Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

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)	2021		2020		2019
Cost of sales	$	156	$	182	$	139
Research and development expenses	1,253		1,099		1,096
Selling, general and administrative expenses:
Employees	6,997		6,257		6,431
Outside directors	1,563		1,584		1,179
Total employee and director stock-based compensation expense	$	9,969	$	9,122	$	8,845

Income tax benefit	$	1,718	$	1,594	$	1,877

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,
	2021			2020			2019
Weighted average fair value of grants	$	23.97		$	17.70		$	11.51
Risk-free interest rate	0.41		%	1.44		%	2.38		%
Expected volatility	48.49		%	43.95		%	41.73		%
Expected life in years	4.62			4.59			4.60

Stock option activity was as follows:


	2021						2020						2019
	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	774	$	43.01				745	$	41.73				597	$	44.27
Granted	80	59.43					109	46.17					170	30.08
Exercised	(54)	30.04			$	931	(80)	35.28			$	1,334	(22)	20.34			$	569
Forfeited/canceled/expired	—	—					—	—					—	—
Outstanding at end of the year (1)	800	$	45.55	3.15	$	3,780	774	$	43.01	3.71	$	9,228	745	$	41.73	3.97	$	9,798
Vested and expected to vest at the end of the year (1)	800	$	45.55	3.15	$	3,780	774	$	43.01	3.71	$	9,228	745	$	41.73	3.97	$	9,798
Exercisable at the end of the year (1)	656	$	44.08	2.58	$	3,608	582	$	43.90	2.98	$	6,887	517	$	44.95	3.01	$	5,636

(1)The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of 2021, 2020 and 2019 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, 2021, 2020 and 2019. 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 years ended December 31, 2021 and 2020 was $0.6 million and $2.8 million, respectively. Cash received from option exercises for the years ended December 31, 2021 and 2019 was $1.0 million and $0.4 million, respectively. There was no cash received from option exercises for the year ended December 31, 2020. The actual tax benefit realized from option exercises was $0.2 million, $0.3 million and $0.01 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Significant option groups outstanding at December 31, 2021 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	230	3.08	$	24.36	218	$	24.20
$44.95 to $46.17	207	4.60	45.59		162	45.43
$51.38 to $65.54	363	2.61	58.98		276	59.00
	800	3.15	$	45.55	656	$	44.08

As of December 31, 2021, 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 1.7 years.

On February 10, 2022, certain executive employees were granted 119,365 stock options, in the aggregate, in connection with the 2021 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 10, 2023 and 8.33% each quarter thereafter). The total grant date fair value of these awards was $1.8 million.

Restricted Stock

Non-vested restricted stock award activity was as follows:


	2021			2020			2019
	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	374	$	34.53	310	$	34.99	204	$	49.23
Granted	156	56.90		238	36.85		268	30.67
Vested	(211)	36.35		(166)	38.28		(141)	47.26
Forfeited	(9)	39.65		(8)	43.44		(21)	35.78
Non-vested at end of the year	310	$	44.41	374	$	34.53	310	$	34.99

As of December 31, 2021, we expect to recognize $8.9 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 2022, certain executives and employees were granted 223,001 restricted stock awards, in the aggregate, in connection with the 2021 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 (51,365 of these awards will vest 33.33% on February 10, 2023 and 8.33% each quarter thereafter and 171,636 of these awards will vest at a rate of 33.33% per year beginning on February 22, 2023). The total grant date fair value of these awards was $7.1 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, 2021:


Name	Approval Date	Total 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	—	11,500
2006 Stock Incentive Plan	6/13/2006	1,000,000	—	23,910
2010 Stock Incentive Plan	6/15/2010	1,000,000	—	93,904
2014 Stock Incentive Plan	6/12/2014	1,100,000	—	311,276
2018 Equity and Incentive Compensation Plan (1)	6/4/2018	2,118,664	1,095,728	669,738
			1,095,728	1,110,328

(1)The 2018 Equity and Incentive Compensation Plan was amended in June 2021 to add an additional 1,100,000 shares, as approved by our stockholders.