XML 40 R17.htm IDEA: XBRL DOCUMENT v3.24.0.1
Employee Benefit Plans and Stockholders' Equity
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Employee Benefit Plans and Stockholders' Equity
9. Employee Benefit Plans and Stockholders’ Equity
Defined Contribution Plans
We offer various defined contribution plans for U.S. and international employees. The largest defined contribution plan is the 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 6% of eligible compensation. Total matching contributions under the 401(k) Plan were $14.9 million, $11.1 million and $9.9 million for the twelve months ended December 31, 2023, 2022 and 2021, respectively. Our contributions for other defined contribution plans are not significant for the twelve months ended December 31, 2023, 2022 and 2021.
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 approximately 0.3 million, 0.3 million and 0.3 million shares of common stock under the 2015 ESPP during the twelve months ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, approximately 2.5 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, RSUs, and 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, 2023, approximately 13.9 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 approximately three years from the date of grant, subject to continued employment through that date and certification by the Compensation Committee
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.
Twelve Months Ended
December 31,
(In millions)202320222021
Shares issued in connection with 2023 Notes conversions—(0.4)(0.8)
Shares received from Note Hedge12.20.31.0
Shares issued in connection with the Restated Collaboration Agreement(3.7)(2.9)—
Shares repurchased under the 2022 Share Repurchase Program
—6.6—
Shares repurchased under the 2023 Share Repurchase Program
4.7——
Shares repurchased with 2028 Notes proceeds
1.6——
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 that ended on June 30, 2023 (the “2022 Share Repurchase Program”). Shares of common stock repurchased under the 2022 Share Repurchase Program became treasury shares. We repurchased approximately $557.7 million of our outstanding common stock throughout the duration of the 2022 Share Repurchase Program. The 2022 Share Repurchase Program and the remaining authorization of approximately $142.3 million expired on June 30, 2023. There were no share repurchases under the 2022 Share Repurchase Program in 2023. On August 1, 2022, we entered into an accelerated share repurchase agreement (“2022 ASR”) 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 2022 ASR 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 2022 ASR for the period from August 1, 2022 to August 31, 2022, less a discount. The 2022 ASR concluded on September 1, 2022.
On October 24, 2023, our Board of Directors authorized and approved a share repurchase program of up to $500.0 million of our outstanding common stock, with a repurchase period ending no later than October 31, 2024 (the “2023 Share Repurchase Program”). On October 31, 2023, we entered into an accelerated share repurchase agreement (“2023 ASR”) with Bank of America, N.A. (“BofA”) to repurchase $500.0 million of our common stock on an accelerated basis through December 14, 2023. On October 31, 2023, we paid $500.0 million to BofA and received an initial delivery of approximately 4.7 million shares of common stock. The final notional amount under the 2023 ASR was $500.0 million or approximately 4.7 million shares of our common stock based on the daily average volume-weighted average price of our common stock during the term of the 2023 ASR for the period from November 1, 2023 to December 14, 2023, less a discount. The 2023 ASR concluded on December 14, 2023. After completion of the repurchases under the 2023 ASR, no shares remained available for additional repurchases under our 2023 Share Repurchase Program.
The 2022 ASR and 2023 ASR were forward contracts indexed to our own common stock. The forward contracts met all of the applicable criteria for equity classification, so we did not account for them 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.
In May 2023, we used a portion of the proceeds of the 2028 Notes to repurchase 1.6 million shares of our common stock for $188.7 million, excluding excise tax due under the Inflation Reduction Act of 2022, for an average per share price of $118.12, via privately negotiated transactions, independent of the 2022 Share Repurchase Program.
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. Authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.
Equity Award Activity
A summary of RSU and PSU activity under the 2015 Plan for the twelve months ended December 31, 2023, 2022 and 2021 is as follows:
Nonvested RSU and PSU Activity
(In millions, except weighted average grant date fair value)Shares Available for GrantSharesWeighted 
Average
Grant Date
Fair Value		Aggregate
Intrinsic Value
Balance at December 31, 202018.0 4.7 $45.88 
Granted(1.7)1.7 87.67 
Vested— (2.9)34.47 
Forfeited0.5 (0.5)69.77 
Balance at December 31, 202116.8 3.0 76.88 $403.8 
Granted(1.9)1.9 96.79 
Vested— (1.6)63.90 
Forfeited0.4 (0.4)92.54 
Balance at December 31, 202215.3 2.9 94.08 325.6 
Granted(1.6)1.6 112.01 
Vested— (1.4)88.57 
Forfeited0.2 (0.2)106.34 
Balance at December 31, 202313.9 2.9 $105.98 $361.2 
The total vest-date fair value of RSUs and PSUs that vested during the twelve months ended December 31, 2023, 2022 and 2021 was $157.8 million, $160.1 million and $284.5 million, respectively. As of December 31, 2023, 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 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)202320222021
Cost of sales$14.6 $11.1 $8.5 
Research and development45.5 42.7 41.0 
Selling, general and administrative90.7 72.7 63.9 
Total share-based compensation expense$150.8 $126.5 $113.4 
Total tax benefit related to share-based compensation expense
$40.0 $43.2 $71.1 
At December 31, 2023, unrecognized estimated compensation costs related to RSUs and PSUs totaled $199.5 million and are expected to be recognized over a weighted-average period of approximately 1.7 years.
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,
202320222021
Risk free interest rate
5.20% - 5.47%
0.60% - 3.34%
0.06% - 0.07%
Dividend yield— %— %— %
Expected volatility of Dexcom common stock
34% - 48%
45% - 55%
36% - 45%
Expected life (in years)0.50.50.5