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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation In May 2011, we adopted the 2011 Equity Incentive Plan, as amended, or the 2011 Plan. The 2011 Plan authorized 21 million shares of common stock for issuance and allowed for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, or RSUs, performance stock awards, performance-based restricted stock units, or PRSUs, and certain other awards. During 2020, the 2011 Plan was merged into the 2020 Plan (defined below). As a result, there were no shares of common stock remaining available for future grant under the 2011 Plan. In May 2018, we adopted the 2018 Employee Stock Purchase Plan, or ESPP, pursuant to which 0.3 million shares of common stock are authorized for issuance. As of December 31, 2021, 0.1 million shares of common stock remain available for future grant under the 2018 ESPP. In May 2020, we adopted the 2020 Equity Incentive Plan, or the 2020 Plan. The 2020 Plan authorized 3.3 million shares of common stock for issuance and allows for the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, performance stock awards, PRSUs and certain other awards. The 2011 Plan was merged into the 2020 Plan and, as a result, all remaining shares in the 2011 Plan were transferred into the 2020 Plan. As of December 31, 2021, 5.4 million shares of common stock remain available for future grant under the 2020 Plan. Share-Based Compensation Expense. The effect of share-based compensation expense on our consolidated statements of income and comprehensive income by line-item follows:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Selling, general and administrative expense | $ | 85.8 |  |  | $ | 66.3 |  |  | $ | 49.5 |
Research and development expense | 48.4 |  |  | 33.7 |  |  | 25.8 |
Total share-based compensation expense | $ | 134.2 |  |  | $ | 100.0 |  |  | $ | 75.3 |
Share-based compensation expense by award-type follows:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Stock options | $ | 60.5 |  |  | $ | 47.5 |  |  | $ | 36.5 |
RSUs | 62.5 |  |  | 44.2 |  |  | 30.5 |
PRSUs | 7.6 |  |  | 5.3 |  |  | 5.6 |
ESPP | 3.6 |  |  | 3.0 |  |  | 2.7 |
Total share-based compensation expense | $ | 134.2 |  |  | $ | 100.0 |  |  | $ | 75.3 |
As of December 31, 2021, unrecognized share-based compensation expense by award-type and the weighted-average period over which such expense is expected to be recognized, as applicable, were as follows:
(dollars in millions) | Unrecognized Expense |  | Weighted-Average Recognition Period
Stock options | $ | 101.7 |  |  | 2.5 years
RSUs | $ | 150.5 |  |  | 2.2 years
Stock Options. Typically, stock options have a 10-year term and vest over a 3 to 4-year period. The exercise price of stock options granted is equal to the closing price of our common stock on the date of grant. We estimate the fair value of stock options using the Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, term and interest rates. The weighted-average grant-date fair values of stock options granted were $45.02 for 2021, $45.67 for 2020 and $41.74 for 2019. The fair value of each stock option granted was estimated on the date of grant using the Black-Scholes option-pricing valuation model with the following weighted-average assumptions:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Risk-free interest rate | 0.6 | % |  | 1.4 | % |  | 2.4 | %
Expected volatility of common stock | 45.9 | % |  | 48.5 | % |  | 54.8 | %
Dividend yield | 0.0 | % |  | 0.0 | % |  | 0.0 | %
Expected option term | 5.2 years |  | 5.3 years |  | 5.4 years
The weighted-average valuation assumptions were determined as follows: •The expected volatility of common stock is estimated based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our stock options. •The expected option term is estimated based on historical experience as well as the status of the employee. For example, directors and officers have a longer expected option term than all other employees. •The risk-free interest rate for periods within the contractual life of a stock option is based upon observed interest rates appropriate for the expected term of our employee stock options. •We have not historically declared or paid dividends and do not intend to do so in the foreseeable future. A summary of activity related to stock options follows:
(in millions, except weighted average data) | Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted-Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at December 31, 2020 | 6.8 |  |  | $ | 62.98 |  |  |  |  |
Granted | 1.8 |  |  | $ | 110.74 |  |  |  |  |
Exercised | (0.7) |  |  | $ | 28.02 |  |  |  |  |
Canceled | (0.2) |  |  | $ | 103.30 |  |  |  |  |
Outstanding at December 31, 2021 | 7.7 |  |  | $ | 76.38 |  |  | 6.5 years |  | $ | 136.4 |
Exercisable at December 31, 2021 | 5.2 |  |  | $ | 63.53 |  |  | 5.5 years |  | $ | 134.7 |
The total intrinsic value of stock options exercised was $58.0 million for 2021, $40.2 million for 2020 and $64.3 million for 2019. Cash received from stock option exercises was $20.7 million for 2021, $23.5 million for 2020 and $27.3 million for 2019. Restricted Stock Units. RSUs typically vest over a 4-year period. The fair value of RSUs is based on the closing sale price of our common stock on the date of issuance. RSUs may be subject to a deferred delivery arrangement at the election of eligible employees. A summary of activity related to RSUs follows:
(in millions, except weighted average data) | Number of RSUs |  | Weighted-Average Grant Date Fair Value |  | Weighted-Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Unvested at December 31, 2020 | 1.5 |  |  | $ | 89.60 |  |  |  |  |
Granted (1) | 1.2 |  |  | $ | 104.95 |  |  |  |  |
Released | (0.6) |  |  | $ | 82.22 |  |  |  |  |
Canceled | (0.1) |  |  | $ | 101.71 |  |  |  |  |
Unvested at December 31, 2021 | 2.0 |  |  | $ | 99.96 |  |  | 1.3 years |  | $ | 174.1 |
_________________________ (1) In August 2021, our board of directors approved an equity grant of approximately 0.5 million RSUs, which will vest over a 2-year period, to our full-time employees other than our executive officers. The total fair value of RSUs that vested was $64.3 million for 2021, $49.7 million for 2020 and $36.1 million for 2019. Performance-Based Restricted Stock Units. PRSUs vest based on the achievement of certain predefined Company-specific performance criteria and expire 3 to 4 years from the grant date. The fair value of PRSUs is estimated based on the closing sale price of our common stock on the date of grant. Expense recognition for PRSUs commences when attainment of the performance-based criteria is determined to be probable. A summary of activity related to PRSUs follows:
(in millions, except weighted average data) | Number of PRSUs |  | Weighted-Average Grant Date Fair Value |  | Weighted-Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Unvested at December 31, 2020 | 0.2 |  |  | $ | 102.90 |  |  |  |  |
Granted | 0.2 |  |  | $ | 114.68 |  |  |  |  |
Unvested at December 31, 2021 | 0.4 |  |  | $ | 109.31 |  |  | 1.2 years |  | $ | 30.9 |
As of December 31, 2021, unrecognized share-based compensation expense for PRSUs was $32.0 million. The total fair value of PRSUs that vested was $13.5 million for 2020. No PRSUs vested during 2021 or 2019. Employee Stock Purchase Plan. Under the ESPP, eligible employees may purchase shares of our common stock at a discount semi-annually based on a percentage of their annual compensation. The discounted purchase price is equal to the lower of 85% of (i) the market value per share of the common stock on the first day of the offering period or (ii) the market value per share of common stock on the purchase date.

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