Employee Benefits and Share-Based Compensation

Stock based plans

For a detailed explanation of the Company's stock plans and subsequent changes, please refer to Note 11, Employee Benefits and Share-Based Compensation, of the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 27, 2018.

Share-based compensation expense

The following table sets forth the total share-based compensation expense recognized in the Company's Condensed Consolidated Statements of Operations:



	Three months ended
	March 31, 2018		March 31, 2017
	(In thousands)
Cost of product and service revenues	$	1,019	$	982
Research and development	1,234		897
Selling, general and administrative	4,275		3,632
Total share-based compensation expense	$	6,528	$	5,511

Stock Options and ESPP Shares

The following assumptions were used to value share options and Employee Stock Purchase Plan ("ESPP") shares granted pursuant to the Company's equity incentive plans for the three months ended March 31, 2018 and 2017:



	Three months ended
	March 31, 2018		March 31, 2017
Stock Option Plans
Expected life, years	4.79		4.67
Expected volatility, %	32.2	%	31.1	%
Risk free interest rate, %	2.57	%	1.89	%
Estimated forfeiture rate %	6.9	%	7.7	%
Dividend yield, %	—	%	—	%



	Three months ended
	March 31, 2018		March 31, 2017
Employee Stock Purchase Plan
Expected life, years	0.5-2.0		0.5-2.0
Expected volatility, %	27.7-33.8%		25.8-32.8%
Risk free interest rate, %	0.70-2.25%		0.52-1.31%
Dividend yield, %	—	%	—	%

Stock Options activity

The following table summarizes the share option activity under the Company’s equity incentive plans during the three months ended March 31, 2018:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Stock Options
Outstanding at December 31, 2017	3,323		$	32.72	7.6	$	53,953
Granted	482		44.38
Exercised	(87	)	22.50
Expired	(1	)	24.09
Forfeited	(43	)	37.14
Outstanding at March 31, 2018	3,674		$	34.45	7.3	$	37,607
Exercisable at March 31, 2018	1,474		$	25.36	5.3	$	26,596
Vested and expected to vest at March 31, 2018 and thereafter	3,456		$	33.94	7.2	$	36,818

The weighted-average fair value per share of options granted during the three months ended March 31, 2018 and 2017 was $14.22 and $10.86, respectively. The intrinsic value of options exercised during the three months ended March 31, 2018 and 2017 was $2.0 million and $2.9 million, respectively.

As of March 31, 2018, total unrecognized compensation cost related to unvested stock options was $23.1 million, which is expected to be recognized over a weighted-average vesting period of 3.0 years.

Employee Stock Purchase Plan activity

For the three months ending March 31, 2018 and 2017, employees purchased approximately 289,000 and 259,000 shares of common stock under the ESPP at weighted average prices of $26.30 and $25.51, respectively. As of March 31, 2018, the unrecognized compensation cost related to the shares to be purchased under the ESPP was approximately $6.5 million and is expected to be recognized over a weighted-average period of 1.4 years.

Restricted Stock Units and Restricted Stock Awards

Summaries of restricted stock activity under the Company's 2009 Equity Incentive Plan, as amended (the "2009 Plan") are presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Restricted Stock Units ("RSUs")
Outstanding at December 31, 2017	501		$	38.90	1.5	$	24,293
Granted	71		44.32
Vested	(50	)	33.70
Forfeited	(14	)	39.05
Outstanding and unvested at March 31, 2018	508		$	40.16	1.5	$	22,041

The weighted-average grant date fair value per share of RSUs granted during the three months ended March 31, 2018 and March 31, 2017 was $44.32 and $36.57, respectively.

As of March 31, 2018, total unrecognized compensation expense related to RSUs was $17.2 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.8 years.



	Number of Shares	Weighted-Average Grant Date Fair Value
	(In thousands, except per share data)
Restricted Stock Awards ("RSAs")
Outstanding at December 31, 2017	23	$	41.07
Granted	—	—
Vested	—	—
Forfeited	—	—
Outstanding and unvested at March 31, 2018	23	$	41.08

As of March 31, 2018, total unrecognized compensation cost related to RSAs was $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.1 years.

Performance-based Restricted Stock Units

A summary of the performance-based restricted stock activity under the 2009 Plan during the three months ended March 31, 2018 is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Unit
	(In thousands, except per share data)
Performance-based Restricted Stock Units ("PSUs")
Outstanding at December 31, 2017	225		$	31.18
Granted	110		38.03
Vested	(32	)	32.37
Forfeited	(1	)	43.20
Outstanding and unvested at March 31, 2018	302		$	33.51

The weighted-average grant date fair value per share of PSUs granted during the three months ended March 31, 2018 and 2017 was $38.03 and $32.37, respectively. As of March 31, 2018, total unrecognized compensation cost related to PSUs was $5.4 million, which is expected to be recognized over the remaining weighted-average period of 1.5 years.

Summary of Shares Reserved for Future Issuance under Equity Incentive Plans

The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of March 31, 2018:



	Number of Shares
	(In thousands)
Share options outstanding	3,674
Non-vested restricted share awards	833
Shares authorized for future issuance	730
ESPP shares available for future issuance	2,077
Total shares reserved for future issuance	7,314

Stock Repurchase Program

On August 2, 2016, the Company's Board of Directors (the "Board") authorized a stock repurchase program providing for the repurchase of up to $50.0 million of the Company’s common stock (the “2016 Repurchase Program”). The 2016 Repurchase Program is in addition to the stock repurchase program approved by the Board on November 4, 2014 (the “2014 Repurchase Program”). As of March 31, 2018, the maximum dollar value of shares that may yet be purchased under the two repurchase programs was $54.9 million. The stock repurchase programs do not obligate the Company to repurchase any specific number of shares, and the Company may terminate or suspend the repurchase program at any time.

During the three months ended March 31, 2018 and 2017, the Company did not repurchase any of its outstanding common stock.