As of December 31, 2019, an aggregate of approximately 39.7 million unissued shares was authorized for future issuance under the Company’s stock plans, which primarily includes shares issuable under the 2017 Equity Incentive Plan and the ESPP. Under the 2017 Equity Incentive Plan, shares issued under the Amended and Restated 2006 Share Incentive Plan (the 2006 Share Incentive Plan) and the 2017 Equity Incentive Plan that expire or are forfeited generally become available for future issuance under the 2017 Equity Incentive Plan. Shares formerly reserved for future issuance under the 2006 Share Incentive Plan were transferred to the 2017 Equity Incentive Plan and became available for issuance thereunder upon the effectiveness of the 2017 Equity Incentive Plan. The Company’s stock-based compensation plans are administered by the Company’s Board of Directors (the Board), or designated Committee thereof, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the awards. See Note 3 to these Consolidated Financial Statements for discussion regarding the valuation of equity awards.

The 2017 Equity Incentive Plan, approved by the Company’s stockholders on June 6, 2017 and effective as of that same date, is the successor to and continuation of the 2006 Share Incentive Plan and provides for awards of RSUs and stock options as well as other forms of equity compensation. No additional awards will be granted under the 2006 Share Incentive Plan; however, there are vested and unvested awards outstanding under the 2006 Share Incentive Plan. Stock option awards granted to employees generally vest over a four-year period on a cliff basis twelve months after the grant date and then monthly thereafter. The contractual term of stock option awards is generally ten years from the grant date. RSUs granted to employees generally vest annually over a straight-line four-year period after the grant date.

The ESPP was initially approved in June 2006, replacing the Company’s previous plan, and was most recently amended in June 2019. Under BioMarin’s ESPP, employees meeting specific employment qualifications are eligible to participate and can purchase shares on established dates (each purchase date) semi-annually through payroll deductions at the lower of 85% of the fair market value of the stock at the commencement of the offering period or each purchase date of the offering period. Each offering period will span up to two years. The ESPP permits eligible employees to purchase common stock through payroll deductions for up to 10% of qualified compensation, up to an annual limit of $25,000. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the IRC. During the year ended December 31, 2019, the Company issued 0.2 million shares under the ESPP.

September 19, 2019, the Board of BioMarin approved revised compensation for the Independent Directors of the Company. On the date of the Company’s annual meeting of stockholders for a given year, each re-elected Independent Director receives an RSU grant valued at $400,000 ($375,000 prior to September 19, 2019), with the number of RSUs to be granted calculated based on the three-month trailing average closing price of the Company’s common stock on the Nasdaq Global Select Market. The RSUs subject to the annual award vest in full on the one-year anniversary of the grant date, subject to each respective Director providing service to the Company through such vesting date. Upon election or appointment, a new Independent Director will receive an RSU grant on the same terms as the annual award, pro-rated for amount and vesting to the nearest quarter for the time such new Independent Director will serve prior to the Company’s next annual meeting of stockholders.


	Years Ended December 31,
	2019		2018		2017
Cost of sales	$	16,146	$	13,558	$	10,636
Research and development	56,649		57,557		53,112
Selling, general and administrative	87,070		77,704		76,515
Total stock-based compensation expense	$	159,865	$	148,819	$	140,263

Stock-based compensation of $20.3 million, $20.0 million and $16.1 million was capitalized into inventory for the years ended December 31, 2019, 2018 and 2017, respectively. Capitalized stock-based compensation is recognized in Cost of Sales when the related product is sold.


	Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Years	Aggregate Intrinsic Value
Non-vested units as of December 31, 2018	3,147,523	$	87.42	2.6	$	268,012
Granted	1,937,858	$	91.28
Vested	(1,136,627)	$	91.20
Forfeited	(363,370)	$	89.39
Non-vested units as of December 31, 2019	3,585,384	$	88.54	2.6	$	303,144

The weighted-average grant date fair value per share of RSUs granted during the years ended December 31, 2019, 2018 and 2017, was $91.28, $84.63 and $87.88, respectively. The total intrinsic value of restricted stock that vested and was released in the years ended December 31, 2019, 2018 and 2017, was $101.0 million, $84.5 million and $76.5 million, respectively.

The Compensation Committee of the Board (with respect to awards to certain executive officers other than the Chief Executive Officer) and the Board (with respect to awards to the Chief Executive Officer) may grant RSUs with performance-based vesting conditions to certain executive officers. In March 2019, the Compensation Committee and Board approved a grant of RSUs with performance-based vesting conditions. This award is contingent upon the achievement of a 2019 revenue target and the earned RSUs, if any, vest over a three-year service period. The number of shares that may be earned range between 50% and 200% of the base RSUs, depending on the percentage of 2019 “managed revenues” (defined as the Company’s net product revenues, excluding net revenues attributable to Aldurazyme, and determined using fixed foreign currency exchange rates) achieved against the target managed revenues, with a threshold achievement level of 75% of target and a ceiling achievement level of 125% of target.

The weighted-average grant date fair value of RSUs with performance conditions was $83.57 and $87.42 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2019, total unrecognized compensation expense of $10.5 million related to RSUs with performance-based vesting conditions was expected to be recognized over a weighted average period of 1.7 years.

In August 2019, the Compensation Committee of the Board approved the grant of 44,260 RSUs with performance-based vesting conditions and a grant date fair value of $81.00 per RSU. These awards are contingent upon obtaining regulatory approval for valoctocogene roxaparvovec by January 2022 and the awarded RSUs, if any, will vest from the time regulatory approval is obtained through January 2022. The Company evaluated the current timeline and the status of regulatory applications and determined that for accounting purposes attainment of the performance measure was not probable as of December 31, 2019 as the regulatory approval is outside of the Company's control. Therefore, the Company did not record any expense associated with these awards, as such the full value of $3.6 million remains unrecognized and the Company does not have an estimate of the expected weighted average period over which expense is to be recognized.

In March 2019, the Compensation Committee and Board approved the grant of 99,010 RSUs with market-based vesting conditions (base TSR-RSUs) to certain executives. These base TSR-RSUs vest, if at all, in full following a three-year service period only if certain total shareholder return (TSR) results relative to the Nasdaq Biotechnology Index comparative companies are achieved. The number of shares that may be earned range between zero percent and 200% of the base TSR-RSUs with a ceiling achievement level of 100% of the base TSR-RSUs in the event the Company’s TSR is above the 50th percentile but negative on an absolute basis. The Company utilized a Monte Carlo simulation model to determine the grant date fair value of $143.92 per base TSR-RSU using the following assumptions: an expected term of 2.8 years, discount rate of 2.4% dividend yield of 0.0% and expected volatility rate derived from historical volatilities for the Company and the members of the referenced peer group. Compensation expense for awards with market conditions is not reversed if the market condition is not met.

The following table summarizes activity under the Company’s stock option plans for the year ended December 31, 2019. All stock option grants presented in the table had exercise prices not less than the fair value of the underlying common stock on the


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Years	Aggregate Intrinsic Value (1)
Options outstanding as of December 31, 2018	7,363,609	$	63.06	5.1	$	183,091
Granted	610,250	$	94.45
Exercised	(567,672)	$	28.95
Expired and forfeited	(141,952)	$	82.24
Options outstanding as of December 31, 2019	7,264,235	$	67.99	4.7	$	146,700
Options unvested as of December 31, 2019	1,258,052	$	89.49	8.5	$	447
Exercisable at December 31, 2019	6,006,183	$	63.48	3.9	$	146,253

(1)The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock on the Nasdaq Global Select Market as of the last trading day for the respective year. The aggregate intrinsic value of options outstanding and exercisable includes options with an exercise price below $84.55, the closing price of the Company’s common stock on the Nasdaq Global Select Market on December 31, 2019.

The weighted-average fair value per stock option granted in the years ended December 31, 2019, 2018 and 2017, were $36.84, $33.40 and $36.07, respectively. The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017, was $32.5 million, $79.9 million and $77.0 million, respectively. The aggregate intrinsic value of options exercised was determined as of the date of option exercise. Upon the exercise of the options, the Company issues new common stock from its authorized shares.

Years Ended December 31,

2019

2018

2017

Expected volatility

37.1 – 37.4%

36.8 – 38.4%

37.6 – 39.7%

Dividend yield

0.00%

Expected term

4.6 – 5.8 years

4.6 – 5.7 years

4.9 – 6.6 years

Risk-free interest rate

2.2 – 3.0%

2.3 – 2.8%

1.8 – 2.2%

As of December 31, 2019, total unrecognized compensation cost related to unvested stock options of $36.5 million was expected to be recognized over a weighted average period of 2.4 years. The net tax benefit from stock options exercised during the year ended December 31, 2019 was $1.2 million.

Years Ended December 31,

2019

2018

2017

Expected volatility

27.7 – 35.0%

29.7 – 35.0%

27.7 – 42.3%

Dividend yield

0.00%

Expected term

6 – 24 months

Risk-free interest rate

1.2 – 2.8%

1.0 – 1.6%