XML 25 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity
 9 Months Ended
Sep. 30, 2021
Stockholders' Equity
8.
Stockholders’ Equity

 

Stock Option and Incentive Plans

 

Under the Company’s current 2018 Stock Option and Incentive Plan (the “2018 Plan”), the number of shares of the Company’s common stock that are reserved and available for issuance is 2,778,000, plus the number of shares of common stock available for issuance under the Company’s previous plans. The shares of common stock underlying any awards under the 2018 Plan and previous plans (together, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan. At September 30, 2021, 2,134,916 shares were available for future grants under the 2018 Plan.

 

Stock-Based Compensation

For each of the three months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense of $6.8 million and $4.2 million, respectively, for share-based awards granted under the Plans. For the nine months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense of $20.5 million and $12.5 million, respectively. The following table presents stock-based compensation expense in the Company’s consolidated statements of comprehensive income:

 

 

 

Three Months Ended
 September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(Amounts in thousands)

 

Cost of product revenue

 

$

489

 

 

$

563

 

 

$

1,444

 

 

$

1,421

 

Research and development

 

 

698

 

 

 

326

 

 

 

2,209

 

 

 

1,092

 

Selling, general and administrative

 

 

5,605

 

 

 

3,336

 

 

 

16,823

 

 

 

9,979

 

Total stock-based compensation

 

$

6,792

 

 

$

4,225

 

 

$

20,476

 

 

$

12,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 2018 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Employee grants under the Plans generally vest over a three to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter.

Nonqualified options issued to non-employee directors under the Plans generally vest over one year. In the first quarter of 2018, to create a longer-term retention incentive, the Company’s Compensation Committee granted long-term incentive compensation

awards to its Chief Executive Officer consisting of both stock options and restricted stock units (“RSUs”) that are subject to time-based vesting over nine years. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At September 30, 2021, options to purchase 658,600 shares and 619,761 stock units were outstanding under the Plans.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value RSUs. The Company measures stock-based compensation costs at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a straight-line basis. Prior to 2020, the Company issued performance stock units to certain employees which are tied to the achievement of certain Company financial goal metrics and the passage of time. Since 2020, the Company has implemented formal programs that issue performance stock units to certain employees set to vest upon the achievement of individual goals and financial goals of the Company, as well as the passage of time. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

 

Information regarding option activity for the nine months ended September 30, 2021 under the Plans is summarized below:

 

 

 

Shares

 

 

Weighted
average
exercise
price

 

 

Weighted-Average Remaining Contractual Term
(in Years)

 

 

Aggregate Intrinsic Value
(in Thousands)

 

Options outstanding at December 31, 2020

 

 

696,711

 

 

$

43.88

 

 

 

6.90

 

 

$

102,958

 

Granted

 

 

38,824

 

 

$

202.88

 

 

 

 

 

 

 

Exercised

 

 

(70,935

)

 

$

28.00

 

 

 

 

 

 

 

Forfeited/expired/cancelled

 

 

(6,000

)

 

$

48.05

 

 

 

 

 

 

 

Options outstanding at September 30, 2021

 

 

658,600

 

 

$

54.93

 

 

 

6.55

 

 

$

154,152

 

Options exercisable at September 30, 2021

 

 

343,909

 

 

$

38.68

 

 

 

5.87

 

 

$

86,085

 

Vested and expected to vest at September 30, 2021(1)

 

 

637,504

 

 

 

 

 

 

6.53

 

 

$

149,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Represents the number of vested options as of September 30, 2021 plus the number of unvested options expected to vest as of September 30, 2021 based on the unvested outstanding options at September 30, 2021 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2021, the last business day of the third quarter of 2021, of $288.99 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $14.5 million and $30.7 million, respectively.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2021 and 2020 was $88.01 and $48.13, respectively. The total fair value of stock options that vested during the nine months ended September 30, 2021 and 2020 was $2.6 million during each period.

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. Information regarding stock unit activity, which includes activity for RSUs and performance stock units, for the nine months ended September 30, 2021 under the Plans is summarized below:

 

 

Shares

 

 

Weighted-Average Remaining Contractual Term
(in Years)

 

 

Aggregate Intrinsic Value
(in Thousands)

 

Unvested at December 31, 2020

 

 

665,540

 

 

 

3.32

 

 

$

127,904

 

Awarded

 

 

164,968

 

 

 

 

 

 

 

Vested

 

 

(185,922

)

 

 

 

 

 

 

Forfeited/expired/cancelled

 

 

(24,825

)

 

 

 

 

 

 

Unvested at September 31, 2021

 

 

619,761

 

 

 

2.94

 

 

$

179,105

 

Unvested and expected to vest at September 30, 2021(1)

 

 

623,642

 

 

 

2.61

 

 

$

180,226

 

 

 

 

 

 

 

 

 

 

 
(1)
Represents the number of vested stock units as of September 30, 2021 plus the number of unvested stock units expected to vest as of September 30, 2021 based on the unvested outstanding stock units at September 30, 2021 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on September 30, 2021, the last business day of the third quarter of 2021, of $288.99 per share, as stock units do not have an exercise price) that would have been received by the stock unit holders had all holders exercised on September 30, 2021. The aggregate intrinsic value of stock units vested during the nine months ended September 30, 2021 and 2020 was $39.2 million and $25.0 million, respectively.

The weighted average grant date fair value of stock units vested during the nine months ended September 30, 2021 and 2020 was $58.10 and $43.73, respectively. The total fair value of stock units that vested during the nine months ended September 30, 2021 and 2020 was $10.8 million and $9.8 million, respectively.

As of September 30, 2021, there was $61.3 million of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 3.08 years. The Company expects 1,950,908 unvested options and stock units to vest over the next five years.