STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and nine months ended September 30, 2022 and 2021 was as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of sales	$	5.3	$	4.9	$	18.4	$	16.1
Selling, general, and administrative expenses	18.1		15.9		57.9		50.7
Research and development expenses	6.9		5.8		22.6		18.3
Total stock-based compensation expense	30.3		26.6		98.9		85.1
Income tax benefit	(4.9)		(4.7)		(15.2)		(13.5)
Total stock-based compensation expense, net of tax	$	25.4	$	21.9	$	83.7	$	71.6

At September 30, 2022, 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 $220.3 million, which will be amortized on a straight-line basis over each award's requisite service period. The weighted-average remaining requisite service period is 32 months.

During the nine months ended September 30, 2022, the Company granted 1.6 million stock options at a weighted-average

exercise price per share of $105.18, and 0.7 million restricted stock units at a weighted-average grant-date fair value per share of $104.41. During the nine months ended September 30, 2022, the Company also granted 0.1 million market-based restricted stock units at a weighted-average grant-date fair value per share of $124.92 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 granted during the nine months ended September 30, 2022 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 175.0% of the targeted number of shares granted.

Fair Value Disclosures

The weighted-average assumptions used in a Monte Carlo simulation model to determine the fair value of the market-based restricted stock units granted during the nine months ended September 30, 2022 and 2021 included an average risk-free interest rate of 2.9% and 0.4%, respectively, and an expected volatility rate of 33.9% and 34.4%, 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 September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Risk-free interest rate	3.2		%	0.9		%	3.0		%	0.8		%
Expected dividend yield	None			None			None			None
Expected volatility	31.5		%	33.5		%	31.5		%	33.5		%
Expected term (years)	4.9			5.3			5.0			5.0
Fair value, per option	$	32.00		$	34.38		$	34.77		$	28.78

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,
	2022			2021			2022			2021
Risk-free interest rate	2.5		%	0.1		%	0.5		%	0.1		%
Expected dividend yield	None			None			None			None
Expected volatility	31.1		%	33.7		%	32.0		%	36.6		%
Expected term (years)	0.8			0.7			0.6			0.6
Fair value, per share	$	21.53		$	29.85		$	28.18		$	23.07