Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

In July 2015, the Company adopted the 2015 Incentive Compensation Plan (as amended, the “Plan”), pursuant to which the Compensation Committee of the Company is authorized to grant up to 7,150,000 shares to officers and employees of the Company, in the form of equity-based awards, including time or performance based options and restricted stock.

In June 2019, the Company's shareholders approved the 2019 Employee Stock Purchase Plan (the "ESPP"), which was effective July 1, 2019. 500,000 shares of common stock are reserved for issuance under the ESPP. As of June 30, 2020, 253,042 shares had been issued under the ESPP.

Stock compensation expense for equity-classified and liability-classified awards was $1.0 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively. Stock compensation expense for equity-classified and liability-classified awards was $1.8 million and $1.2 million for the six months ended June 30, 2020 and 2019, respectively. Stock compensation expense is recognized in cost of goods sold, selling, general and administrative expenses and research and development expenses. At June 30, 2020, there was $5.7 million of unrecognized compensation cost relating to outstanding unvested equity instruments expected to be recognized over the weighted average period of 2.1 years.

On April 14, 2020, the Company granted the following share-based awards to members of management employed in the United States. These awards will be settled in shares of the Company's common stock and are equity-classified. The grant date fair value of the time-based award will be recognized on a straight-line basis over the vesting period. The grant date fair value of the performance-based award will be recognized on a straight-line basis over the vesting period based on the probability of achieving the performance condition. The performance-based restricted stock units each have a performance period that ends on December 31, 2022.


			Number of shares
Time-based restricted stock			1,004,979
Performance-based restricted stock units			896,766
Total			1,901,745

On April 14, 2020, the Company also granted the following share-based awards to members of management employed in countries outside of the United States. These awards will be settled in cash and are liability-classified. Therefore, the fair value of these liability-classified awards will be re-measured on each balance sheet date. The performance-based phantom shares each have a performance period that ends on December 31, 2022.


			Number of shares
Time-based phantom shares			163,462
Performance-based phantom shares			83,704
Total			247,166

The performance-based restricted stock units and phantom shares were valued with a Monte Carlo simulation model using the assumptions in the table below. Based on these assumptions, the grant date fair value of the performance-based restricted stock units was estimated to be $1.70 per share.


Volatility	65.8	%
Risk-free interest rate	0.27	%
Dividend yield	—	%
Grant date stock price	$1.65
Performance period	3.0 years

The fair value of the time-based restricted stock and the time-based phantom shares is equal to the closing price of the Company’s common stock on the grant date of the awards.