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Employee Benefits and Share-Based Compensation | 9 Months Ended
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Sep. 30, 2019
Share-based Payment Arrangement [Abstract] |
Employee Benefits and Share-Based Compensation | Employee Benefits and Share-Based Compensation Stock-Based Plans For a detailed explanation of the Company's stock plans, 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, 2018 filed with the SEC on February 27, 2019. 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 for the three and nine months ended September 30, 2019 and 2018:
| Three months ended September 30, |  | Nine months ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (In thousands)
Cost of product and service revenues | $ | 1,316 |  |  | $ | 1,150 |  |  | $ | 4,194 |  |  | $ | 3,346 |
Research and development | 1,652 |  |  | 1,397 |  |  | 4,938 |  |  | 4,068 |
Selling, general, and administrative | 5,537 |  |  | 4,538 |  |  | 16,043 |  |  | 13,437 |
Total share-based compensation expense | $ | 8,505 |  |  | $ | 7,085 |  |  | $ | 25,175 |  |  | $ | 20,851 |
In the first quarter of 2019, the Company modified the terms of its stock options by extending the post-employment exercise period for certain employees. The Company recorded share-based compensation expense related to this modification of approximately $0.2 million on the stock options modification date. As of September 30, 2019, share-based compensation expense related to unvested stock options impacted by the modification was approximately $0.7 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.9 years. Stock Options and ESPP Shares The following assumptions were used to value stock options and Employee Stock Purchase Plan (“ESPP”) shares granted pursuant to the Company’s equity incentive plans for the three and nine months ended September 30, 2019 and 2018:
| Three months ended September 30, |  | Nine months ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Stock options |  |  |  |  |  |  |
Expected life, years | 4.3 |  |  | 4.8 |  |  | 4.4 |  |  | 4.8 |
Expected volatility, % | 34.7 | % |  | 30.4 | % |  | 33.7 | % |  | 31.1 | %
Risk-free interest rate, % | 1.6 | % |  | 2.8 | % |  | 2.1 | % |  | 2.7 | %
Estimated forfeiture rate, % | 7.2 | % |  | 6.9 | % |  | 7.2 | % |  | 6.9 | %
Dividend yield, % | — | % |  | — | % |  | — | % |  | — | %
| Three months ended September 30, |  | Nine months ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Employee stock purchase plan shares |  |  |  |  |  |  |
Expected life, years | 0.5 - 2.0 |  |  | 0.5 - 2.0 |  |  | 0.5 - 2.0 |  |  | 0.5 - 2.0 |
Expected volatility, % | 28.9% - 39.9% |  |  | 28.1% - 33.8% |  |  | 28.2% - 39.9% |  |  | 27.7% - 33.8% |
Risk-free interest rate, % | 1.4% - 2.7% |  |  | 0.8% - 2.7% |  |  | 1.3% - 2.7% |  |  | 0.7% - 2.7% |
Dividend yield, % | — | % |  | — | % |  | — | % |  | — | %
Stock Options Activity The following table summarizes the share option activity under the Company’s equity incentive plans during the nine months ended September 30, 2019:
| Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Years |  | Aggregate Intrinsic Value
| (In thousands, except per share data)
Outstanding at December 31, 2018 | 3,748 |  |  | $ | 41.27 |  |  | 7.6 |  | $ | 78,365 |
Granted | 687 |  |  | 75.49 |  |  |  |  |
Exercised | (597 | ) |  | 32.66 |  |  |  |  |
Expired | (9 | ) |  | 37.08 |  |  |  |  |
Forfeited | (234 | ) |  | 47.23 |  |  |  |  |
Outstanding at September 30, 2019 | 3,595 |  |  | $ | 48.86 |  |  | 7.7 |  | $ | 87,453 |
Exercisable at September 30, 2019 | 1,470 |  |  | $ | 33.91 |  |  | 6.3 |  | $ | 56,377 |
Vested and expected to vest at September 30, 2019 and thereafter | 3,401 |  |  | $ | 48.07 |  |  | 7.7 |  | $ | 85,235 |
The weighted-average fair value per share of options granted during the three months ended September 30, 2019 and 2018 was $21.59 and $12.49, respectively, and the weighted-average fair value per share of options granted during the nine months ended September 30, 2019 and 2018 was $23.41 and $15.02, respectively. The intrinsic value of options exercised during the three months ended September 30, 2019 and 2018 was $2.7 million and $8.2 million, respectively, and the intrinsic value of options exercised during the nine months ended September 30, 2019 and 2018 was $27.0 million and $16.7 million, respectively. As of September 30, 2019, total unrecognized compensation cost related to unvested stock options was $33.5 million, which is expected to be recognized over a weighted-average vesting period of 2.7 years. Employee Stock Purchase Plan Activity For the nine months ended September 30, 2019 and 2018, employees purchased approximately 374,000 and 452,038 shares of common stock, respectively, under the ESPP at weighted average prices of $41.44 and $29.69, respectively. As of September 30, 2019, the unrecognized compensation cost related to the shares to be purchased under the ESPP was approximately $2.6 million and is expected to be recognized over a weighted-average period of 1.5 years. Restricted Stock Units (“RSUs”) and Restricted Stock Awards (“RSAs”) Summaries of the restricted stock activity under the Company’s 2009 Equity Incentive Plan, as amended (the “2009 Plan”) are presented below for the nine months ended September 30, 2019:
| 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 |  |  |  |  |  |  |
Outstanding at December 31, 2018 | 538 |  |  | $ | 51.52 |  |  | 1.6 |  | $ | 32,935 |
Granted (Awarded) | 77 |  |  | 77.48 |  |  |  |  |
Vested (Released) | (120 | ) |  | 40.87 |  |  |  |  |
Forfeited | (49 | ) |  | 47.21 |  |  |  |  |
Outstanding and unvested at September 30, 2019 | 446 |  |  | $ | 59.39 |  |  | 1.3 |  | $ | 32,199 |
As of September 30, 2019, total unrecognized compensation cost related to RSUs was $21.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.6 years.
| Number of Shares |  | Weighted-Average Grant Date Fair Value
| (In thousands, except per share data)
Restricted stock awards |  |  |
Outstanding at December 31, 2018 | 21 |  |  | $ | 46.60 |
Granted (Awarded) | 17 |  |  | 81.86 |
Vested (Released) | (21 | ) |  | 46.96 |
Forfeited | — |  |  | — |
Outstanding and unvested at September 30, 2019 | 17 |  |  | $ | 81.92 |
As of September 30, 2019, total unrecognized compensation cost related to RSAs was $0.8 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.6 years. Performance-Based Restricted Stock Units A summary of the performance-based restricted stock activity under the 2009 Plan is presented below for the nine months ended September 30, 2019:
| Number of Shares |  | Weighted-Average Grant Date Fair Value Per Unit
| (In thousands, except per share data)
Outstanding at December 31, 2018 | 197 |  |  | $ | 34.83 |
Granted | 71 |  |  | 73.38 |
Vested | (68 | ) |  | 35.74 |
Forfeited | (33 | ) |  | 33.84 |
Outstanding and unvested at September 30, 2019 | 167 |  |  | $ | 51.07 |
As of September 30, 2019, total unrecognized compensation cost related to PSUs was approximately $4.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.3 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 September 30, 2019:
| Number of Shares
| (In thousands)
Share options outstanding | 3,595 |
Non-vested restricted share awards | 630 |
Shares authorized for future issuance | 3,672 |
ESPP shares available for future issuance | 1,539 |
Total shares reserved for future issuance | 9,436 |
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 September 30, 2019, 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 programs at any time. During the three and nine months ended September 30, 2019 and 2018, the Company did not repurchase any of its outstanding common stock.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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