Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

We have three stock plans: our 2017 Omnibus Incentive Plan (“OIP”), our 2008 Equity Incentive Plan (the “2008 Plan”) and our 2003 Equity Incentive Plan (the “2003 Plan”) (collectively, the “Plans”). The OIP is the only remaining stock plan actively granting new stock options or units. The purpose of these stock plans was, and the OIP is, to grant incentive stock options to employees and non-qualified stock options, RSUs, PSOs, PSUs and other stock-based incentive awards to officers, directors, employees and consultants. The Plans are administered by our Board of Directors (the “Board”) or its delegates. The number, type, exercise price and vesting terms of awards are determined by the Board or its delegates in accordance with the terms of the Plans. The stock options granted expire on a date specified by the Board but generally not more than ten years from the grant date. Stock option grants to employees generally vest over four years while RSUs generally vest after three years.

2017 Omnibus Incentive Plan (OIP)

On May 11, 2017, our stockholders approved the OIP, which replaced the 2008 Plan. Stock options, RSUs, PSUs and PSOs have been granted under the OIP. Under the terms of the OIP, any cancellation, forfeiture or expiry of equity awards granted under the 2008 Plan roll into the availability under the OIP. There were 1,611,963 shares available for grant under the OIP as of March 31, 2020.

2008 Equity Incentive Plan

Our 2008 Plan became effective on March 18, 2008 and replaced our 2003 Plan. Under the terms of the 2008 Plan, all available shares in the 2003 Plan share reserve automatically rolled into the 2008 Plan. Any cancellations or forfeitures of granted stock options under the 2003 Plan also automatically rolled into the 2008 Plan. There are no shares available to grant under the 2008 Plan subsequent to the approval of the OIP.

Stock option and PSO activity is summarized as follows:



Stock Options	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2019	2,691,059		$	22.67
Granted	188,403		51.12
Forfeited	—		—
Exercised	(6,223	)	11.45
Outstanding as of March 31, 2020	2,873,239		$	24.56	5.7	$	54,796
Exercisable as of March 31, 2020	1,981,650		$	13.52	4.4	$	52,408
Expected to vest as of March 31, 2020	827,468		$	49.10	8.6	$	2,216



Performance Stock Options	Number of PSOs	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2019	30,000	$	21.45
Granted	—	—
Forfeited	—	—
Exercised	—	—
Outstanding as of March 31, 2020	30,000	$	21.45	6.8	$	512
Exercisable as of March 31, 2020	30,000	$	21.45	6.8	$	512

The table below summarizes certain additional information with respect to our options:



	Three Months Ended
	March 31,
(in thousands, except per option amounts)	2020		2019
Aggregate intrinsic value of options exercised	$	194	$	16,059
Cash received from the exercise of stock options	71		2,923
Weighted average grant date fair value per option	$	28.51	$	42.35

The total compensation cost of options granted but not yet vested was $22.4 million as of March 31, 2020, which is expected to be recognized over a weighted average period of approximately three years.

RSU and PSU activity is summarized as follows:



	Restricted Stock Units				Performance Stock Units
	Number of RSUs		Weighted Average Grant Date Fair Value		Number of PSUs	Weighted Average Grant Date Fair Value
Units outstanding as of December 31, 2019	270,052		$	41.70	90,020	$	55.06
Granted	77,214		51.18		51,839	60.36
Forfeited	(1,500	)	39.94		—	—
Vested	(77,260	)	26.71		—	—
Units outstanding as of March 31, 2020	268,506		$	48.75	141,859	$	57.00

Consistent with prior years, during 2020, we granted awards to certain participants in the form of PSUs. These PSUs will vest at the end of a three-year performance period only if long-term financial goals have been achieved, with the vested shares then increased or decreased based on our total shareholder return relative to the companies in the Russell 2000 Index during the same period. The 51,839 2020 PSUs were granted at “target” levels; however, for share pool purposes, we have reserved an additional 51,839 shares in the event that the combined financial performance and market conditions achieve maximum levels. For the 2018, 2019 and 2020 PSUs combined, we have 141,859 shares reserved as of March 31, 2020 in the event that actual results achieve “maximum” levels. Should any PSU grant not achieve the maximum level, the excess of the maximum shares reserved over the “achieved” level will be returned to the share pool availability.

Additional information about our RSUs is summarized as follows:



	Three Months Ended
	March 31,
(in thousands)	2020		2019
Aggregate market value of RSUs vested	$	4,135	$	11,554

The total compensation cost of RSUs and PSUs granted but not yet vested, inclusive of the PSUs for which vesting has been deemed probable as of March 31, 2020, was $9.9 million, which is expected to be recognized over a weighted average period of approximately two years. Additionally, there were 588,359 RSUs vested but not released at March 31, 2020.

Employee Stock Purchase Plan

In May 2017, our stockholders approved the BioTelemetry, Inc. 2017 Employee Stock Purchase Plan (“2017 ESPP”) with 500,000 shares reserved for issuance, which replaced the 2008 Employee Stock Purchase Plan. Substantially all of our employees are eligible to participate in the 2017 ESPP. Under the 2017 ESPP, each participant may purchase option value of our shares, through payroll deductions, not to exceed $25,000 of grant date fair value in a calendar year. The purchase price per share is equal to the lower of 85% of the closing market price on the first day of the offering period, or 85% of the closing market price on the day of purchase. Proceeds received from the issuance of shares are credited to stockholders’ equity in the period that the shares are issued. Purchases under the 2017 ESPP are made in March and September. For the three months ended March 31, 2020, an aggregate of 59,697 shares were purchased in accordance with the 2017 ESPP. Net proceeds from the issuance of shares of common stock under the 2017 ESPP for the three months ended March 31, 2020 were $1.6 million. At March 31, 2020, 172,974 shares remain available for purchase under the 2017 ESPP.

Our aggregate stock-based compensation expense is summarized as follows:



	Three Months Ended
	March 31,
(in thousands)	2020			2019
Stock options	$	2,674		$	1,459
Restricted stock units	1,307			919
Performance stock units	(831		)	(81		)
Employee stock purchase plan	232			252
Total stock-based compensation expense	$	3,382		$	2,549