Note 6. Stock-Based Compensation

On September 8, 2005, the Board of Directors approved the 2005 Stock Incentive Plan (the “2005 Plan”), which was later approved by the Company’s stockholders. Pursuant to the 2005 Plan, stock options, restricted shares, stock units, including restricted stock units (“RSU”s), and stock appreciation rights may be granted to employees, consultants, and outside directors of the Company. Options granted may be either incentive stock options or nonstatutory stock options. The Company initially reserved 5,000,000 shares of common stock for issuance under the 2005 Plan, effective upon the closing of the Company’s initial public offering on October 4, 2005. On June 8, 2009, the Company’s stockholders approved an amendment to the 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 3,980,000 shares. The amended and restated plan also extends the term under which awards may be granted under the 2005 Plan until January 27, 2019. On June 11, 2015, the Company’s stockholders approved an amendment to the amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,500,000 shares. On June 9, 2016, the Company’s stockholders approved an amendment to the amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,500,000 shares. On June 15, 2017, the Company’s stockholders approved an amendment to the amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,500,000 shares.

Stock Options

A summary of the stock option activity under the 2005 Plan for the nine months ended September 30, 2017 is as follows:



	Number of	Weighted-Average
	Shares	Exercise Price
	(In thousands)
Balance at December 31, 2016	3,606	$	25.07
Options granted	727	$	28.09
Options exercised	(569)	$	20.95
Options forfeited	(72)	$	28.12
Options expired	(4)	$	20.08
Balance at September 30, 2017	3,688	$	26.24
Exercisable at September 30, 2017	2,479	$	25.33
Vested and expected to vest at September 30, 2017	3,604	$	26.20

Restricted Stock Units

A summary of the RSU activity under the 2005 Plan for the nine months ended September 30, 2017 is as follows:


		Weighted-Average
	Number of	Grant Date Fair
	Shares	Value
	(In thousands)
Balance at December 31, 2016	871	$	28.42
RSUs granted	572	$	28.24
RSUs vested	(367)	$	28.59
RSUs cancelled	(90)	$	28.30
Balance at September 30, 2017	986	$	28.26

Restricted Stock in Lieu of Directors’ Fees

Outside members of the Company’s Board of Directors may elect to receive fully-vested restricted stock in lieu of cash compensation for services as a director. During the nine months ended September 30, 2017, the Company issued 4,820 shares of restricted stock to outside directors, with a grant date fair value of $150,000 and a weighted-average grant date fair value of $31.09 per share.

Employee Stock Purchase Plan

A total of 1,250,000 shares of common stock have been reserved for issuance under the Employee Stock Purchase Plan (“ESPP”). On June 15, 2017, the Company’s stockholders approved an amendment to the ESPP to increase the shares reserved for issuance under the ESPP by 1,250,000 shares and, 1,472,746 shares were available for issuance as of September 30, 2017. Shares are issued twice yearly at the end of each offering period. During the nine months ended September 30, 2017, 106,847 shares of common stock were issued under the ESPP. As of September 30, 2017, there was $229,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of two months.

Employee Stock-Based Compensation Expense

Share-based compensation expense recognized and included in the condensed consolidated statements of operations and comprehensive income (loss) was allocated as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
	(In thousands)				(In thousands)
Cost of product revenues	$	187	$	155	$	548	$	501
Research and development		1,378		1,108		4,209		3,596
Selling and marketing		1,325		1,359		4,315		4,234
General and administrative		2,065		2,091		6,185		5,771
Total	$	4,955	$	4,713	$	15,257	$	14,102