XML 68 R19.htm IDEA: XBRL DOCUMENT
v3.22.4

Employee Benefit Plans and Stockholders' Equity | 12 Months Ended
--- | ---
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Employee Benefit Plans and Stockholders' Equity |
9. Employee Benefit Plans and Stockholders’ Equity
401(k) Plan We have a defined contribution 401(k) retirement plan (the 401(k) Plan) covering substantially all employees in the United States that meet certain age requirements. Employees who participate in the 401(k) Plan may contribute up to 90% of their compensation each year, subject to Internal Revenue Service limitations and the terms and conditions of the plan. Under the terms of the 401(k) Plan, we may elect to match a discretionary percentage of contributions. We match 50% of contributions up to 5% of eligible compensation. Total matching contributions were $11.1 million, $9.9 million and $6.7 million for the twelve months ended December 31, 2022, 2021 and 2020, respectively. Employee Stock Purchase Plan (“ESPP”) Under the 2015 Employee Stock Purchase Plan (the 2015 ESPP), amended in December 2019, eligible employees may purchase shares of our common stock at semi-annual intervals through periodic payroll deductions during defined Offering Periods. Payroll deductions may not exceed 10% of the participant’s cash compensation subject to certain limitations, and the purchase price will be 85% of the lower of the fair market value of the common stock at either the beginning of the applicable Offering Period or the Purchase Date. A total of 6.0 million shares of common stock are reserved for issuance under the 2015 ESPP. The 2015 ESPP shall continue until the earlier to occur of (a) termination of the 2015 ESPP by our Board of Directors, (b) issuance of all of the shares of common stock reserved for issuance under the plan, or (c) May 28, 2025. We issued 292,552, 239,240 and 356,776 shares of common stock under the 2015 ESPP during the twelve months ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, approximately 2.9 million shares remained available for future issuance under the 2015 ESPP. Equity Incentive Plans In May 2015, we adopted the Amended and Restated 2015 Equity Incentive Plan (the 2015 Plan), which replaced our 2005 Equity Incentive Plan and provides for the grant of incentive and nonstatutory stock options, restricted stock, stock bonuses, stock appreciation rights, restricted stock units or RSUs, and performance stock units or PSUs to employees, directors or consultants of the Company. On May 30, 2019, our stockholders approved an increase to the maximum number of shares that may be issued under the 2015 Plan. We are authorized to issue up to 39.2 million shares of our common stock under the 2015 Plan. As of December 31, 2022, approximately 15.3 million shares remained available for future issuance under the 2015 Plan. We issue new shares of common stock to satisfy RSU and PSU vesting under our employee equity incentive plans. RSU awards typically vest in annual installments over three or four years and vesting is subject to continued service. PSUs are granted to a group of senior officers and the number of shares of our common stock to be received at vesting will range from 0% to 200% of the target award based on the achievement of pre-established performance and market goals. PSUs vest three years from the date of grant, subject to continued employment through that date. Share Repurchase Program and Treasury Shares Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount. The following table summarizes our treasury share activity for the periods shown. No treasury share activity occurred during the twelve months ended December 31, 2020.
|  | Twelve Months Ended December 31,
(In millions) |  | 2022 |  | 2021
Shares issued in connection with 2023 Notes conversions |  | 0.4 |  |  | 0.8 |
Shares received from Note Hedge |  | (0.3) |  |  | (1.0) |
Shares issued in connection with the Restated Collaboration Agreement |  | 2.9 |  |  | — |
Shares repurchased under the Share Repurchase Program |  | (6.6) |  |  | — |
On July 26, 2022, a duly authorized committee of our Board of Directors authorized and approved a share repurchase program of up to $700.0 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2023 (the “Share Repurchase Program”). Shares of common stock repurchased under the Share Repurchase Program become treasury shares. Repurchases of our common stock under the Share Repurchase Program may be made from time to time, on the open market, in privately negotiated transactions or by other methods, at our discretion, and in accordance with the limitations set forth in Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, and other applicable federal and state laws and regulations. On August 1, 2022, we entered into an accelerated share repurchase (“ASR”) agreement with JPMorgan Chase Bank, National Association (“JP Morgan”) to repurchase up to $700.0 million of our common stock on an accelerated basis through September 29, 2022. On August 3, 2022, we paid $700.0 million to JP Morgan and received an initial delivery of approximately 3.0 million shares of common stock. The final notional amount under the ASR agreement was $557.7 million or approximately 6.6 million shares of our common stock based on the daily average volume-weighted average price of our common stock during the term of the ASR for the period from August 1, 2022 to August 31, 2022, less a discount. The ASR agreement concluded on September 1, 2022. The ASR was a forward contract indexed to our own common stock. The forward contract met all of the applicable criteria for equity classification, so we did not account for it as a derivative instrument. We have reflected the shares delivered to us by the financial institution as treasury shares as of the dates they were delivered to us in computing weighted average shares outstanding for both basic and diluted net income per share. Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. We have not yet determined the ultimate disposition of repurchased shares and consequently we continue to hold them as treasury shares rather than retiring them. Future stock repurchases under the Share Repurchase Program are at the discretion of our management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors. The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. Stock Options We have not granted any stock options since 2010. As of December 31, 2022 and December 31, 2021, we had no stock options outstanding. The total intrinsic value of stock options exercised during the twelve months ended December 31, 2020 was $7.9 million. Equity Award Activity All periods presented have also been adjusted to reflect the four-for-one stock split. Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information. A summary of RSU and PSU activity under the 2015 Plan for the twelve months ended December 31, 2022, 2021 and 2020 is as follows:
|  |  | Nonvested RSU and PSU Activity
(In millions, except weighted average grant date fair value) | Shares Available for Grant |  | Shares |  | Weighted Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Balance at December 31, 2019 | 19.6 |  |  | 7.2 |  |  | $ | 24.20 |  |  |
Granted | (2.0) |  |  | 2.0 |  |  | 75.09 |  |  |
Vested | — |  |  | (4.1) |  |  | 23.10 |  |  |
Forfeited | 0.4 |  |  | (0.4) |  |  | 34.36 |  |  |
Balance at December 31, 2020 | 18.0 |  |  | 4.7 |  |  | 45.88 |  |  | $ | 430.6 |
Granted | (1.7) |  |  | 1.7 |  |  | 87.67 |  |  |
Vested | — |  |  | (2.9) |  |  | 34.47 |  |  |
Forfeited | 0.5 |  |  | (0.5) |  |  | 69.77 |  |  |
Balance at December 31, 2021 | 16.8 |  |  | 3.0 |  |  | 76.88 |  |  | 403.8 |
Granted | (1.9) |  |  | 1.9 |  |  | 96.79 |  |  |
Vested | — |  |  | (1.6) |  |  | 63.90 |  |  |
Forfeited | 0.4 |  |  | (0.4) |  |  | 92.54 |  |  |
Balance at December 31, 2022 | 15.3 |  |  | 2.9 |  |  | $ | 94.08 |  |  | $ | 325.6 |
The total vest-date fair value of RSUs and PSUs that vested during the twelve months ended December 31, 2022, 2021 and 2020 was $160.1 million, $284.5 million and $331.8 million, respectively. As of December 31, 2022, 2.6 million unvested RSUs and 0.3 million unvested PSUs were outstanding under the 2015 Plan. Share-based Compensation Our share-based compensation expense is associated with RSUs, PSUs, and the 2015 ESPP. The following table summarizes the share-based compensation expense included in our consolidated statements of operations for the periods shown.
| Twelve Months Ended December 31,
(In millions) | 2022 |  | 2021 |  | 2020
Cost of sales | $ | 11.1 |  |  | $ | 8.5 |  |  | $ | 14.6 |
Research and development | 42.7 |  |  | 41.0 |  |  | 37.8 |
Selling, general and administrative | 72.7 |  |  | 63.9 |  |  | 67.0 |
Total share-based compensation expense | $ | 126.5 |  |  | $ | 113.4 |  |  | $ | 119.4 |
We value RSUs at the date of grant using the intrinsic value method. We estimate the fair value of PSUs at the date of grant using the intrinsic value method and the probability that the specified performance criteria will be met. We estimate the fair value of ESPP purchase rights on the date of grant using the Black-Scholes option pricing model and the assumptions below for the specified reporting periods.
| Twelve Months Ended December 31,
| 2022 |  | 2021 |  | 2020
Risk free interest rate | 0.60% - 3.34% |  | 0.06% - 0.07% |  | 0.13% - 0.95%
Dividend yield | — | % |  | — | % |  | — | %
Expected volatility of Dexcom common stock | 45% - 55% |  | 36% - 45% |  | 51% - 63%
Expected life (in years) | 0.5 |  | 0.5 |  | 0.5
At December 31, 2022, unrecognized estimated compensation costs related to RSUs, PSUs, and the 2015 ESPP totaled $175.5 million and are expected to be recognized through 2026.

X
- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI https://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI https://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI https://asc.fasb.org/topic&trid=2235017 + Details
Name: | us-gaap_CompensationAndEmployeeBenefitPlansTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration