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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2025
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Stock Plans The Company’s stock-based awards that result in compensation expense consist of stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs"). In May 2023, the shareholders of the Company approved the Cognex Corporation 2023 Stock Option and Incentive Plan (the “2023 Plan”). The 2023 Plan permits awards of stock options (both incentive and non-qualified options), stock appreciation rights, RSUs, and PRSUs. Up to 8,100,000 shares of common stock (subject to adjustment in the event of stock splits and other similar events) may be issued pursuant to awards granted under the 2023 Plan. In connection with the approval of the 2023 Plan, no further awards will be made under the Cognex Corporation 2001 General Stock Option Plan, as amended and restated (the “2001 Plan”), and the Cognex Corporation 2007 Stock Option and Incentive Plan, as amended and restated (the “2007 Plan”). With the approval of the 2023 Plan, the 10,610,800 shares of common stock subject to awards granted under the 2001 Plan and the 2007 Plan that were outstanding as of May 3, 2023 may become eligible for issuance under the 2023 Plan if such awards are forfeited, cancelled, or otherwise terminated (other than by exercise) (the “Carryover Shares”). As of December 31, 2025, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 1,584,542 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 9,684,542. As of December 31, 2025, the Company had 4,006,000 shares available for issuance under its stock plans. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over five years based on continuous employment and expire ten years from the grant date. RSUs generally vest upon three years of continuous employment or incrementally over such three year period. PRSUs generally vest upon three years of continuous employment and achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Participants are not entitled to dividends on stock options, RSUs, or PRSUs. Stock Options The following table summarizes the Company’s stock option activity:
| Shares (in thousands) |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2024 | 9,543 |  |  | $ | 49.40 |  |  |  |  |
Granted | 1,669 |  |  | 32.38 |  |  |  |  |
Exercised | (265) |  |  | 24.36 |  |  |  |  |
Forfeited or expired | (557) |  |  | 48.57 |  |  |  |  |
Outstanding as of December 31, 2025 | 10,390 |  |  | $ | 47.35 |  |  | 5.45 |  | $ | 9,725 |
Exercisable as of December 31, 2025 | 6,007 |  |  | $ | 51.47 |  |  | 3.55 |  | $ | 3,531 |
Options vested or expected to vest as of December 31, 2025 (1) | 9,551 |  |  | $ | 48.17 |  |  | 5.18 |  | $ | 7,949 |
(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options. The total cash received as a result of stock option exercises was $6,432,000 in 2025, $6,011,000 in 2024, and $11,104,000 in 2023. In connection with these exercises, the tax benefit (expense) realized by the Company was $1,802,000 in 2025, $(4,021,000) in 2024, and $(4,691,000) in 2023. The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Risk-free rate | 4.3 | % |  | 4.3 | % |  | 4.0 | %
Expected dividend yield | 0.99 | % |  | 0.76 | % |  | 0.61 | %
Expected volatility | 39 | % |  | 39 | % |  | 39 | %
Expected term (in years) | 5.1 |  | 4.7 |  | 5.0
Risk-free rate The risk-free rate was based on a treasury instrument whose term was consistent with the contractual term of the option. Expected dividend yield The current dividend yield was calculated by annualizing the cash dividend declared by the Board and dividing that result by the closing stock price on the grant date. Expected volatility The expected volatility was based on a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock. Expected term The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time. The weighted-average grant-date fair value of stock options granted was $12.14 in 2025, $14.89 in 2024, and $17.76 in 2023. The total intrinsic value of stock options exercised was $4,179,000 in 2025, $4,626,000 in 2024, and $6,227,000 in 2023. The total fair value of stock options vested was $24,197,000 in 2025, $29,309,000 in 2024, and $34,751,000 in 2023. Restricted Stock Units (RSUs) The following table summarizes the Company's RSUs activity:
| Shares (in thousands) |  | Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2024 | 1,690 |  |  | $ | 44.75 |
Granted | 1,320 |  |  | 32.80 |
Vested | (731) |  |  | 49.18 |
Forfeited or expired | (163) |  |  | 37.58 |
Nonvested as of December 31, 2025 | 2,116 |  |  | $ | 36.32 |
The fair value of RSUs was determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends. The weighted-average grant-date fair value of RSUs granted was $32.80 in 2025, $38.90 in 2024, and $46.14 in 2023. There were 731,000, 429,000, and 521,000 RSUs that vested in 2025, 2024, and 2023, respectively. Tax obligations for vested RSUs are settled by withholding a portion of the shares prior to distribution to the shareholder. The total cash used by the Company to fund the tax payments was $6,877,000 in 2025, $5,017,000 in 2024, and $7,836,000 in 2023. In connection with these vested RSUs, the tax benefit (expense) realized by the Company was $(9,250,000) in 2025, $(7,401,000) in 2024, and $(3,229,000) in 2023. Performance Restricted Stock Units (PRSUs) The following table summarizes the Company's PRSUs activity:
| Shares (in thousands) |  | Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2024 | 134 |  |  | $ | 46.82 |
Granted | 184 |  |  | 32.14 |
Vested | — |  |  | — |
Forfeited or expired | (33) |  |  | 62.49 |
Nonvested as of December 31, 2025 | 285 |  |  | $ | 35.53 |
During 2025, the Company granted PRSUs that vest upon the achievement of (1) a service condition of three years of continuous employment and (2) a performance condition established by the Compensation Committee of the Board as of the grant date. The number of shares earned could range between 0% and 120% based on achievement of the performance condition, which includes certain financial targets over the three year measurement period. The fair value of these PRSUs is calculated based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends. Compensation expense for these PRSUs is recognized based on the probable outcome of the performance condition with a cumulative catch-up adjustment for prior periods in the period that the probable outcome changes. During 2023 and 2024, the Company granted PRSUs that vest upon the satisfaction of service and market conditions stipulated in the award grant. The fair value of these awards was determined using a Monte Carlo simulation model to estimate the probability of meeting those conditions. The weighted average grant-date fair value of PRSUs granted was $32.14 in 2025, $39.05 in 2024, and $44.86 in 2023. No PRSUs vested in 2025, 2024, and 2023. Stock-Based Compensation Expense The Company stratifies its employee population into two groups: one consisting of senior management and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 11% to all stock-based awards for senior management and a rate of 13% for all other employees. Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover. Credits of $4,789,000, $1,832,000, and $234,000 were recorded in 2025, 2024, and 2023, respectively, to true up previously recorded compensation expense for this forfeiture rate revision. As of December 31, 2025, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested stock-based awards, including stock options, RSUs, and PRSUs, was $48,015,000, which is expected to be recognized over a weighted-average period of 1.5 years. The total stock-based compensation expense and the related income tax benefit recognized was $48,517,000 and $6,820,000, respectively, in 2025, $52,443,000 and $8,387,000, respectively, in 2024, and $54,768,000 and $8,442,000, respectively, in 2023. No compensation expense was capitalized in 2025, 2024, or 2023. The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Cost of revenue | $ | 2,216 |  |  | $ | 1,966 |  |  | $ | 1,979 |
Research, development, and engineering | 15,336 |  |  | 14,628 |  |  | 16,480 |
Selling, general, and administrative | 30,965 |  |  | 35,849 |  |  | 36,309 |
| $ | 48,517 |  |  | $ | 52,443 |  |  | $ | 54,768 |

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