4 |  |  | $ | 8.5 |  |  | $ | 7.0 |
Selling, general, and administrative expenses | 11.9 |  |  | 10.3 |  |  | 36.4 |  |  | 30.5 |
Research and development expenses | 2.8 |  |  | 3.1 |  |  | 10.1 |  |  | 8.8 |
Total stock-based compensation expense | $ | 17.4 |  |  | $ | 15.8 |  |  | $ | 55.0 |  |  | $ | 46.3 |
At September 30, 2018, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $129.6 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 32 months. During the nine months ended September 30, 2018, the Company granted 0.9 million stock options at a weighted-average exercise price of $136.59 and 0.3 million shares of restricted stock units at a weighted-average grant-date fair value of $138.03. The Company also granted 42 thousand shares of market-based restricted stock units at a weighted-average grant-date fair value of $148.69. In addition, the Company issued an additional 50 thousand shares related to a previous year's grant of market-based restricted stock units since the payout percentage achieved at the end of the performance period was in excess of the targeted shares. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company's total shareholder return relative to a selected industry peer group over a three-year performance period, and may range from 0% to 175% of the targeted number of shares granted. Fair Value Disclosures The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the nine months ended September 30, 2018 and 2017 included a risk-free interest rate of 2.7% and 1.7%, respectively, and an expected volatility rate of 29.7% and 30.2%, respectively. The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:
Option Awards | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Average risk-free interest rate | 2.8 | % |  | 1.8 | % |  | 2.9 | % |  | 1.8 | %
Expected dividend yield | None |  |  | None |  |  | None |  |  | None |
Expected volatility | 29.2 | % |  | 33.2 | % |  | 29.1 | % |  | 33.0 | %
Expected term (years) | 5.2 |  |  | 4.7 |  |  | 5.0 |  |  | 4.6 |
Fair value, per option | $ | 46.37 |  |  | $ | 36.26 |  |  | $ | 42.44 |  |  | $ | 33.74 |
The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:
ESPP | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Average risk-free interest rate | 1.2 | % |  | 0.7 | % |  | 0.9 | % |  | 0.5 | %
Expected dividend yield | None |  |  | None |  |  | None |  |  | None |
Expected volatility | 34.3 | % |  | 34.3 | % |  | 32.8 | % |  | 33.1 | %
Expected term (years) | 0.7 |  |  | 0.7 |  |  | 0.6 |  |  | 0.6 |
Fair value, per share | $ | 46.58 |  |  | $ | 29.15 |  |  | $ | 36.53 |  |  | $ | 25.69 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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