Share-Based Compensation

3 Months Ended

Mar. 29, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

(14) Share-Based Compensation

As of March 29, 2020, the Company had 689,418 stock options and 826,349 Restricted Stock Unit Awards ("RSU Awards") and Restricted Stock Unit Management Stock Plan Awards ("RSU MSPs") outstanding. On May 9, 2019, our shareholders approved the 2019 Stock Option and Incentive Plan (the "2019 Plan") at the Company's annual meeting which was adopted, subject to shareholder approval, by the Company's board of directors on February 20, 2019. The 2019 Plan authorizes issuance of up to 1,000,000 shares of common stock (subject to adjustment for stock splits and similar events). Under the 2019 Plan, there were 413,507 shares available for grant as of March 29, 2020.

During the three months ended March 29, 2020, there were no stock options granted compared with 153,726 stock options granted during the three months ended March 31, 2019.

The average fair value of stock options granted during the first three months of 2019 was $11.84 per share, estimated using the following weighted-average assumptions:



	March 31, 2019
Risk-free interest rate	2.6	%
Expected life (years)	4.4
Expected stock volatility	38.1	%
Expected dividend yield	—	%

For additional information regarding the historical issuance of stock options, refer to Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

During the three months ended March 29, 2020 and March 31, 2019, we granted 552,010 and 154,903 RSU Awards with approximate fair values of $12.70 and $33.07 per RSU Award, respectively. During the first three months of 2020 and 2019, we granted performance-based RSU Awards as part of the overall mix of RSU Awards. Of the 552,010 RSU Awards granted during the three months ended March 29, 2020, 109,278 are performance-based RSU Awards. This compares to 26,475 performance-based RSU Awards granted during the three months ended March 31, 2019. In 2020, these performance-based RSU Awards include metrics for achieving Adjusted Operating Margin and Adjusted Measurement Cash Flow with target payouts ranging from 0% to 200%. In 2019, the performance-based RSU Awards include metrics for achieving Adjusted Operating Margin and Adjusted Free Cash Flow with the same target payout ranges. Of the different performance-based RSU tranches, the Company anticipates approximately 95% overall achievement and probability to vest.

There were no RSU MSPs granted during the three months ended March 29, 2020. RSU MSPs totaling 56,379 with per unit discount amounts representing a fair value of $11.10 per share were granted during the three months ended March 31, 2019.

Compensation expense related to our share-based plans for the three months ended March 29, 2020 and March 31, 2019 was $0.7 million and $1.4 million, respectively. The decrease in costs in the current period is primarily related to a delay in our annual grant as well as reduced achievement on certain performance-based awards. Compensation expense for the three months ended March 29, 2020 was recorded as follows: $0.6 million in selling, general and administrative expenses and $0.1 million in special charges related to the sale of our Instrumentation and Sampling business. The special charge amount related to the accelerated vesting of awards as a result of the transaction. Compensation expense for the three months ended March 31, 2019 was recorded in selling, general and administrative expenses. As of March 29, 2020, there were $13.0 million of total unrecognized compensation costs related to our outstanding share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 2.0 years.

The weighted average contractual term for stock options outstanding and options exercisable as of March 29, 2020 was 3.9 years and 3.5 years, respectively. The aggregate intrinsic values of stock options exercised, outstanding, and exercisable during the three months ended March 29, 2020 were insignificant.

The aggregate intrinsic value of RSU Awards settled during the three months ended March 29, 2020 was $1.1 million and the aggregate intrinsic value of RSU Awards outstanding and RSU Awards vested and deferred as of March 29, 2020 was $9.0 million and $0.0 million, respectively.

The aggregate intrinsic value of RSU MSPs settled during the three months ended March 29, 2020 was insignificant. The aggregate intrinsic value of RSU MSPs outstanding and RSU MSPs vested and deferred as of March 29, 2020 was insignificant.

International participants are issued Cash Settled Stock Unit Awards. As of March 29, 2020, there were 53,513 Cash Settled Stock Unit Awards outstanding compared to 45,681 as of December 31, 2019. During the three months ended March 29, 2020, the aggregate cash used to settle Cash Settled Stock Unit Awards was $0.7 million. As of March 29, 2020, we had $0.1 million of accrued expenses in other non-current liabilities associated with these Cash Settled Stock Unit Awards compared with $0.9 million as of December 31, 2019. Cash Settled Stock Unit Award related compensation costs for the three months ended March 29, 2020 and March 31, 2019 were $(0.1) million and $0.4 million, respectively. The decrease in cost is due primarily to the much lower stock price as of March 29, 2020. For the three months ended March 29, 2020, $(0.2) million was recorded as selling, general, and administrative expenses and $0.1 million was recorded as special charges related to the sale of our Instrumentation and Sampling business. The special charge amount related to the accelerated vesting of awards as a result of the transaction. For the three months ended March 31, 2019, compensation costs for Cash Settled Stock Unit Awards were recorded entirely in selling, general, and administrative expense.