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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2022
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Employee Stock-Based Compensation Plans At March 31, 2022, the Company had stock-based compensation awards outstanding under the following plans: the 2010 Equity Incentive Plan, as amended, or 2010 Plan, and the 2010 Employee Stock Purchase Plan, or ESPP. Refer to the Company’s Annual Report for a summary of its stock-based compensation and equity plans as of December 31, 2021. There have been no material changes to the terms of the Company’s equity incentive plans during the three months ended March 31, 2022. As of March 31, 2022, the number of shares of common stock available for future issuance under the 2010 Plan was 16,641,362 shares. As of March 31, 2022, the number of shares of common stock available for future issuance under the ESPP was 5,061,372 shares. Employee Incentive Bonus The Company settles a majority of bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan. When bonus awards are settled in common stock issued under the 2010 Equity Incentive Plan, the number of shares issuable to plan participants is determined based on the closing price of the Company’s common stock as determined in trading on the applicable stock exchange, on a date approved by the Board of Directors. In connection with the Company’s bonus programs, in February 2022, the Company issued 0.5 million freely-tradable shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2021 performance period. At March 31, 2022, the Company has an accrual of $9.0 million for bonus awards for employees for year-to-date achievement in the 2022 performance period. The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock. Stock-Based Compensation The Company recognizes stock-based compensation in the consolidated statements of income, based on the department to which the related employee reports, as follows:
| Three Months Ended March 31, |  |  |  |  |  |
| 2022 |  | 2021 |  |  |  |  |  |  |  |  |  |
| (in thousands) |  |  |  |
Cost of net revenue | $ | 163 |  |  | $ | 169 |  |  |  |  |  |  |  |  |  |  |
Research and development | 9,676 |  |  | 7,162 |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 8,715 |  |  | 5,624 |  |  |  |  |  |  |  |  |  |  |
| $ | 18,554 |  |  | $ | 12,955 |  |  |  |  |  |  |  |  |  |  |
The total unrecognized compensation cost related to unvested restricted stock units as of March 31, 2022 was $117.0 million, and the weighted average period over which these equity awards are expected to vest is 2.50 years. The total unrecognized compensation cost related to unvested performance-based restricted stock units as of March 31, 2022 was $32.4 million, and the weighted average period over which these equity awards are expected to vest is 1.37 years. The total unrecognized compensation cost related to unvested stock options as of March 31, 2022 was $0.2 million, and the weighted average period over which these equity awards are expected to vest is 0.26 years. Restricted Stock Units A summary of the Company’s restricted stock unit activity is as follows:
| Number of Shares (in thousands) |  | Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2021 | 5,233 |  |  | $ | 25.14 |
Granted | 1,502 |  |  | 63.44 |
Vested | (730) |  |  | 56.13 |
Canceled | (108) |  |  | 25.66 |
Outstanding at March 31, 2022 | 5,897 |  |  | $ | 31.05 |
Performance-Based Restricted Stock Units Performance-based restricted stock units are eligible to vest at the end of each fiscal year in a three-year performance period based on the Company’s annual growth rate in net sales and non-GAAP diluted earnings per share (subject to certain adjustments) over baseline results relative to the growth rates for a peer group of companies for the same metrics and periods. For the performance-based restricted stock units granted to date, 60% of each performance-based award is subject to the net sales metric for the performance period and 40% is subject to the non-GAAP diluted earnings per share metric for the performance period. The maximum percentage for a particular metric is 250% of the target number of units subject to the award related to that metric, however, vesting of the performance stock units is capped at 30% and 100%, respectively, of the target number of units subject to the award in years one and two, respectively, of the three-year performance period. As of March 31, 2022, the Company believes that it is probable that it will achieve certain performance metrics specified in the respective award agreements based on its expected revenue and non-GAAP diluted EPS results over the performance periods and calculated growth rates relative to its peers’ expected results based on data available, as defined in the respective award agreements. A summary of the Company’s performance-based restricted stock unit activity is as follows:
| Number of Shares (in thousands) |  | Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2021 | 2,005 |  |  | $ | 19.80 |
Granted(1) | 376 |  |  | 75.40 |
Vested | (701) |  |  | 17.85 |
Canceled | (1) |  |  | 35.57 |
Outstanding at March 31, 2022 | 1,679 |  |  | $ | 33.05 |
________________ (1) Number of shares granted is based on the maximum percentage achievable in the performance-based restricted stock unit award. Employee Stock Purchase Rights and Stock Options Employee Stock Purchase Rights During the three months ended March 31, 2022 and 2021 there were no shares of common stock purchased under the ESPP. The fair values of employee stock purchase rights were estimated using the Black-Scholes option pricing model at their respective grant date using the following assumptions:
| Three Months Ended March 31,
| 2022 |  | 2021
Weighted-average grant date fair value per share | $ | 18.82 |  |  | $ | 8.66 |
Risk-free interest rate | 0.06 | % |  | 0.12 | %
Dividend yield | — | % |  | — | %
Expected life (in years) | 0.50 |  | 0.50
Volatility | 43.83 | % |  | 59.72 | %
The risk-free interest rate assumption was based on rates for United States (U.S.) Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The expected term is the duration of the offering period for each grant date. In addition, the estimated volatility incorporates the historical volatility over the expected term based on the Company’s daily closing stock prices. Stock Options A summary of the Company’s stock options activity is as follows:
| Number of Options (in thousands) |  | Weighted-Average Exercise Price |  | Weighted-Average Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021 | 417 |  |  | $ | 17.05 |  |  |  |  |
Exercised | (6) |  |  | 13.42 |  |  |  |  |
Outstanding at March 31, 2022 | 411 |  |  | $ | 17.10 |  |  | 3.07 |  | $ | 16,947 |
Vested and expected to vest at March 31, 2022 | 411 |  |  | $ | 17.10 |  |  | 3.07 |  | $ | 16,947 |
Exercisable at March 31, 2022 | 383 |  |  | $ | 17.00 |  |  | 3.04 |  | $ | 15,831 |
No stock options were granted by the Company during the three months ended March 31, 2022. The intrinsic value of stock options exercised was $0.3 million and $2.3 million in the three months ended March 31, 2022 and 2021, respectively. Cash received from exercise of stock options was $0.1 million and $1.3 million during the three months ended March 31, 2022 and 2021, respectively. The tax benefit from stock options exercised was $0.4 million and $2.7 million during the three months ended March 31, 2022 and 2021, respectively.

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