Common Stock and Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Common Stock and Stock-Based Compensation

Common Stock and Stock-Based Compensation

Common Stock

On October 30, 2018, the Company announced a new repurchase program approved by the Board pursuant to which the Company may repurchase of up to $150 million of the its outstanding common stock, consisting of (i) up to $50 million in repurchases pursuant to an accelerated share repurchase agreement (the “ASR”), with JPMorgan Chase Bank, N.A. (“JPMorgan”), and (ii) up to $100 million in additional repurchases (collectively, the “2018 Share Repurchase Program”). In connection with its approval of the 2018 Share Repurchase Program, the Board terminated the Company’s 2016 Share Repurchase Program and 2017 Share Repurchase Program in October 2018. Under the 2018 Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. Under the 2018 Share Repurchase Program, the additional repurchases have no time limit and may be suspended or discontinued completely at any time. The specific timing and amount of repurchases will vary based on available capital resources and other

financial and operational performance, market conditions, securities law limitations, and other factors. The repurchases will be made using the Company’s cash resources.

In connection with the 2018 Share Repurchase Program, on October 30, 2018, the Company entered into the ASR with JPMorgan to repurchase an aggregate of $50 million of the Company’s common stock. Under the terms of the ASR, the Company paid $50 million to JP Morgan on November 1, 2018, and received 702,988 shares, representing approximately 80% of the notional amount of the ASR, based on the closing price of $56.90 on October 29, 2018. Upon settlement of the ASR, the final number of shares repurchased were trued up based on the average of the daily volume weighted average share prices of the Company’s common stock, less a discount, during the term of the ASR. The Company received 297,146 shares on December 6, 2018, the termination date.

On August 9, 2016, the Company announced a share repurchase program approved by the Company’s board of directors authorizing the repurchase of up to $75.0 million of the Company’s common stock (the “Share Repurchase Program”). On August 9, 2017, the Company announced a new share repurchase program approved by the Board, under which the Company may repurchase up to an additional $100 million of its outstanding common stock (the “New Share Repurchase Program”). Under the Share Repurchase Program and the New Share Repurchase Program, the Company was authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act.

We repurchased the following shares of common stock with cash resources:

	Year Ended December 31,
	2019		2018		2017
Shares of common stock repurchased	317,429		1,348,563		674,857
Value of common stock repurchased	$	17,961	$	73,105	$	43,792

Stock-Based Compensation

In December 2007, the Company's board of directors approved the 2007 Incentive Compensation Plan (the "2007 Plan") enabling the Company to grant multiple stock-based awards to employees, directors and consultants, the most common being stock options and restricted stock awards. In November 2013, the Company's board of directors approved the 2014 Equity Incentive Plan (the "2014 Plan") which became effective on February 11, 2014. The 2007 Plan was terminated upon the effectiveness of the 2014 Plan and all shares available for issuance under the 2007 Plan were made available under the 2014 Plan. The 2014 Plan provides for the awards of incentive stock options, non-qualified stock options, restricted stock, restricted stock units and other stock-based awards. Awards generally vest equally over a period of four years from grant date. Vesting is accelerated under a change in control of the Company or in the event of death or disability to the recipient. In the event of termination, any unvested shares or options are forfeited. At the Company's annual meeting of stockholders held on August 4, 2015, the stockholders approved an amendment to the 2014 Plan to, among other things, increase the number of shares of common stock authorized for issuance thereunder by 500,000 shares. After accounting for such increase, and as of such amendment, the Company has reserved and made available 1,934,193 shares of common stock for issuance under the 2014 Plan.

During the year ended December 31, 2018, the Company introduced a new long-term incentive program with the objective to better align the share-based awards granted to management with the Company's focus on improving total shareholder return over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based restricted stock units ("RSUs") and performance-based stock units ("PSUs"). PSUs are comprised of awards that vest upon achievement of certain share price appreciation conditions.

Stock Options

The fair value of stock options granted to employees, directors, and consultants is estimated using the following assumptions:

	Year Ended December 31,
	2019	2018	2017
Risk-free interest rate	1.42% - 2.61%	2.30% - 3.07%	1.70% - 2.42%
Volatility	40.83% - 50.73%	43.76%	28.56% - 37.63%
Expected term (in years)	1.51 - 9.41 years	5.50 - 6.08 years	5.50 - 7.0 years
Expected dividend yield	0.0%	0.0%	0.0%

The following table summarizes information about stock option activity related to the 2014 Plan:

	Number of  Stock  Option  Shares		Weighted  Average  Exercise  Price (Per Share)		Non-  Exercisable	Exercisable
Outstanding at December 31, 2017	2,786,568		$	57.13	1,349,339	1,437,229
Granted	672,092		59.17
Exercised	(502,322	)	17.19
Forfeited or expired	(399,973	)
Outstanding at December 31, 2018	2,556,365		$	62.78	1,074,456	1,481,909
Granted	628,133		$	44.28
Exercised	(23,032	)	$	10.33
Forfeited or expired	(65,305	)
Outstanding at December 31, 2019	3,096,161		$	59.29	1,070,054	2,026,107

The weighted-average grant-date fair value of options granted during the year ended December 31, 2019, 2018, and 2017 was $22.18, $26.73, and $32.83, respectively. As of December 31, 2019, there was $19,051 of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of 2 years. The total intrinsic value of options exercised during the year ended December 31, 2019 was $1,068.

The weighted average contractual terms of options outstanding as of December 31, 2019, 2018, and 2017 was 6.8, 7.3, and 7.0 years, respectively.

The aggregate pre-tax intrinsic value of options outstanding as of December 31, 2019, 2018, and 2017 was $31.9 million, $10.7 million, and $33.7 million, respectively.

RSUs

Each vested time-based RSU represents the right of a holder to receive one of the Company’s common shares. The fair value of each RSU granted was estimated based on the trading price of the Company’s common shares on the date of grant.

The following table summarizes information about RSU activity related to the 2014 Plan:

	Number of Restricted Stock Units		Weighted  Average  Grant Date Fair Value (Per Share)
Non-vested at December 31, 2017	—		$	—
Granted	64,080		59.04
Vested	—		—
Forfeited	(9,861	)	$	59.14
Non-vested at December 31, 2018	54,219		$	59.02
Granted	211,829		$	42.17
Vested	(13,555	)	$	59.02
Forfeited	(1,278	)	$	52.19
Non-vested at December 31, 2019	251,215		$	44.84

As of December 31, 2019, there was $7,028 of unrecognized stock-based compensation expense related to non-vested RSUs that is expected to be recognized over a weighted average period of 3 years.

PSUs

The fair value of PSUs granted to employees was estimated using a monte carlo simulation model. Inputs used in the calculation include a risk-free interest rate of 2.06%, an expected volatility of 47%, contractual term of 3 years, and no expected dividend yield.

The following table summarizes information about PSU activity related to the 2014 Plan:

	Number of  Performance Stock Units		Weighted  Average Grant Date Fair Value (Per Share)
Non-vested at December 31, 2017	—		$	—
Granted	127,080		90.19
Vested	—		—
Forfeited	(9,861	)	$	90.19
Non-vested at December 31, 2018	117,219		$	90.19
Granted	—		$	—
Vested	—		$	—
Forfeited	(1,038	)	$	90.19
Non-vested at December 31, 2019	116,181		$	90.19

As of December 31, 2019, there was $3,098 of unrecognized stock-based compensation expense related to non-vested PSUs that is expected to be recognized over a weighted average period of 2 years.

The Company recognized stock-based compensation in its consolidated statements of income for the year ended December 31, 2019, 2018, and 2017 as follows:

	Year Ended December 31,
	2019		2018		2017
Stock options	$	16,394	$	15,333	$	15,429
PSUs	3,062		3,059		—
RSUs	2,542		690		—
Stock-based compensation expense	$	21,998	$	19,082	$	15,429
Selling, general and administrative	$	17,556	$	15,068	$	11,486
Research and development	4,442		4,014		3,943
Stock-based compensation expense	$	21,998	$	19,082	$	15,429