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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Stock-Based Compensation2020 Equity Incentive Plan. In May 2022, our stockholders approved an amendment and restatement of the 2020 Equity Incentive Plan (as so amended and restated, the Amended 2020 Plan). The Amended 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards. As of December 31, 2022, 7.9 million shares of common stock remain available for future grant under the Amended 2020 Plan. Under the terms of the Amended 2020 Plan, the number of shares of common stock available for issuance will be: (i) reduced by (a) one share for each share issued pursuant to an appreciation award (as defined in the Amended 2020 Plan) granted under the Amended 2020 Plan and (b) 2.13 shares for each share issued pursuant to a full value award (as defined in the Amended 2020 Plan) granted under the Amended 2020 Plan on or after May 18, 2022; and (ii) increased by (a) one share for each share subject to an appreciation award that becomes available again for issuance under the terms of the Amended 2020 Plan and (b) 2.13 shares for each share subject to a full value award that becomes available again for issuance under the terms of the Amended 2020 Plan on or after May 18, 2022. 2011 Equity Incentive Plan. In May 2011, we adopted the 2011 Equity Incentive Plan, or the 2011 Plan. The 2011 Plan was a stockholder-approved plan pursuant to which outstanding awards have been made, but from which no further awards can or will be made. 2018 Employee Stock Purchase Plan. In May 2022, our stockholders approved an amendment and restatement of the 2018 Employee Stock Purchase Plan (as so amended and restated, the Amended 2018 ESPP). As of December 31, 2022, 0.6 million shares of common stock remain available for future issuance under the Amended 2018 ESPP. Stock-Based Compensation Expense. The effect of stock-based compensation expense on our consolidated statements of income and comprehensive income by line-item follows:
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020
Selling, general and administrative expense | $ | 115.4 |  |  | $ | 85.8 |  |  | $ | 66.3 |
Research and development expense | 57.7 |  |  | 48.4 |  |  | 33.7 |
Total stock-based compensation expense | $ | 173.1 |  |  | $ | 134.2 |  |  | $ | 100.0 |
Stock-based compensation expense by award-type follows:
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020
Stock options | $ | 62.6 |  |  | $ | 60.5 |  |  | $ | 47.5 |
RSUs | 86.4 |  |  | 62.5 |  |  | 44.2 |
PRSUs | 20.1 |  |  | 7.6 |  |  | 5.3 |
ESPP | 4.0 |  |  | 3.6 |  |  | 3.0 |
Total stock-based compensation expense | $ | 173.1 |  |  | $ | 134.2 |  |  | $ | 100.0 |
As of December 31, 2022, unrecognized stock-based compensation expense by award-type and the weighted-average period over which such expense is expected to be recognized, as applicable, was as follows:
(dollars in millions) | Unrecognized Expense |  | Weighted-Average Recognition Period
Stock options | $ | 106.1 |  |  | 2.5 years
RSUs | $ | 151.4 |  |  | 2.3 years
PRSUs | $ | 33.6 |  |  |
Stock Options. Typically, stock options have a 10-year term and vest over a three to four-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 $32.05 for 2022, $45.02 for 2021 and $45.67 for 2020. 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,
| 2022 |  | 2021 |  | 2020
Risk-free interest rate | 1.8 | % |  | 0.6 | % |  | 1.4 | %
Expected volatility of common stock | 42.6 | % |  | 45.9 | % |  | 48.5 | %
Dividend yield | 0.0 | % |  | 0.0 | % |  | 0.0 | %
Expected option term | 5.0 years |  | 5.2 years |  | 5.3 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. The following table presents summary of activity related to stock options.
(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, 2021 | 7.7 |  |  | $ | 76.38 |  |  |  |  |
Granted | 2.2 |  |  | $ | 81.27 |  |  |  |  |
Exercised | (0.7) |  |  | $ | 52.96 |  |  |  |  |
Canceled | (0.2) |  |  | $ | 96.28 |  |  |  |  |
Outstanding at December 31, 2022 | 9.0 |  |  | $ | 79.10 |  |  | 6.5 years |  | $ | 362.8 |
Exercisable at December 31, 2022 | 6.0 |  |  | $ | 72.27 |  |  | 5.4 years |  | $ | 281.9 |
The total intrinsic value of stock options exercised was $39.7 million for 2022, $58.0 million for 2021 and $40.2 million for 2020. Cash received from stock option exercises was $37.0 million for 2022, $20.7 million for 2021 and $23.5 million for 2020. Restricted Stock Units. RSUs typically vest over a four-year period and may be subject to a deferred delivery arrangement at the election of eligible employees. The fair value of RSUs is based on the closing sale price of our common stock on the date of issuance. The total fair value of RSUs that vested was $72.4 million for 2022, $64.3 million for 2021 and $49.7 million for 2020. The following table presents a summary of activity related to RSUs.
(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, 2021 | 2.0 |  |  | $ | 99.96 |  |  |  |  |
Granted | 1.2 |  |  | $ | 83.01 |  |  |  |  |
Released | (0.8) |  |  | $ | 96.40 |  |  |  |  |
Canceled | (0.1) |  |  | $ | 94.05 |  |  |  |  |
Unvested at December 31, 2022 | 2.3 |  |  | $ | 92.61 |  |  | 1.3 years |  | $ | 276.6 |
Performance-Based Restricted Stock Units. PRSUs vest based on the achievement of certain predefined Company-specific performance criteria. Any unvested PRSUs will expire if it is determined the related performance criteria has not been met during the applicable three to four-year performance period. The fair value of PRSUs is estimated based on the closing sale price of our common stock on the date of grant. The fair value of PRSUs that vested during 2020 was $13.5 million. No PRSUs vested during 2021 or 2022. The following table presents a summary of activity related to PRSUs.
(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, 2021 | 0.4 |  |  | $ | 109.31 |  |  |  |  |
Granted | 0.1 |  |  | $ | 80.04 |  |  |  |  |
Released | — |  |  | $ | — |  |  |  |  |
Canceled | — |  |  | $ | — |  |  |  |  |
Unvested at December 31, 2022 | 0.5 |  |  | $ | 101.00 |  |  | 0.8 years |  | $ | 60.5 |
Employee Stock Purchase Plan. Under the Amended 2018 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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