The 2017 Incentive Award Plan (2017 Plan) authorizes the grant of stock options, restricted stock, restricted stock units, performance-based stock units and other types of equity awards to officers and certain other employees. Stock options are granted at exercise prices not less than the fair market value of the underlying common stock on the date of grant and have a maximum term of 10 years. We may issue stock options for either Class A or Class B common stock. Prior to September 2020, equity awards granted vest in increments of 20% per year on the yearly anniversary date of the grant. Starting in September 2020, equity awards granted vest in increments of 25% per year on the yearly anniversary date of the grant.

A total of 2,108,724 shares have been reserved for issuance of equity awards under the 2017 Plan and may be of either Class A or Class B common stock. At December 31, 2022, there were 1,259,719 shares available to be granted.

Bio-Rad grants certain executive officers Performance-based stock unit (PSU) awards, which are administered under the 2017 Plan. PSUs generally vest over a three year performance period based on achievement of specific performance goals. Based on the extent to which the targets are achieved, vested shares may range from zero to 200 percent of the target award.

We consider the dilutive impact of PSUs in our diluted net income per share calculation only to the extent that the performance conditions would have been met if the reporting period was the end of the performance period.

Our 2011 Employee Stock Purchase Plan (2011 ESPP) provides that eligible employees may contribute up to the greater of 10% of their compensation or $25,000 annually towards the quarterly purchase of our Class A common stock. The employees’ purchase price is 85% of the lesser of the fair market value of the stock on the first business day or the last business day of each calendar quarter. The Board of Directors have authorized the sale of 1,300,000 shares of Class A common stock under the 2011 ESPP.

Included in our share-based compensation expense is the cost related to stock option grants, ESPP stock purchases and restricted stock unit awards, including performance-based stock awards. Share-based compensation expense is allocated in the consolidated statements of income (loss) as follows (in millions):


	Year ended December 31,
	2022		2021		2020
Cost of goods sold	$	5.4	$	4.9	$	3.4
Selling, general and administrative expense	45.6		38.0		31.8
Research and development expense	9.9		8.3		6.4
Share-based compensation expense	$	60.9	$	51.2	$	41.6

The income tax benefit related to share-based compensation expense was $8.8 million, $7.4 million and $6.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. We did not capitalize any share-based compensation expense as it was immaterial.

The tax benefit from equity awards vested or exercised during the years ended December 31, 2022, 2021 and 2020 was $4.0 million, $18.5 million and $11.2 million, respectively.

For equity awards, we amortize the fair value on a straight-line basis. All equity awards are amortized over the requisite service periods of the awards, which are generally the vesting periods. We recognize forfeitures as they occur.

The weighted-average fair value of stock options granted was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions:


	Year Ended December 31,
	2022		2021			2020
Expected volatility	—		27		%	27		%
Risk-free interest rate	—		1.05		%	0.31		%
Expected life (in years)	0.0		7.3			7.4
Expected dividend	—		—			—
Weighted-average fair value of options granted	$	—	$	251.93		$	153.32

Expected volatility is based on the historical volatilities of our common stock for a period equal to the stock option’s expected life. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the number of years that we estimate, based primarily on historical experience, that the options will be outstanding prior to exercise. We do not anticipate paying any cash dividends in the future and therefore use an expected dividend yield of zero.


	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2021	250,441	$	246.41
Granted	—	$	—
Exercised	(39,250)	$	107.32
Forfeited	(4,771)	$	368.81
Outstanding, December 31, 2022	206,420	$	270.03	4.10	$	39.5

Unvested, December 31, 2022	37,192	$	539.67	7.47	$	1.4
Exercisable, December 31, 2022	169,228	$	210.77	3.36	$	38.1

Intrinsic value for stock options is defined as the difference between the current market value and the exercise price. The total intrinsic value on the date of exercise of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $15.2 million, $33.0 million and $24.4 million, respectively.

No cash was received from stock options exercised during the year ended December 31, 2022. Cash received from stock options exercised during the years ended December 31, 2021 and 2020 was $3.6 million and $3.8 million, respectively.

As of December 31, 2022, there was $5.2 million of total unrecognized compensation expense from stock options. This amount is expected to be recognized in the future over a remaining weighted-average period of approximately two years.

Restricted stock units are rights to receive shares of company stock. The fair value of a restricted stock unit is the market value as determined by the closing price of the stock on the day of grant.


	Restricted Stock Units	Weighted- Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2021	316,860	$	495.57
Granted	140,560	$	486.29
Vested	(113,323)	$	433.46
Forfeited	(29,855)	$	463.70
Outstanding, December 31, 2022	314,242	$	516.85	1.67	$	132.1


	Performance-based Stock Units	Weighted- Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2021	—	$	—
Granted	11,391	$	486.25
Vested	—	$	—
Forfeited	—	$	—
Outstanding, December 31, 2022	11,391	$	486.25	1.83	$	4.8

The total fair value of restricted stock units and performance-based stock units vested for the years ended December 31, 2022, 2021 and 2020 was $54.5 million, $104.4 million and $65.0 million, respectively. As of December 31, 2022, there was approximately $142.6 million and $9.4 million of total unrecognized compensation expense related to restricted stock units and performance-based stock units, respectively. This amount is expected to be recognized over a remaining weighted-average period of approximately three years.

The fair value of the employees’ purchase rights under the 2011 ESPP was estimated using a Black-Scholes model with the following weighted-average assumptions:


	Year Ended December 31,
	2022			2021			2020
Expected volatility	41		%	25		%	41		%
Risk-free interest rate	1.71		%	0.05		%	0.50		%
Expected life (in years)	0.25			0.25			0.25
Expected dividend	—			—			—
Weighted-average fair value
of purchase rights	$	124.26		$	127.16		$	94.93

The assumptions are primarily based on historical data. Volatility is based on the historical volatilities of our common stock for a period equal to the expected life of the purchase rights. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. We do not anticipate paying any cash dividends in the future and therefore use an expected dividend yield of zero.

We sold 44,480 shares for total employee contributions of $17.6 million, 31,639 shares for total employee contributions of $17.0 million and 47,548 shares for total employee contributions of $16.4 million under the 2011 ESPP to employees for the years ended December 31, 2022, 2021 and 2020, respectively. At December 31, 2022, 475,864 shares remain authorized and available for issuance under the 2011 ESPP.