STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

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, 2023 and 2022 was as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of sales	$	6.2	$	6.9	$	13.2	$	13.1
Selling, general, and administrative expenses	22.5		21.1		44.8		39.8
Research and development expenses	8.7		8.2		18.3		15.7
Total stock-based compensation expense	37.4		36.2		76.3		68.6
Income tax benefit	(6.8)		(5.9)		(11.5)		(10.3)
Total stock-based compensation expense, net of tax	$	30.6	$	30.3	$	64.8	$	58.3

At June 30, 2023, 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 $275.0 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 34 months.

During the six months ended June 30, 2023, the Company granted 1.9 million stock options at a weighted-average

exercise price per share of $88.72, and 0.8 million restricted stock units at a weighted-average grant-date fair value per share of $88.06. During the six months ended June 30, 2023, the Company also granted 0.1 million market-based restricted stock units at a weighted-average grant-date fair value per share of $110.10. The market-based restricted stock units granted during the six months ended June 30, 2023 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 target number of shares granted.

Fair Value Disclosures

The fair value of 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, 2023 and 2022 included a risk-free interest rate of 3.6% and 2.8%, respectively, and an expected volatility rate of 32.6% and 33.8%, 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,
	2023			2022			2023			2022
Risk-free interest rate	3.4		%	3.0		%	3.4		%	3.0		%
Expected dividend yield	None			None			None			None
Expected volatility	32.8		%	31.4		%	32.8		%	31.4		%
Expected term (years)	5.1			5.0			5.1			5.0
Fair value, per option	$	31.03		$	35.07		$	31.01		$	35.08

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,
	2023			2022			2023			2022
Risk-free interest rate	4.7		%	1.1		%	4.6		%	0.3		%
Expected dividend yield	None			None			None			None
Expected volatility	34.8		%	31.5		%	31.5		%	32.1		%
Expected term (years)	0.6			0.6			0.6			0.6
Fair value, per share	$	22.02		$	23.63		$	19.03		$	28.63