Stock-Based Compensation

Equity Incentive Plans

As of December 31, 2019, the Company’s approved equity incentive plans included the 2015 Equity Incentive Plan (“2015 Plan”), the 2013 Equity Incentive Plan (“2013 Plan”), and the 2008 Equity Incentive Plan (“2008 Plan”). These plans are administered by the Board of Directors and permit the granting of stock options, stock appreciation rights, restricted stock, restricted stock units and dividend equivalent rights (“DERs”) to employees, officers, directors and consultants of the Company.

The Company has certain stock option and restricted stock awards outstanding under each of its equity incentive plans but, upon adoption of the 2015 Plan, no longer grants new equity awards under its 2008 and 2013 Plans. The Company adopted its 2015 Plan in June 2015 and subsequently amended the plan in April 2016, 2017 and 2019 which increased the common stock reserved for issuance under the plan to an aggregate 6,580,277 shares.

Stock-based compensation expense recognized in the consolidated statements of operations is summarized below:



	Year Ended December 31,
(in thousands)	2019		2018		2017
Cost of goods sold	$	2,091	$	1,140	$	1,692
Sales and marketing	1,953		1,244		640
General and administrative	6,990		4,990		2,964
Research and development	1,458		1,344		632
Total stock-based compensation expense	$	12,492	$	8,718	$	5,928

Stock Options

Stock option awards under the 2015 Plan are granted with an exercise price equal to the fair value of the Company’s common stock at the date of grant. All option awards have a ten-year contractual term.

A summary of option activity for 2019 is presented below:



	Total Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance at January 1, 2019	357,075		$	17.50
Options granted	—		$	—
Options exercised	(67,558	)	$	17.37
Options cancelled and expired	(17,293	)	$	18.66
Outstanding at December 31, 2019	272,224		$	17.44	3.7	1,096,000
Exercisable at December 31, 2019	272,224		$	17.44	3.7	1,096,000

During the years ended December 31, 2019, 2018 and 2017, 67,558, 192,550 and 465,232 options were exercised having aggregate intrinsic values of $0.6 million, $2.4 million and $5.1 million, respectively.

Restricted Stock

A summary of restricted stock awards and restricted stock units activity for 2019 is presented below:



	Shares		Weighted- Average Grant Date Fair Value Per Share
Nonvested balance at January 1, 2019	1,508,539		$	9.51
Granted	409,821		$	23.33
Vested	(795,503	)	$	8.52
Forfeited	(91,085	)	$	15.84
Nonvested balance at December 31, 2019	1,031,772		$	15.20

As of December 31, 2019, there was $9.9 million of unrecognized compensation expense related to outstanding restricted stock, which is expected to be recognized over a weighted-average period of 2.0 years.

The weighted average grant-date fair value for restricted stock granted during the fiscal years ended December 31, 2019, 2018 and 2017 was $23.33, $15.46 and $12.94 per share, respectively. The total fair value of restricted stock vested in fiscal years 2019, 2018 and 2017 was $6.8 million, $4.3 million and $2.9 million, respectively.

Performance Restricted Stock Awards

Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly. The performance targets include the achievement of internal performance targets only.

A summary of performance restricted stock award activity for 2019 is presented below:



	Shares		Weighted- Average Grant Date Fair Value Per Share
Nonvested balance at January 1, 2019	241,880		$	16.71
Granted	—		$	—
Vested	—		$	—
Forfeited	(15,870	)	$	18.10
Nonvested balance at December 31, 2019	226,010		$	16.62

As of December 31, 2019, there was $0.4 million of unrecognized compensation expense related to outstanding performance restricted stock which is expected to be recognized over a weighted-average period of 0.2 years.

The weighted average grant-date fair value for performance restricted stock granted during the fiscal year ended December 31, 2017 was $16.69 per share.

Total Stockholder Return Restricted Stock Awards (“TSR Awards”)

During the years ended December 31, 2019 and 2018, the Company granted total stockholder return (“TSR”) Awards that include a three-year market condition where the performance measurement period is three years. Vesting of the TSR Awards is based on the Company’s level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year period and is also subject to the continued employment of the grantees. The number of shares that are earned over the performance period ranges from 0% to 200% of the initial award. The fair value of these awards are based on a Monte Carlo Simulation valuation model with the following assumptions:



	Year Ended December 31,
	2019		2018
Expected volatility	71.7	%	84.3	%
Risk-free interest rate	2.4	%	2.4	%
Expected life (in years)	2.9		2.8
Expected dividend yield	—		—

A summary of TSR Award activity for 2019 is presented below:



	Shares		Weighted- Average Grant Date Fair Value Per Share
Nonvested balance at January 1, 2019	179,913		$	22.76
Granted	152,869		$	39.92
Vested	—		$	—
Forfeited	(26,552	)	$	31.64
Nonvested balance at December 31, 2019	306,230		$	30.56

As of December 31, 2019, there was $5.8 million of unrecognized compensation expense related to outstanding performance restricted stock which is expected to be recognized over a weighted-average period of 1.9 years.

The weighted average grant-date fair value for TSR Awards granted during the fiscal years ended December 31, 2019 and 2018 was $39.92 and $22.76 per share, respectively.

Employee Stock Purchase Plan

In April 2017, the Company’s stockholders approved the 2017 Employee Stock Purchase Plan (“2017 ESPP”), which authorized the issuance of up to 250,000 shares of common stock thereunder. Under the terms of the 2017 ESPP, eligible U.S. employees can elect to acquire shares of the Company’s common stock through periodic payroll deductions during a series of six month offering periods, which will generally begin in March and September of each year. Purchases under the 2017 ESPP are effected on the last business day of each offering period at a 15% discount to the closing price on that day. The 2017 ESPP was implemented, subject to stockholder approval, on March 10, 2017, and the first purchases thereunder were made on September 13, 2017.