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 nine months ended September 30, 2018, the Company granted 260,341 RSUs with a weighted average grant date fair value of $112.49. During the nine months ended September 30, 2017, the Company granted 388,137 RSUs with a weighted average grant date fair value of $67.58. There were no SARs granted during the nine months ended September 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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenues	$	170	$	1,016	$	2,664	$	3,133
Research and development expense		708		712		2,249		2,284
Selling, general and administrative expense		4,335		3,117		17,092		14,417
Total pre-tax stock-based compensation expense	$	5,213	$	4,845	$	22,005	$	19,834

At September 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 $23,738, net of estimated forfeitures. The future compensation expense for time-based awards is recognized on a straight-line basis and the future compensation expense for performance-based awards is recognized using the accelerated graded vesting method, both of which expense over the requisite service period, net of estimated forfeitures, except for retirement eligible employees, in which case 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:

	Nine Months Ended September 30, 2018
	Outstanding RSUs			Weighted Average Grant Date Fair Value
RSUs – beginning of period		943,379		$	47.57
Accrued dividend shares		46		$	105.26
Granted		260,341		$	112.49
Vested		(487,856	)	$	44.60
Forfeited		(62,021	)	$	65.37
RSUs – end of period		653,889		$	73.95

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

	Nine Months Ended September 30, 2018
	Outstanding SARs			Weighted Average Grant Date Fair Value
SARs – beginning of period		282,907		$	28.62
Exercised		(100,683	)	$	28.77
Forfeited or expired		(1,950	)	$	29.00
SARs Outstanding – end of period		180,274		$	28.52