Share repurchase:

On February 13, 2023 the Company announced the expansion of the Company’s

on-going

share repurchase program by an additional $2,000. Under the share repurchase program, as extended, the Company is authorized to continue to repurchase up to $325 each quarter.

As of December 31, 2022, the Company repurchased ordinary shares for an aggregate amount of $13,085.1. During 2022, 2021 and 2020 the Company repurchased 10,324,181, 10,900,938, and 11,376,531 shares for an aggregate amount of $1,299.9, $1,299.5 and $1,297.7, respectively.

Stock Options, RSUs and PSUs:

In 2005, the Company adopted two new equity incentive plans, which were subsequently amended in January 2014 and in July 2018: the 2005 United States Equity Incentive Plan and the 2005 Israel Equity Incentive Plan together are referred to as the Equity Incentive Plans.

Under the Equity Incentive Plans, the Company may grant options to employees, officers and directors at an exercise price equal to at least the fair market value of the ordinary shares at the date of grant and are granted for periods not to exceed seven years. The Company grants under the Equity Incentive Plans options, Restricted Stock Units (“RSUs”) and Performance stock units (“PSUs”) and can also grant a variety of other equity incentives. Options granted under the Equity Incentive Plans generally vest over a period of four years of employment. Options, RSUs and PSUs that are cancelled or forfeited before expiration become available for future grants. RSUs generally vest over a four years period of employment from the grant date while PSUs generally vest over a two to four years period of employment from the grant date. PSUs are subject to certain performance criteria; accordingly, compensation expense is recognized for such awards when it becomes probable that the related performance condition will be satisfied.

Under the Equity Incentive Plans, the Company’s

non-employee

directors receive on an annual basis options and RSUs grant. Following the amendments to the Equity Incentive Plans in July 2018, commencing December 31, 2018, on December 31st of each year, the number of Reserved and Authorized Shares (as defined below) under both Equity Incentive Plans together shall be annually reset on such date to equal 10% of the sum of (i) the number of ordinary shares issued and outstanding on such date and (ii) the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date (provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date).

The number of “Reserved and Authorized Shares” under the Equity Plans shall equal the sum of (i) the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding options, RSUs, PSUs and other awards granted under the Equity Incentive Plans as of such date, and (ii) the number of ordinary shares reserved, authorized and available for issuance under the Equity Incentive Plans on such date.

As of December 31, 2022, the number of Reserved and Authorized Shares under the Equity Incentive Plans is as detailed below:



Stock Options outstanding			7,778,108
RSU outstanding			2,219,853
PSU outstanding			188,493
Ordinary shares available for issuance under the Equity Incentive Plans			2,905,777

Total Reserved and Authorized Shares as of December 31, 2022			13,092,231

As of December 31, 2022 the aggregate number of shares, stock options, RSU and PSU outstanding is 130,948,425.

A summary of the Company’s stock option activity and related information is as follows:


	Number of options			Weighted average exercise price		Aggregate intrinsic value

	2022

Outstanding at beginning of year		8,160,625		$	113.06	$	37.1
Granted		710,000		$	125.54
Exercised		(1,009,329	)	$	99.89
Forfeited		(83,188	)	$	122.41


Outstanding at December 31, 2022		7,778,108		$	115.05	$	82.5


Exercisable at December 31, 2022		5,666,608		$	114.61	$	65.4

The weighted average fair values at grant date of options granted for the years ended December 31, 2022, 2021 and 2020 with an exercise price equal to the market value at the date of grant were $34.6, $25.9 and $22.0 per share, respectively.

The total intrinsic value of options exercised during the years 2022, 2021 and 2020 was $32.9, $65.1 and $81.7, respectively.

The aggregate intrinsic value of the outstanding stock options as of December 31, 2022 and 2021, represents the intrinsic value of 7,651,858 and 6,484,417 outstanding options that are

in-the-money

as of such dates. The remaining 126,250 and 1,676,208 outstanding options are

out-of-the-money

as of December 31, 2022 and 2021, and their intrinsic value was considered as zero.

A summary of the Company’s RSUs and PSUs activity is as follows:


	Year ended December 31, 2022
	RSUs		PSUs		Total

Unvested at beginning of year		2,231,167		105,595		2,336,762
Granted		958,157		160,423		1,118,580
Vested		(706,738)		(5,799)		(712,537)
Forfeited		(262,733)		(71,726)		(334,459)


		2,219,853		188,493		2,408,346

*) Represents an amount lower than 0.1

The weighted average fair values at grant date of RSUs and PSUs granted for the years ended December 31, 2022, 2021 and 2020 were $126.3, $120.1 and $105.3 per share, respectively.

The total fair value of shares vested during the years 2022, 2021 and 2020 was $89.4, $66.8 and $49.6, respectively.

As of December 31, 2022, the Company had approximately $265.8 of unrecognized compensation expense related to

non-vested

stock options and

non-vested

RSU’s and PSU’s, expected to be recognized over a weighted average period of 1.9 years.

Employee Stock Purchase Plan (“ESPP”):

In 1996, the Company adopted an ESPP, which was subsequently amended in 2015. According to the amendments, commencing the purchase period that begins February 1, 2017, 568,478 ordinary shares are authorized for issuance under the US ESPP, and Commencing June 19, 2019 the Pool of shares for the US ESPP was set on 750,000 shares and 1,096,795 ordinary shares are authorized for issuance under the rest of the world (ROW).

As of December 31, 2022, 2,250,867 ordinary shares had been issued under the amended ESPP plan.

Eligible employees may use up to 15% of their salaries to purchase ordinary shares but no more than 1,250 single shares per participant on any purchase date. The ESPP is implemented through an offering every six months. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

During 2022, 2021 and 2020, employees purchased 372,242, 361,675 and 364,859 ordinary shares at average prices of $103.5, $105.3 and $95.4 per share, respectively.

In accordance with ASC No. 718, the ESPP is compensatory and as such results in recognition of compensation cost. For the years ended December 31, 2022, 2021 and 2020, the Company recognized $9.9, $10.9 and $10.2, respectively, of compensation expense in connection with the ESPP.

Stock-Based Compensation:

Stock-based compensation expense related to stock options, RSUs and PSUs is included in the consolidated statements of income as follows:


	Year ended December 31,
	2022		2021		2020

Cost of revenues	$	5.4	$	4.8	$	4.5
Research and development		42.0		31.8		23.5
Selling and marketing		43.2		42.8		36.8
General and administrative		40.8		40.9		47.7


	$	131.4	$	120.3	$	112.5