Share-based compensation

3 Months Ended

Mar. 31, 2016

Note 7 - Share-based compensation

Restricted share awards are issued to employees that are subject to specified restrictions and a risk of forfeiture. The restrictions typically lapse over one to five years and may entitle holders to dividends and voting rights. Other types of share-based compensation include performance share awards, performance share units, and restricted share units (collectively with restricted share awards, “restricted shares”), as well as options to purchase common stock.

Veeco adopted ASU 2016-09 Stock Compensation: Improvements to Employee Share-Based Payment Accounting in the first quarter of fiscal 2016. As a result, beginning in 2016, excess tax benefits and deficiencies are recognized as income tax expense or benefit in the income statement in the reporting period incurred. In conjunction with adopting the ASU, Veeco made an accounting policy election to account for forfeitures when they occur.

Share-based compensation expense was recognized in the following line items in the Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015:

	Three months ended March 31,
	2016		2015
	(in thousands)
Cost of sales	$	546	$	601
Selling, general, and administrative	2,743		2,798
Research and development	1,099		599

Total	$	4,388	$	3,998

For the three months ended March 31, 2016, equity activity related to stock options was as follows:

	Number of		Weighted Average
	Shares		Exercise Price
	(in thousands)
Balance - December 31, 2015	2,064		$	32.91
Granted	—		—
Exercised	(13	)	12.00
Expired or forfeited	(32	)	35.43

Balance - March 31, 2016	2,019		$	33.00

For the three months ended March 31, 2016, equity activity related to restricted shares was as follows:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
	(in thousands)
Balance - December 31, 2015	1,398		$	31.97
Granted	49		19.54
Released	(7	)	31.19
Forfeited	(13	)	32.36

Balance - March 31, 2016	1,427		$	31.55