Stockholders’ Equity

In May 2016, the Company’s stockholders approved a new stock incentive plan authorizing an additional 2.0 million shares, plus remaining available shares under a prior plan, for issuance under the new plan. Combined with the legacy stock incentive plans, there are 0.8 million shares available for grant as of March 31, 2018.

Performance-based stock awards

The Company has issued performance-based stock options and performance-based restricted stock units ("RSUs"), the vesting of which is contingent upon the achievement of certain performance criteria related to the operating performance of the Company, as well as successful and timely development and market acceptance of future product introductions. In addition, certain of the performance-based RSUs have additional service-based vesting requirements subsequent to the achievement of the performance criteria. Compensation expense is recognized over the implicit service period (the longer of the period the performance condition is expected to be achieved or the required service period) based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date.

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2018 (number of units and aggregate intrinsic value in thousands):



	Number of Units		Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value
Units outstanding, beginning of year	2,348		$	23.47
Granted	122		30.14
Released	(329	)	24.14
Forfeited	(114	)	21.79
Units outstanding, end of period	2,027		23.93		$	79,681

Aggregate intrinsic value represents the Company’s closing stock price on the last trading day of the period, which was $39.31 per share, multiplied by the number of RSUs outstanding. As of March 31, 2018, there was $39.3 million in unrecognized compensation costs related to RSUs under the Company's stock plans. The Company expects to recognize the cost related to the RSUs over a weighted average period of 2.68 years. RSUs are released when vesting requirements are met.

During the three months ended March 31, 2018, the Company granted no performance-based RSUs As of March 31, 2018, the performance criteria had not been met for any of the 0.4 million performance-based RSUs outstanding.The performance-based RSUs granted in 2017 and 2016 contain provisions whereby the amount of RSUs that ultimately vest is dependent upon the level of achievement of performance metrics. The amount of RSUs included in the table above related to such grants is the target level, which is the Company's best estimate of the amount of RSUs that will vest. The maximum additional number of performance-based RSUs that could be earned is 0.3 million, which are not included in the table above.

Certain RSUs that vested in the three months ended March 31, 2018 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld were 0.1 million and had a value of $3.6 million on their respective vesting dates as determined by the Company’s closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the statement of cash flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the amount of shares that would have otherwise been issued as a result of the vesting had they been settled on a gross basis with the employees responsible for directly remitting the applicable income and other employment taxes.

Stock Option Activity

The following table summarizes stock option activity for the three months ended March 31, 2018 (number of units and aggregate intrinsic value in thousands):



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Options outstanding, beginning of year	804		$	4.99
Granted	—		—
Exercised	(78	)	4.54
Expired / terminated	—		—
Options outstanding, end of period	726		5.04		0.99	$	24,879
Options exercisable, end of period	722		5.04		1.00	24,729

Aggregate intrinsic value represents the difference between the exercise price of the underlying stock option awards and the closing market price of the Company's common stock of $39.31 on March 31, 2018. The intrinsic value of options exercised for the three months ended March 31, 2018 and 2017 was $2.0 million and $0.7 million, respectively. As of March 31, 2018, total options outstanding includes 0.2 million performance-based stock options, of which 4,350 were unvested and of those, none are expected to vest.

On February 26, 2018, the Company's Board of Directors approved a new stock option grant to Patrick W. Smith, the Company's Chief Executive Officer (“CEO Performance Award”), which is subject to shareholder approval. The CEO Performance Award will consist of 12 vesting tranches, each equal to 1% of the Company's outstanding common stock as of February 23, 2018, the business day prior to the award date. The CEO Performance Award will have a per share exercise price equal to $28.58, the closing price of our common stock on February 23, 2018, and will have a vesting schedule based entirely on the attainment of both operational and market capitalization goals. Because the CEO Performance Award is still subject to shareholder approval, there was no financial statement impact as of and for the three months ended March 31, 2018.

Stock-based Compensation Expense

Stock-based compensation cost for RSUs is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes stock-based compensation cost over the requisite service period of an award on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The following table summarizes the composition of stock-based compensation for the three months ended March 31, 2018 and 2017 (in thousands):



	Three Months Ended March 31,
	2018		2017
Cost of products sold and services delivered	$	141	$	79
Sales, general and administrative expenses	2,304		2,028
Research and development expenses	1,648		1,340
Total stock-based compensation	$	4,093	$	3,447

Stock Repurchase Plan

In February 2016, the Company's Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of the Company’s outstanding common stock subject to stock market conditions and corporate considerations. During the three months ended March 31, 2018 and 2017, no common shares were purchased under the program. As of March 31, 2018, $16.3 million remains available under the plan for future purchases. The Company suspended its 10b5-1 plan during 2016, and any future purchases will be discretionary.