16)	Stock-Based Compensation

The Company grants restricted stock units (“RSUs”) to employees and directors under the 2014 Stock Incentive Plan (the “2014 Plan”). The 2014 Plan is administered by the Compensation Committee of the Company’s Board of Directors. The 2014 Plan is intended to attract and retain employees and directors, and to provide an incentive for these individuals to assist the Company to achieve long-range performance goals and to enable these individuals to participate in the long-term growth of the Company.

In connection with the completion of the Newport Merger, the Company assumed:

•

all RSUs granted under any Newport equity plan that were outstanding immediately prior to the effective time of the Newport Merger, and as to which shares of Newport common stock were not fully distributed in connection with the closing of the Newport Merger, and

•

all stock appreciation rights (“SARs”) granted under any Newport equity plan, whether vested or unvested, that were outstanding immediately prior to the effective time of the Newport Merger.

During the six months ended June 30, 2018, the Company granted 259,597 RSUs with a weighted average grant date fair value of $112.56. During the six months ended June 30, 2017, the Company granted 376,081 RSUs with a weighted average grant date fair value of $67.13. There were no SARs granted during the six months ended June 30, 2018 or 2017.

The total stock-based compensation expense included in the Company’s consolidated statements of income and comprehensive income was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	1,489	$	1,187	$	2,494	$	2,117
Research and development expense		819		827		1,541		1,572
Selling, general and administrative expense		4,058		4,193		12,757		11,300

Total pre-tax stock-based compensation expense	$	6,366	$	6,207	$	16,792	$	14,989

At June 30, 2018, the total compensation expense related to unvested stock-based awards granted to employees and directors under the 2014 Plan that had not been recognized was $30,447, net of estimated forfeitures. The future compensation expense is recognized on a straight-line basis over the requisite service period, net of estimated forfeitures except for retirement eligible employees in which the Company expenses the fair value of the grant in the period the grant is issued. The Company considers many factors when estimating expected forfeitures, including types of awards and historical experience. Actual results and future changes in estimates may differ substantially from the Company’s current estimates.

The following table presents the activity for RSUs under the Plan:


	Six Months Ended June 30, 2018
	Outstanding RSUs			Weighted Average Grant Date Fair Value
RSUs – beginning of period		943,379		$	47.57
Accrued dividend shares		31		$	115.65
Granted		259,597		$	112.56
Vested		(478,238	)	$	44.21
Forfeited		(33,889	)	$	60.77

RSUs – end of period		689,880		$	73.71

The following table presents the activity for SARs under the Plan:


	Six Months Ended June 30, 2018
	Outstanding SARs			Weighted Average Grant Date Fair Value
SARs – beginning of period		282,907		$	28.62
Exercised		(79,767	)	$	28.91
Forfeited or expired		(1,950	)	$	29.00

SARs Outstanding – end of period		201,190		$	28.50