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Share-Based Compensation
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
The Company’s share-based compensation plans include the 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.
The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, and other share-based awards. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of the Company’s common stock subject to the option on the date the option is granted. As of June 30, 2023, 435,135 shares underlying options and 849,826 shares of restricted stock units were outstanding under the 2015 Plan. At June 30, 2023, there were 1,043,255 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan.
Share-Based Compensation Expense
The following table presents the effects of share-based compensation expense in the Condensed Consolidated Statements of Operations during the periods presented (in thousands):
Three months ended June 30,Six months ended June 30,
2023202220232022
Cost of revenues$94 $142 $170 $226 
Sales and marketing1,038 1,106 1,962 1,675 
Research, development, and engineering958 852 1,741 1,481 
General and administrative7,127 5,603 13,746 11,038 
Total share-based compensation expense$9,217 $7,703 $17,619 $14,420 
Restricted Stock
The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four or five years for senior staff (excluding market-based awards discussed below) and four to eight years for the Chief Executive Officer. The Company granted 291,159 and 132,117 shares of restricted stock and restricted units (excluding awards with market conditions below) during the six months ended June 30, 2023 and 2022, respectively.
The Company has awarded certain key employees market-based restricted stock and market-based restricted stock units pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Share-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the six months ended June 30, 2023, the Company awarded 167,606 market-based restricted stock units at stock price targets ranging from $83.61 to $103.76 per share. During the six months ended June 30, 2022, the Company awarded 100,193 market-based restricted stock units at stock price targets ranging from $107.97 to $138.73 per share. The per share weighted average grant-date fair values of the market-based restricted stock units granted during the six months ended June 30, 2023 and 2022 were $70.07 and $87.11, respectively.
The weighted-average fair values of market-based restricted stock units granted have been estimated utilizing the following assumptions:
June 30, 2023June 30, 2022
Underlying stock price at valuation date$77.80 $99.32 
Expected volatility32.0 %36.7 %
Risk-free interest rate4.1 %1.8 %

Restricted stock award activity for the six months ended June 30, 2023 is set forth below:
SharesWeighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2023311,281 $59.90 
Vested(47,484)$78.37 
Nonvested at June 30, 2023
263,797 $57.71 
  
Restricted stock unit activity for the six months ended June 30, 2023 is set forth below:
Number of
Shares		Weighted-Average
Remaining
Contractual
Term (in years)		Aggregate
Intrinsic
Value
Outstanding at January 1, 2023464,354 
Granted458,765 
Vested(67,892)
Canceled(5,401)
Outstanding at June 30, 2023849,826 3.2$59,538,810 
Vested and expected to vest at June 30, 2023710,196 2.9$49,756,330 
As of June 30, 2023, the Company had unrecognized share-based compensation cost of approximately $58.9 million associated with these restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 2.2 years for restricted stock awards and 3.0 years for restricted stock units.
Employee Stock Purchase Plan
The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period.
The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 12.7% and 11.2% as of June 30, 2023 and 2022, respectively.
For the six months ended June 30, 2023 and 2022, 87,098 and 76,741 shares were purchased under the Purchase Plan, respectively at a price of $54.25 and $68.22 per share, respectively. As of June 30, 2023, 1,068,601 shares were available under the Purchase Plan for future issuance.
The shared-based compensation expense related to the Purchase Plan has been estimated utilizing the following weighted-average assumptions:
June 30, 2023June 30, 2022
Risk-free interest rate
4.7%1.5%
Expected term (in years)
0.50.5
Expected volatility
35.8%41.6%