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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-Based Compensation |
1 5) | Stock-Based Compensation
The Company grants 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 ESI Merger, the Company assumed:
| • | all RSUs that vest based solely on the satisfaction of service conditions, granted under any ESI equity plan, arrangement or agreement (“ESI Plan”) that were outstanding immediately prior to the effective time of the ESI Merger, and as to which shares of ESI common stock were not fully distributed in connection with the closing of the ESI Merger,
| • | all RSUs that were granted subject to vesting based on both the achievement of performance goals and the satisfaction of service conditions granted under any ESI Plan that were outstanding immediately prior to the effective time of the ESI Merger, and
| • | all SARs granted under any ESI Plan, whether vested or unvested, that were outstanding immediately prior to the effective time of the ESI Merger and held by an individual who was a service provider of ESI as of the date on which the effective time of the ESI Merger occurred.
As of the effective time of the ESI Merger, based on a formula in the ESI Merger Agreement, (a) such RSUs were converted automatically into RSUs with respect to 736,000 shares of the Company’s common stock (the “Assumed RSUs”), and (b) such SARs were converted automatically into SARs with respect to 13,000 shares of the Company’s common stock (the “Assumed SARs”). Included in the total number of Assumed RSUs are 326,000 shares of the Company’s common stock for employees and outside directors that are part of the ESI Deferred Compensation plan (the “ESI DC Plan”). These shares will not become issued shares until their respective release dates. The shares of the Company’s common stock that are subject to the Assumed SARs and the Assumed RSUs are issuable pursuant to the Company’s 2014 Plan. The 749,000 shares of the Company’s common stock that are issuable pursuant to the Assumed RSUs and the Assumed SARs under the Company’s 2014 Plan were registered under the Securities Act of 1933 on the Registration Statement on Form S-8. These shares are in addition to the 18,000,000 shares of the Company’s common stock reserved for issuance under the 2014 Plan and previously registered under the Securities Act of 1933 on the Registration Statement on Form S-8. During the three months ended March 31, 2020, the Company granted 88,000 RSUs with a weighted average grant date fair value of $112.24. During the three months ended March 31, 2019, the Company granted 182,000 RSUs with a weighted average grant date fair value of $82.58. There were no SARs granted during the three months ended March 31, 2020 or 2019. The total stock-based compensation expense included in the Company’s consolidated statements of income and comprehensive income was as follows:
|  | Three Months Ended March 31, |
|  | 2020 |  |  | 2019 |
Cost of revenues |  | $ | 1.0 |  |  | $ | 0.4 |
Research and development |  |  | 1.1 |  |  |  | 0.8 |
Selling, general and administrative |  |  | 5.9 |  |  |  | 8.0 |
Acquisition and integration cost |  |  | 0.5 |  |  |  | 18.6 |
Total pre-tax stock-based compensation expense |  | $ | 8.5 |  |  | $ | 27.8 |
At March 31, 2020, 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 $27.9, 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:
|  | Three Months Ended March 31, 2020 |
|  | Outstanding RSUs |  |  | Weighted Average Grant Date Fair Value |
RSUs – beginning of period |  |  | 1,102,534 |  |  | $ | 85.93 |
Accrued dividend shares |  |  | 254 |  |  | $ | 100.84 |
Granted |  |  | 88,368 |  |  | $ | 112.24 |
Vested |  |  | (446,503 | ) |  | $ | 84.06 |
Forfeited |  |  | (41,642 | ) |  | $ | 83.76 |
RSUs – end of period |  |  | 703,011 |  |  | $ | 90.56 |
The following table presents the activity for SARs under the Plan:
|  | Three Months Ended March 31, 2020 |
|  | Outstanding SARs |  |  | Weighted Average Grant Date Fair Value |
SARs – beginning of period |  |  | 108,854 |  |  | $ | 29.05 |
Exercised |  |  | (16,216 | ) |  | $ | 23.87 |
Forfeited or expired |  |  | — |  |  | $ | — |
SARs Outstanding – end of period |  |  | 92,638 |  |  | $ | 30.0 |

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