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Stock-Based Compensation | 6 Months Ended
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Jul. 01, 2022
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors (the “Board”) or the Compensation and Organization Committee of the Board. The stock-based compensation plans provide for the granting of stock options, restricted stock awards, restricted stock units (“RSUs”), stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers. Stock-based Compensation Expense The components and classification of stock-based compensation expense were as follows (in thousands):
| Three Months Ended |  | Six Months Ended
| July 1, 2022 |  | July 2, 2021 |  | July 1, 2022 |  | July 2, 2021
RSUs and PRSUs | $ | 5,956 |  |  | $ | 4,249 |  |  | $ | 10,951 |  |  | $ | 8,953 |
Total stock-based compensation expense | $ | 5,956 |  |  | $ | 4,249 |  |  | $ | 10,951 |  |  | $ | 8,953 |
Cost of sales | $ | 837 |  |  | $ | 823 |  |  | $ | 1,606 |  |  | $ | 1,937 |
Selling, general and administrative | 4,308 |  |  | 3,215 |  |  | 7,853 |  |  | 6,570 |
Research, development and engineering | 338 |  |  | 211 |  |  | 663 |  |  | 446 |
Restructuring and other charges | 473 |  |  | — |  |  | 829 |  |  | — |
Total stock-based compensation expense | $ | 5,956 |  |  | $ | 4,249 |  |  | $ | 10,951 |  |  | $ | 8,953 |
Stock Options The following table summarizes the Company’s stock option activity for the six month period ended July 1, 2022:
| Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value (In Millions)
Outstanding at December 31, 2021 | 247,640 |  |  | $ | 38.03 |  |  |  |  |
No activity | — |  |  | — |  |  |  |  |
Outstanding and exercisable at July 1, 2022 | 247,640 |  |  | $ | 38.03 |  |  | 3.6 |  | $ | 8.4 |
(7.) STOCK-BASED COMPENSATION (Continued) Restricted Stock Units During the six months ended July 1, 2022, the Company awarded grants of either time-based RSUs or a mix of time-based RSUs and performance-based RSUs (“PRSUs”) to members of its Board of Directors and certain members of management. Most time-based RSUs granted during the six months ended July 1, 2022 vest over a period of three years from the grant date, subject to the recipient’s continuous service to the Company. RSUs are issued to members of the Board as a portion of their annual retainer and vest quarterly over a one-year vesting term. The grant-date fair value of all time-based RSUs is equal to the closing market price of Integer common stock on the date of grant. The following table summarizes time-vested RSU activity for the six month period ended July 1, 2022:
| Time-Vested Activity |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2021 | 248,131 |  |  | $ | 81.14 |
Granted | 179,242 |  |  | 78.85 |
Vested | (81,171) |  |  | 79.60 |
Forfeited | (10,997) |  |  | 79.35 |
Nonvested at July 1, 2022 | 335,205 |  |  | $ | 80.35 |
For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of market-based performance conditions. The market-based performance conditions are based on the Company’s achievement of a relative total shareholder return (“TSR”) performance requirement, on a percentile basis, compared to a defined group of peer companies over three year performance periods, or contingent upon achieving specified stock price milestones over a five year performance period. The following table summarizes PRSU activity for the six month period ended July 1, 2022:
| Performance- Vested Activity |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2021 | 198,869 |  |  | $ | 92.07 |
Granted | 131,393 |  |  | 90.84 |
Forfeited | (51,375) |  |  | 99.62 |
Nonvested at July 1, 2022 | 278,887 |  |  | $ | 90.10 |
The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market-based performance conditions. The grant-date fair value of all other PRSUs is equal to the closing market price of Integer common stock on the date of grant. The weighted average fair value and assumptions used to value the PRSU awards granted with market-based performance conditions are as follows:
| Six Months Ended
| July 1, 2022 |  | July 2, 2021
Weighted average fair value | $ | 97.58 |  |  | $ | 85.16 |
Risk-free interest rate | 1.58 | % |  | 0.19 | %
Expected volatility | 42 | % |  | 41 | %
Expected life (in years) | 3.9 |  | 3.0
Expected dividend yield | — | % |  | — | %
The valuation of the market-based PRSUs granted during 2022 and 2021 also reflects a weighted average illiquidity discount of 9.25% and 8.19%, respectively, related to the six-month period that recipients are restricted from selling, transferring, pledging or assigning the underlying shares, in the event of vesting.

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