STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and six months ended June 30, 2020 and 2019 was as follows (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	4.7	$	3.9	$	9.3	$	7.9
Selling, general, and administrative expenses	15.3		14.3		29.7		27.0
Research and development expenses	4.8		4.1		9.7		8.2
Total stock-based compensation expense	$	24.8	$	22.3	$	48.7	$	43.1

At June 30, 2020, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $173.0 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 33 months.

During the six months ended June 30, 2020, the Company granted 1.7 million stock options at a weighted-average exercise price of $72.82, and 0.6 million restricted stock units at a weighted-average grant-date fair value of $72.85. During the six months ended June 30, 2020, the Company also granted 0.1 million market-based restricted stock units at a weighted-average grant-date fair value of $82.67 and issued an additional 0.1 million shares of common stock 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 six months ended June 30, 2020 and 2019 included a risk-free interest rate of 0.2% and 2.2%, respectively, and an expected volatility rate

of 32.7% and 29.4%, 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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.3		%	2.3		%	0.3		%	2.3		%
Expected dividend yield	None			None			None			None
Expected volatility	33.5		%	29.7		%	33.4		%	29.6		%
Expected term (years)	5.0			5.0			5.0			5.0
Fair value, per option	$	21.58		$	18.01		$	21.61		$	18.01

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.1		%	2.4		%	1.4		%	2.4		%
Expected dividend yield	None			None			None			None
Expected volatility	37.5		%	31.9		%	32.6		%	26.6		%
Expected term (years)	0.6			0.6			0.6			0.6
Fair value, per share	$	18.42		$	15.58		$	16.06		$	16.14