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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for each employee and director is presented in the same statement of operations caption as their cash compensation. Stock-based compensation expense by statement of operations caption and the related income tax benefit were as follows:
| Year Ended December 31,
(In thousands) | 2020 |  | 2019 |  | 2018
Cost of sales | $ | 182 |  |  | $ | 139 |  |  | $ | 84 |
Research and development expenses | 1,099 |  |  | 1,096 |  |  | 744 |
Selling, general and administrative expenses: |  |  |  |  |
Employees | 6,257 |  |  | 6,431 |  |  | 6,491 |
Outside directors | 1,584 |  |  | 1,179 |  |  | 1,501 |
Total employee and director stock-based compensation expense | $ | 9,122 |  |  | $ | 8,845 |  |  | $ | 8,820 |
Income tax benefit | $ | 1,594 |  |  | $ | 1,877 |  |  | $ | 1,870 |
Stock Options The assumptions we utilized in the Black-Scholes option pricing model and the resulting weighted average fair value of stock option grants were the following:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Weighted average fair value of grants | $ | 17.70 |  |  | $ | 11.51 |  |  | $ | 14.26 |
Risk-free interest rate | 1.44 | % |  | 2.38 | % |  | 2.51 | %
Expected volatility | 43.95 | % |  | 41.73 | % |  | 33.09 | %
Expected life in years | 4.59 |  | 4.60 |  | 4.53
Stock option activity was as follows:
| 2020 |  | 2019 |  | 2018
| Number of Options (in 000's) |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in 000's) |  | Number of Options (in 000's) |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in 000's) |  | Number of Options (in 000's) |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in 000's)
Outstanding at beginning of the year | 745 |  |  | $ | 41.73 |  |  |  |  |  |  | 597 |  |  | $ | 44.27 |  |  |  |  |  |  | 520 |  |  | $ | 42.56 |  |  |  |  |
Granted | 109 |  |  | 46.17 |  |  |  |  |  |  | 170 |  |  | 30.08 |  |  |  |  |  |  | 119 |  |  | 44.95 |  |  |  |  |
Exercised | (80) |  |  | 35.28 |  |  |  |  | $ | 1,334 |  |  | (22) |  |  | 20.34 |  |  |  |  | $ | 569 |  |  | (35) |  |  | 24.67 |  |  |  |  | $ | 744 |
Forfeited/canceled/expired | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  |  |  |  |  | (7) |  |  | 27.74 |  |  |  |  |
Outstanding at end of the year (1) | 774 |  |  | $ | 43.01 |  |  | 3.71 |  | $ | 9,228 |  |  | 745 |  |  | $ | 41.73 |  |  | 3.97 |  | $ | 9,798 |  |  | 597 |  |  | $ | 44.27 |  |  | 4.08 |  | $ | 758 |
Vested and expected to vest at the end of the year (1) | 774 |  |  | $ | 43.01 |  |  | 3.71 |  | $ | 9,228 |  |  | 745 |  |  | $ | 41.73 |  |  | 3.97 |  | $ | 9,798 |  |  | 597 |  |  | $ | 44.27 |  |  | 4.08 |  | $ | 758 |
Exercisable at the end of the year (1) | 582 |  |  | $ | 43.90 |  |  | 2.98 |  | $ | 6,887 |  |  | 517 |  |  | $ | 44.95 |  |  | 3.01 |  | $ | 5,636 |  |  | 430 |  |  | $ | 42.30 |  |  | 3.43 |  | $ | 758 |
(1)The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of 2020, 2019, and 2018 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on December 31, 2020, 2019, and 2018. This amount will change based on the fair market value of our stock. The value of shares withheld in lieu of receiving cash from option exercises in the year ended December 31, 2020 was $2.8 million. Cash received from option exercises for the years ended December 31, 2019 and 2018 was $0.4 million and $0.9 million, respectively. The actual tax benefit realized from option exercises was $0.3 million, $0.01 million and $0.2 million for the years ended December 31, 2020, 2019, and 2018, respectively. Significant option groups outstanding at December 31, 2020 and the related weighted average exercise price and life information were as follows:
|  | Options Outstanding |  | Options Exercisable
Range of Exercise Prices |  | Number Outstanding (in 000's) |  | Weighted-Average Remaining Contractual Term (in years) |  | Weighted-Average Exercise Price |  | Number Exercisable (in 000's) |  | Weighted-Average Exercise Price
$19.25 to $27.07 |  | 263 |  |  | 3.72 |  | $ | 23.83 |  |  | 200 |  |  | $ | 22.82 |
$35.28 to $46.17 |  | 229 |  |  | 5.44 |  | 45.47 |  |  | 113 |  |  | 44.84 |
$51.38 to $65.54 |  | 282 |  |  | 2.61 |  | 58.85 |  |  | 269 |  |  | 59.15 |
|  | 774 |  |  | 3.71 |  | $ | 43.01 |  |  | 582 |  |  | $ | 43.90 |
As of December 31, 2020, we expect to recognize $2.2 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 1.8 years. On February 11, 2021, certain executive employees were granted 80,315 stock options in connection with the 2020 annual review cycle. The options were granted as part of long-term incentive compensation to assist us in meeting our performance and retention objectives and are subject to a three-year vesting period (33.33% on February 11, 2021 and 8.33% each quarter thereafter). The total grant date fair value of these awards was $1.9 million. Restricted Stock Non-vested restricted stock award activity was as follows:
| 2020 |  | 2019 |  | 2018
| Shares (in 000's) |  | Weighted-Average Grant Date Fair Value |  | Shares (in 000's) |  | Weighted-Average Grant Date Fair Value |  | Shares (in 000's) |  | Weighted-Average Grant Date Fair Value
Non-vested at beginning of the year | 310 |  |  | $ | 34.99 |  |  | 204 |  |  | $ | 49.23 |  |  | 162 |  |  | $ | 61.19 |
Granted | 238 |  |  | 36.85 |  |  | 268 |  |  | 30.67 |  |  | 167 |  |  | 42.65 |
Vested | (166) |  |  | 38.28 |  |  | (141) |  |  | 47.26 |  |  | (109) |  |  | 56.16 |
Forfeited | (8) |  |  | 43.44 |  |  | (21) |  |  | 35.78 |  |  | (16) |  |  | 54.16 |
Non-vested at end of the year | 374 |  |  | $ | 34.53 |  |  | 310 |  |  | $ | 34.99 |  |  | 204 |  |  | $ | 49.23 |
As of December 31, 2020, we expect to recognize $8.4 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 1.7 years. In February 2021, certain executives and employees were granted 111,775 restricted stock awards in connection with the 2020 annual review cycle. These awards were granted as part of long-term incentive compensation to assist us in meeting our performance and retention objectives and are subject to a three-year vesting period (32,395 of these awards will vest 33.33% on February 11, 2022 and 8.33% each quarter thereafter and 79,380 of these awards will vest at a rate of 33.33% per year beginning on February 25, 2022). The total grant date fair value of these awards was $6.7 million. Stock Incentive Plans Our active stock-based incentive plans include those adopted in 2003, 2006, 2010, 2014 and 2018 ("Stock Incentive Plans"). Under the Stock Incentive Plans, we may grant stock options, stock appreciation rights, restricted stock units, performance stock units, or any combination thereof for a period of ten years from the approval date of each respective plan, unless the plan is terminated by resolution of our Board of Directors. No stock appreciation rights or performance stock units have been awarded under our Stock Incentive Plans. Only directors and employees meeting certain employment qualifications are eligible to receive stock-based awards. The grant price of stock option and restricted stock awards granted under our Stock Incentive Plans is the average of the high and low trades of our stock on the grant date. We prohibit the re-pricing or backdating of stock options. Our stock options become exercisable in various proportions over a three- or four-year time frame. Stock options have a maximum ten-year term. Restricted stock awards vest in various proportions over a one- to three-year time period. Detailed information regarding our active Stock Incentive Plans was as follows at December 31, 2020:
Name |  | Approval Date |  | Initial Shares Available for Grant Under the Plan |  | Remaining Shares Available for Grant Under the Plan |  | Outstanding Shares Granted Under the Plan
2003 Stock Incentive Plan |  | 6/18/2003 |  | 1,000,000 |  |  | — |  |  | 14,391 |
2006 Stock Incentive Plan |  | 6/13/2006 |  | 1,000,000 |  |  | — |  |  | 25,275 |
2010 Stock Incentive Plan |  | 6/15/2010 |  | 1,000,000 |  |  | — |  |  | 123,131 |
2014 Stock Incentive Plan |  | 6/12/2014 |  | 1,100,000 |  |  | — |  |  | 357,860 |
2018 Equity and Incentive Compensation Plan |  | 6/4/2018 |  | 1,000,000 |  |  | 223,199 |  |  | 627,545 |
|  |  |  |  |  | 223,199 |  |  | 1,148,202 |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: 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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