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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2021
Stockholders' Equity Note [Abstract] |
Stockholders' Equity | Stockholders’ Equity Common Stock The holders of common stock are entitled to receive dividends whenever funds are legally available and when and if declared by the Board of Directors. We have never declared or paid dividends on our common stock. Stock-Based Compensation Plans Our 2005 Incentive Plan, as amended, provides for the granting of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), market-performance based restricted stock units (“MSUs”), stock appreciation rights, performance units and performance shares to employees, non-employee directors and consultants. Shares granted on or after May 16, 2013 as an award of restricted stock, restricted stock unit, market-performance based restricted stock units, performance share or performance unit (“full value awards”) are counted against the authorized share reserve as one and nine-tenths (1 9/10) shares for every one (1) share subject to the award, and any shares canceled that were counted as one and nine-tenths against the plan reserve will be returned at the same ratio. As of December 31, 2021, the 2005 Incentive Plan, as amended, has a total reserve of 27,783,379 shares for issuance of which 4,244,723 shares are available for issuance. We issue new shares from our pool of authorized but unissued shares to satisfy the exercise and vesting obligations of our stock-based compensation plans. Summary of Stock-Based Compensation Expense The stock-based compensation related to our stock-based awards and employee stock purchase plan for the year ended December 31, 2021, 2020 and 2019 is as follows (in thousands):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Cost of net revenues |  | $ | 5,633 |  |  | $ | 4,719 |  |  | $ | 5,154 |
Selling, general and administrative |  | 90,659 |  |  | 78,500 |  |  | 69,817 |
Research and development |  | 18,044 |  |  | 15,208 |  |  | 13,213 |
Total stock-based compensation |  | $ | 114,336 |  |  | $ | 98,427 |  |  | $ | 88,184 |
The income tax benefit related to stock-based compensation was $13.8 million, $11.9 million and $10.3 million for the year ended December 31, 2021, 2020 and 2019, respectively. Restricted Stock Units The fair value of RSUs is based on our closing stock price on the date of grant. RSUs granted generally vest over a period of four years. A summary for the year ended December 31, 2021 is as follows:
|  | Number of Shares Underlying RSUs (in thousands) |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2020 |  | 632 |  |  | $ | 243.55 |  |  |  |  |
Granted |  | 166 |  |  | 600.10 |  |  |  |  |
Vested and released |  | (265) |  |  | 216.73 |  |  |  |  |
Forfeited |  | (41) |  |  | 350.75 |  |  |  |  |
Unvested as of December 31, 2021 |  | 492 |  |  | $ | 369.17 |  |  | 1.1 |  | $ | 323,239 |
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (calculated by multiplying our closing stock price on the last trading day of 2021 by the number of unvested RSUs) that would have been received by the unit holders had all RSUs been vested and released as of the last trading day of 2021. This amount will fluctuate based on the fair market value of our stock. During 2021, of the 264,655 shares vested and released, 78,930 shares were withheld for employee statutory tax obligations, resulting in a net issuance of 185,725 shares. The total fair value of RSUs vested as of their respective vesting dates during 2021, 2020 and 2019 was $158.8 million, $89.6 million and $112.4 million, respectively. The weighted average grant date fair value of RSUs granted during 2021, 2020 and 2019 was $600.10, $267.24 and $255.42, respectively. As of December 31, 2021, we expect to recognize $116.8 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.1 years. Market-Performance Based Restricted Stock Units We grant MSUs to our executive officers. Each MSU represents the right to one share of Align’s common stock. The actual number of MSUs which will be eligible to vest will be based on the performance of Align’s stock price relative to the performance of a stock market index over the vesting period. MSUs vest over a period of three years and the maximum number of eligible to vest in the future is 250% of the MSUs initially granted. The following table summarizes the MSU performance for the year ended December 31, 2021:
|  | Number of Shares Underlying MSUs (in thousands) |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2020 |  | 227 |  |  | $ | 430.50 |  |  |  |  |
Granted 1 |  | 177 |  |  | 658.02 |  |  |  |  |
Vested and released |  | (230) |  |  | 513.73 |  |  |  |  |
Unvested as of December 31, 2021 |  | 174 |  |  | $ | 551.57 |  |  | 1.0 |  | $ | 114,414 |
1 Includes MSUs vested during the period above 100% of the grant as actual shares released is based on Align’s stock performance over the vesting period The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (calculated by multiplying our closing stock price on the last trading day of 2021 by the number of unvested MSUs) that would have been received by the unit holders had all MSUs been vested and released as of the last trading day of 2021. This amount will fluctuate based on the fair market value of our stock. During 2021, of the 229,877 shares vested and released, 104,317 shares were withheld for employee statutory tax obligations, resulting in a net issuance of 125,560 shares. The total fair value of MSUs vested as of their respective vesting dates during 2021, 2020 and 2019 was $135.6 million, $47.1 million and $47.7 million, respectively. As of December 31, 2021, we expect to recognize $38.5 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.0 year. The fair value of MSUs is estimated at the grant date using a Monte Carlo simulation that includes factors for market conditions. The weighted average assumptions used in the Monte Carlo simulation were as follows:
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Expected term (in years) |  | 3.0 |  | 3.0 |  | 3.0
Expected volatility |  | 56.3 | % |  | 44.4 | % |  | 37.3 | %
Risk-free interest rate |  | 0.2 | % |  | 1.4 | % |  | 2.5 | %
Expected dividends |  | — |  |  | — |  |  | — |
Weighted average fair value per share at grant date |  | $ | 1,102.09 |  |  | $ | 392.67 |  |  | $ | 392.03 |
Employee Stock Purchase Plan (“ESPP”) In May 2010, our stockholders approved the 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”) which consists of consecutive overlapping twenty-four month offering periods with four six-month purchase periods in each offering period. Employees purchase shares at 85% of the lower of the fair market value of the common stock at either the beginning of the offering period or the end of the purchase period. The 2010 Purchase Plan will continue until terminated by either the Board of Directors or its administrator. In June 2019, the 2010 Purchase Plan was amended to include a non-Code Section 423 component to grant purchase rights to employees outside the U.S. and Canada with six-month offering periods and purchase periods. In May 2021, the 2010 Purchase Plan was amended and restated to increase the maximum number of shares available for purchase to 4,400,000 shares. The following table summarizes the ESPP shares issued:
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Number of shares issued (in thousands) |  | 131 |  |  | 116 |  |  | 130 |
Weighted average price |  | $ | 195.44 |  |  | $ | 175.69 |  |  | $ | 136.73 |
As of December 31, 2021, 2,194,566 shares remain available for future issuance. The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Expected term (in years) |  | 1.1 |  | 1.0 |  | 1.4
Expected volatility |  | 52.7 | % |  | 55.0 | % |  | 50.0 | %
Risk-free interest rate |  | 0.1 | % |  | 0.9 | % |  | 2.2 | %
Expected dividends |  | — |  |  | — |  |  | — |
Weighted average fair value at grant date |  | $ | 246.84 |  |  | $ | 96.94 |  |  | $ | 86.02 |
We recognized stock-based compensation related to our employee stock purchase plan of $12.2 million, $10.5 million and $12.1 million for the year ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, we expect to recognize $10.4 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.5 year.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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