In January 2006, the Board of Directors adopted the ADTRAN, Inc. 2006 Employee Stock Incentive Plan (the “2006 Plan”), which authorized 13.0 million shares of common stock for issuance to certain employees and officers through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock. The 2006 Plan was adopted by stockholder approval at our annual meeting of stockholders held in May 2006. Options granted under the 2006 Plan typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date and had a ten-year contractual term. The 2006 Plan was replaced in May 2015 by the ADTRAN, Inc. 2015 Employee Stock Incentive Plan (the “2015 Plan”). Expiration dates of options outstanding as of December 31, 2019 under the 2006 Plan range from 2020 to 2024.

In January 2015, the Board of Directors adopted the 2015 Plan, which authorized 7.7 million shares of common stock for issuance to certain employees and officers through incentive stock options and non-qualified stock options, stock appreciation rights, PSUs, RSUs and restricted stock. The 2015 Plan was adopted by stockholder approval at our annual meeting of stockholders held in May 2015. PSUs, RSUs and restricted stock granted under the 2015 Plan reduce the shares authorized for issuance under the 2015 Plan by 2.5 shares of common stock for each share underlying the award. Options granted under the 2015 Plan typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date and have a ten-year contractual term. Expiration dates of options outstanding as of December 31, 2019 under the 2015 Plan range from 2025 to 2026.

Our stockholders approved the 2010 Directors Stock Plan (the “2010 Directors Plan”) in May 2010, under which 0.5 million shares of common stock have been reserved for issuance. This plan replaced the 2005 Directors Stock Option Plan. Under the 2010 Directors Plan, the Company may issue stock options, restricted stock and RSUs to our non-employee directors. Stock awards issued under the 2010 Directors Plan become vested in full on the first anniversary of the grant date. Options issued under the 2010 Directors Plan had a ten-year contractual term. All remaining options under the 2010 Directors Plan expired in 2019.

The following table summarizes stock-based compensation expense related to stock options, PSUs, RSUs and restricted stock for the years ended December 31, 2019, 2018 and 2017, which was recognized as follows:

(In thousands)	2019			2018			2017
Stock-based compensation expense included in cost of sales	$	369		$	418		$	379
Selling, general and administrative expense		3,889			3,989			4,063
Research and development expense		2,704			2,748			2,991
Stock-based compensation expense included in operating expenses		6,593			6,737			7,054
Total stock-based compensation expense		6,962			7,155			7,433
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and restricted stock		(1,659	)		(1,432	)		(1,699	)
Total stock-based compensation expense, net of tax	$	5,303		$	5,723		$	5,734

Under the 2015 Plan, awards other than stock options, including PSUs, RSUs and restricted stock, may be granted to certain employees and officers.

Under our market-based PSU program, the number of shares of common stock earned by a recipient is subject to a market condition based on ADTRAN’s relative total shareholder return against all companies in the NASDAQ Telecommunications Index at the end of a three-year performance period. Depending on the relative total shareholder return over the performance period, the recipient may earn from 0% to 150% of the shares underlying the PSUs, with the shares earned distributed upon the vesting. The fair value of the award is based on the market price of our common stock on the date of grant, adjusted for the expected outcome of the impact of market conditions using a Monte Carlo Simulation valuation method. A portion of the granted PSUs vests and the underlying shares become deliverable upon the death or disability of the recipient or upon a change of control of ADTRAN, as defined by the 2015 Plan. The recipients of the PSUs receive dividend credits based on the shares of common stock underlying the PSUs. The dividend credits vest and are earned in the same manner as the PSUs and are paid in cash upon the issuance of common stock for the PSUs.

During the first quarter of 2017, the Compensation Committee of the Board of Directors approved a one-time PSU grant of 0.5 million shares that contained performance conditions and would have vested at the end of a three-year period if such performance conditions were met. The fair value of these performance-based PSU awards was equal to the closing price of our stock on the date of grant. These awards were forfeited during the first quarter of 2020 as the performance conditions were not achieved.

The fair value of RSUs and restricted stock is equal to the closing price of our stock on the business day immediately preceding the grant date. RSUs and restricted stock vest ratably over four-year and one-year periods, respectively.

We will continue to assess the assumptions and methodologies used to calculate the estimated fair value of stock-based compensation. If circumstances change, and additional data becomes available over time, we may change our assumptions and methodologies, which may materially impact our fair value determination.

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2018 and 2019 and the changes that occurred during 2019:

(In thousands, except per share amounts)	Number of shares			Weighted Average Grant Date Fair Value
Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2018		1,570		$	18.52
PSUs, RSUs and restricted stock granted		897		$	9.63
PSUs, RSUs and restricted stock vested		(368	)	$	17.23
PSUs, RSUs and restricted stock forfeited		(208	)	$	18.24
Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2019		1,891		$	14.58

As of December 31, 2019, total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $17.2 million, which is expected to be recognized over an average remaining recognition period of 2.9 years and adjusted for actual forfeitures as they occur.

The following table details the significant assumptions that impact the fair value estimate of the market-based PSUs:

	2019	2018		2017
Estimated fair value per share	$9.53 to $18.05	$	16.59	$	24.17
Expected volatility	32.7% to 38.9%	27.98% to 31.58%			27.03	%
Risk-free interest rate	1.6% to 2.46%	2.11% to 2.99%			1.78	%
Expected dividend yield	2.3% to 4.09%	1.83% to 2.49%			1.74	%

As of December 31, 2019, 1.0 million shares were available for issuance under shareholder-approved equity plans in connection with the grant and exercise of stock options, PSU’s, RSU’s or restricted stock.

The following table is a summary of our stock options outstanding as of December 31, 2019 and 2018 and the changes that occurred during 2019:

	Number of Options (in thousands)			Weighted Average Exercise Price (per share)		Weighted Avg. Remaining Contractual Life in Years		Aggregate Intrinsic Value (in thousands)
Stock options outstanding, December 31, 2018		4,382		$	22.91		4.10	$	—
Stock options granted		—		$	—
Stock options exercised		(34	)	$	15.53
Stock options forfeited		(32	)	$	15.56
Stock options expired		(744	)	$	23.72
Stock options outstanding, December 31, 2019		3,572		$	22.88		3.40	$	—
Stock options exercisable, December 31, 2019		3,570		$	22.89		3.40	$	—

All of the options above were issued at exercise prices that approximated fair market value at the date of grant. As of December 31, 2019, total unrecognized compensation expense related to non-vested stock options was approximately $11 thousand, which is expected to be recognized over an average remaining recognition period of one year and will be adjusted for actual forfeitures as they occur.

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between ADTRAN’s closing stock price on the last trading day of 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. The amount of aggregate intrinsic value will change based on the fair market value of ADTRAN’s stock and was $0 as of December 31, 2019.

The total pre-tax intrinsic value of options exercised during 2019, 2018 and 2017 was $0.1 million, $0.2 million and $3.4 million, respectively. The fair value of options fully vesting during 2019, 2018 and 2017 was $0.9 million, $2.5 million and $4.3 million, respectively.

The following table further describes our stock options outstanding as of December 31, 2019:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Options Outstanding at December 31, 2019 (In thousands)		Weighted Avg. Remaining Contractual Life in Years		Weighted Average Exercise Price		Options Exercisable at December 31, 2019 (In thousands)		Weighted Average Exercise Price
$14.88 – $18.96		1,135		4.90	$	15.89		1,133	$	15.89
$18.97 – $23.45		685		4.70	$	19.10		685	$	19.10
$23.46 – $30.35		686		3.67	$	24.17		686	$	24.17
$30.36 – $41.92		1,066		1.29	$	31.93		1,066	$	31.93
		3,572						3,570

The Black-Scholes option pricing model (the “Black-Scholes Model”) is used to determine the estimated fair value of stock option awards on the date of grant. The Black-Scholes Model requires the input of certain assumptions that involve judgment. Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, existing models may not provide reliable measures of fair value of our stock options. The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors.

There were no stock options granted in during the years ended December 31, 2019, 2018 or 2017.