STOCK-BASED COMPENSATION

9 Months Ended

Sep. 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 nine months ended September 30, 2023 and 2022 was as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of sales	$	5.5	$	5.3	$	18.7	$	18.4
Selling, general, and administrative expenses	19.1		18.1		63.9		57.9
Research and development expenses	8.0		6.9		26.3		22.6
Total stock-based compensation expense	32.6		30.3		108.9		98.9
Income tax benefit	(5.8)		(4.9)		(17.3)		(15.2)
Total stock-based compensation expense, net of tax	$	26.8	$	25.4	$	91.6	$	83.7

At September 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 $254.5 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 33 months.

During the nine months ended September 30, 2023, the Company granted 2.0 million stock options at a weighted-average

exercise price per share of $88.45, and 1.0 million restricted stock units at a weighted-average grant-date fair value per share of $87.36. During the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2023 and 2022 included a risk-free interest rate of 3.6% and 2.9%, respectively, and an expected volatility rate of 32.6% and 33.9%, 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,
	2023			2022			2023			2022
Risk-free interest rate	4.3		%	3.2		%	3.4		%	3.0		%
Expected dividend yield	None			None			None			None
Expected volatility	32.7		%	31.5		%	32.8		%	31.5		%
Expected term (years)	5.2			4.9			5.1			5.0
Fair value, per option	$	31.16		$	32.00		$	31.02		$	34.77

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,
	2023			2022			2023			2022
Risk-free interest rate	5.3		%	2.5		%	4.6		%	0.5		%
Expected dividend yield	None			None			None			None
Expected volatility	34.8		%	31.1		%	31.5		%	32.0		%
Expected term (years)	0.6			0.8			0.6			0.6
Fair value, per share	$	18.53		$	21.53		$	19.03		$	28.18