Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Note 11: Share-Based Compensation

Total share-based compensation expense related to the Company's RSUs, stock grant awards and ESPP was recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):


	Year Ended December 31,
	2023		2022		2021
Cost of revenue	$	18.1	$	12.0	$	15.6
Research and development	20.5		17.6		24.2
Selling and marketing	18.6		16.4		16.6
General and administrative	63.9		54.8		44.9

Share-based compensation expense	121.1		100.8		101.3
Income tax benefit	(25.4)		(21.2)		(21.3)
Share-based compensation expense, net of taxes	$	95.7	$	79.6	$	80.0

As of December 31, 2023, total unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $123.2 million, which is expected to be recognized over a weighted-average period of 1.4 years. Upon vesting of RSUs, stock grant awards or completion of a purchase under the ESPP, the Company issues new shares of common stock.

Share-Based Compensation Information

The fair value per unit of each RSU and stock grant award is determined on the grant date. Share-based compensation expense is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The annualized pre-vesting forfeitures for RSUs were estimated to be approximately 8% for the year ended December 31, 2023, 8% for the year ended December 31, 2022 and 6% for the year ended December 31, 2021.

Plan and Award Descriptions

On March 23, 2010, the Company adopted the Amended and Restated SIP which has been subsequently amended over the years primarily to increase the number of shares of common stock subject to all awards. Generally, RSUs granted under the Amended and Restated SIP vest ratably over three years for awards with service conditions and over two or three years for awards with performance or market conditions, or a combination thereof, and are settled in shares of the Company's common stock upon vesting. Generally, upon the termination of an RSU holder's employment, all unvested RSUs will immediately cancel, except under circumstances where the service condition has been fulfilled.

On May 20, 2021, the Company's stockholders approved certain amendments to the Amended and Restated SIP to extend the expiration date from 2022 to 2031 and to increase the number of shares of common stock subject to all awards by 22.5 million to 109.5 million. As of December 31, 2023, there was an aggregate of 37.1 million shares of common stock available for grant under the Amended and Restated SIP.

Restricted Stock Units

A summary of activity of RSUs during the year ended December 31, 2023 is as follows (number of shares in millions):


	Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested shares of RSUs at December 31, 2022	3.8	$	46.56
Granted	1.9	80.32
Achieved	0.3	54.16
Released	(2.4)	41.56
Forfeited	(0.4)	62.12
Nonvested shares of RSUs at December 31, 2023	3.2	69.39

The RSUs awared during 2023 include RSUs that vest upon satisfaction of service conditions and 0.6 million RSUs granted to certain officers and employees of the Company that vest upon the achievement of certain performance criteria and market conditions. The number of units expected to vest is evaluated each reporting period and compensation expense is recognized for those units for which achievement of the performance criteria is considered probable. Compensation expense for RSUs with market conditions is recognized based on the grant date fair value irrespective of the achievement of the condition. The fair value of the vested awards are based on the stock price as of the vesting dates, and during the years ended December 31, 2023, 2022 and 2021 totaled $202.6 million, $232.8 million and $123.5 million, respectively.

As of December 31, 2023, unrecognized compensation expense, net of estimated forfeitures related to non-vested RSUs granted under the Amended and Restated SIP with service, performance and market conditions, was $90.5 million, $18.7 million and $14.0 million, respectively. For RSUs with time-based service conditions, expense is being recognized over the vesting period; for RSUs with performance criteria, expense is recognized over the period when the performance criteria is expected to be achieved; for RSUs with market conditions, expense is recognized over the period in which the condition is assessed irrespective of whether it would be achieved or not. Unrecognized compensation cost for awards with certain performance criteria that are not expected to be achieved is not included here. Total compensation expense related to service-based, performance-based and market-based RSUs was $113.7 million for the year ended December 31, 2023, which included $64.0 million for RSUs with time-based service conditions that were granted in 2023 and prior that are expected to vest.

Employee Stock Purchase Plan

On February 17, 2000, the Company adopted the ESPP. During the years ended December 31, 2023, 2022 and 2021 employees

purchased approximately 0.4 million, 0.5 million and 0.7 million shares, respectively, under the ESPP. On May 20, 2021, the stockholders approved an amendment to the ESPP, which increased the number of shares available to be issued pursuant to the ESPP by 6.0 million to 34.5 million. As of December 31, 2023, there were approximately 7.3 million shares available for issuance under the ESPP. Total compensation expense related to the ESPP for the year ended December 31, 2023 was $7.4 million.