
	Years Ended December 31,
Dollars in thousands	2023		2022		2021
Cost of goods sold	588		549		470
Research and development	2,071		1,739		1,644
Selling, general and administrative	$	17,483	$	25,437	$	34,096
Total stock-based compensation expense	20,142		27,725		36,210
Total estimated tax benefit related to stock-based compensation expense	5,223		10,574		13,804
Net effect on net income	$	14,919	$	17,151	$	22,406

As of December 31, 2023, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under the Integra LifeSciences Holdings Corporation Fifth Amended and Restated 2003 Equity Incentive Plan (the “2003 Plan”). The 2000 and 2001 Equity Incentive Plans were terminated as of February 19, 2021, and no further awards may be issued under the plans.

In May 2010 and May 2017, the stockholders of the Company approved amendments to the 2003 Plan to increase by 3.5 million and 1.7 million, respectively, the number of shares of common stock that may be issued under the 2003 Plan. The Company has reserved 4.0 million shares under each of the 2000 Plan and the 2001 Plan, and 14.7 million shares under the 2003 Plan. The Plans permit the Company to grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, contract stock, performance stock, or dividend equivalent rights to designated directors, officers, employees and associates of the Company.

Stock options issued under the 2003 Plan became exercisable over specified periods, generally within four years from the date of grant for officers and employees, and within one year from the date of the grant for members of the Board of Directors. The awards generally expire eight years from the grant date for employees and from six to ten years for directors and certain executive officers, except in certain instances that result in accelerated vesting due to death, disability, retirement age or change in control provisions within their grant agreements. Restricted stock issued under the 2003 Plan vests ratably over specified periods, generally three years after the date of grant. The vesting of performance stock issued under the 2003 Plan is subject to service and performance conditions.

The Company values stock option grants using the binomial distribution model. Management believes that the binomial distribution model is preferable to the Black-Scholes model because it is a more flexible model that gives consideration to the impact of non-transferability and vesting provisions in valuing employee stock options.

In determining the value of stock options granted, the Company considered that it has never paid cash dividends and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield. Expected volatilities are based on the historical volatility of the Company’s stock price. The expected life of stock options is estimated based on historical data on exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock options granted. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected life of the options. The Company accounts for forfeitures as they occur.


	Years Ended December 31,
	2023	2022	2021
Dividend yield	0%	0%	0%
Expected volatility	30%	30%	29%
Risk free interest rate	3.86%	2.01%	1.30%
Expected life of option from grant date	7 years	7 years	7 years
Weighted average grant date fair value of options granted	$21.58	$23.15	$22.59


	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term in Years	Aggregate Intrinsic Value
Stock Options	(In thousands)				(In thousands)
Outstanding at January 1, 2023	1,202	$	49.63	4.14	$10,772
Granted	151	52.87		—	—
Exercised	(93)	34.59		—	—
Forfeited or Expired	(82)	58.02		—	—
Outstanding at December 31, 2023	1,178	$	50.64	3.65	$	1,766
Exercisable at December 31, 2023	888	$	48.43	2.75	$	1,762

The Company recognized $1.4 million, $3.5 million and $5.0 million in expense related to stock options during the years ended December 31, 2023, 2022 and 2021, respectively. The intrinsic value of options exercised for the years ended December 31, 2023, 2022 and 2021 were $1.8 million, $4.0 million and $11.1 million, respectively. Cash received from option exercises and employee stock purchase plan was $4.3 million, $5.5 million and $6.8 million, for the years ended December 31, 2023, 2022 and 2021, respectively. The realized tax benefit from options exercised were $0.1 million, $0.6 million and $2.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, there was approximately $3.8 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately three years.


	Restricted Stock Awards			Performance Stock and Contract Stock Awards
	Shares	Weighted Average Grant Date Fair Value Per Share		Shares	Weighted Average Grant Date Fair Value Per Share
	(In thousands)			(In thousands)
Unvested, January 1, 2023	483	$	61.63	407	62.88
Granted	411	51.01		229	52.29
Adjustments for performance achievement related to award target	—	—		(78)	62.26
Cancellations	(99)	60.17		(77)	63.74
Released	(211)	58.85		(146)	60.14
Unvested, December 31, 2023	584	$	55.37	335	57.53

The Company recognized $18.7 million, $24.3 million and $31.2 million in expense related to such awards during the years ended December 31, 2023, 2022 and 2021, respectively. The total fair market value of shares vested and released in 2023, 2022

and 2021 was $18.2 million, $65.0 million and $15.7 million, respectively. Vested awards include shares that have been fully earned but had not been delivered as of December 31, 2023.

Performance stock awards have performance features associated with them. Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. The fair value of these awards is being expensed on a straight-line basis over the vesting period. As of December 31, 2023, there were 51,241 performance stock units ("PSU's") granted in 2021 subject to vest and be released in 2024 based on PSU catch-up opportunity. No additional PSU's were subject to vest based on 2023 performance achievement.

As of December 31, 2023, there was approximately $30.5 million of total unrecognized compensation costs related to unvested restricted stock, performance stock and contract stock awards. These costs are expected to be recognized over a weighted-average period of approximately two years.

The Company capitalized into inventory, share based compensation costs of $0.6 million, $0.6 million and $0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Such share-based compensation was recognized as cost of goods sold when related inventory was sold.