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Stock Compensation Plans
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock Compensation Plans STOCK COMPENSATION PLAN
We have one compensation plan that provides for the granting of stock options and other share-based awards to key employees and non-employee members of the Board of Directors. The 2022 Equity Incentive Plan (“2022 Plan”) provides for granting options, restricted stock, restricted stock units, dividend equivalent rights or stock appreciation rights to employees and non-employee directors.
We were authorized to grant awards for up to 750,000 shares of common stock under the 2022 Plan, as well as any shares underlying awards outstanding under our 2014 Stock Incentive Plan (the “2014 Plan”) that thereafter terminate or expire unexercised or are canceled, forfeited or lapse for any reason as of the effective date of the 2022 Plan. The 2022 Plan is the successor to and continuation of the 2014 Plan, no additional awards may be granted under the 2014 Plan. All outstanding awards previously granted under the 2014 Plan will remain subject to its previous terms.
There were 22,667 options outstanding at December 31, 2022 under the 2014 Plan at exercise prices between $33.05 and $61.30. The options outstanding under the 2014 Plan have a 7-year term and generally vest over a 3-year period. There were no options outstanding at December 31, 2022 under the 2022 Plan.
Upon election to the Board, each non-employee director receives an initial equity grant of shares of restricted common stock with a value equal to $100,000, calculated using the closing share price on the date of the non-employee director’s election to the Board. The initial restricted stock grant vests on the third anniversary of the grant date, subject to the non-employee director’s continued membership on the Board. Annually, the non-employee directors are granted restricted shares equal to $175,000 on the first business day following the annual meeting of shareholders, calculated using the closing price of our common stock on that day. The shares of restricted stock granted annually to our non-employee directors and our independent Chairman of the Board vest on the day prior to the following year’s annual meeting date, subject to a non-employee director’s continued membership on the Board. We record compensation cost associated with our restricted stock grants on a straight-line basis over the vesting term. Our non-employee directors also may elect to have their annual cash retainers and annual equity retainers paid in the form of deferred stock units pursuant to the 2022 Plan and the 2018 Non-Employee Director Deferred Compensation Plan. Each deferred stock unit represents the right to receive one share of our common stock upon the non-employee director's separation of service from the Company. We record compensation cost associated with our deferred stock units over the period of service.
Annually, upon approval by our Compensation Committee, we grant stock-based awards, which historically have been in the form of restricted stock units, to certain employees. We also have historically granted restricted stock units to certain new employees throughout the year. The fair value of these stock-based awards is determined by using (a) the current market price of our common stock on the grant date in the case of restricted stock units without a market condition, (b) the Monte Carlo Simulation valuation model in the case of market-based restricted stock units with a market condition.
For the stock-based awards granted in 2022, 2021 and 2020, the time-based restricted stock units vest in three equal annual installments beginning one year after the grant date. The market-based restricted stock unit awards vest at the end of the 3-year performance period if the applicable market-based measure is achieved. The related stock-based compensation expense will be recognized over the requisite service period, taking into account the probability that we will satisfy the performance measure. The market-based restricted stock units granted in 2022, 2021 and 2020 will be earned and will vest based upon our total shareholder return (“TSR”) relative to the TSR attained by companies within our defined benchmark group, the Russell 2000 Growth Index. Due to the TSR presence in these market-based restricted stock units, the fair value of these awards was determined using the Monte Carlo Simulation valuation model. We expense these market condition awards over the three-year vesting period regardless of the value the award recipients ultimately receive.
The Monte Carlo Simulation valuation model incorporates assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. The weighted-average grant-date fair value of the market-based restricted stock units that were granted during 2022, 2021 and 2020 valued using the Monte Carlo Simulation valuation model was $68.62, $145.67 and $80.38, respectively. For market-based restricted stock units granted during 2022, 2021 and 2020 valued using the Monte Carlo Simulation valuation model, we used the following assumptions:
Year ended December 31
202220212020
Risk-free interest rate2.0 %0.2 %1.2 %
Expected dividend yield— %— %— %
Term3 years3 years3 years
Expected volatility42.5 %45.0 %40.0 %

Historical information was the primary basis for the selection of the expected dividend yield and expected volatility. The risk-free interest rate was based on the yields of U.S. zero coupon issues and U.S. Treasury issues, with a term equal to the term of the award being valued.
A summary of stock option activity and weighted average exercise prices follows:
OptionsWeighted-
Average
Exercise Price		Weighted-Average
Remaining
Contractual Term
(Years)		Aggregate Intrinsic
Value as of
December 31, 2022
Outstanding at January 1, 202244,524 $56.11 
Granted— — 
Forfeited(21,857)59.97 
Exercised— — 
Outstanding at December 31, 202222,667 $52.39 1.8$— 
Options exercisable at December 31, 202222,667 $52.39 0.2$— 
As no stock options were exercised during the year ended December 31, 2022, the aggregate intrinsic value of stock options exercised was zero. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 and 2020 was $3.0 million and $4.2 million, respectively. No stock options vested during the year ended December 31, 2022. The total fair value of stock options vested during the years ended December 31, 2021 and 2020 was $0.2 million and $0.8 million, respectively.
The following table summarizes the restricted stock and restricted stock unit activity and weighted-average grant date fair values for the year ended December 31, 2022:
SharesWeighted-Average
Grant Date
Fair Value
Non-vested at January 1, 2022350,579 $79.11 
Granted446,701 50.66 
Forfeited(99,477)68.02 
Vested(119,868)65.45 
Non-vested at December 31, 2022577,935 $61.86 
We recorded total stock-based compensation expense associated with our stock incentive plans of $13.3 million, $11.5 million and $8.3 million in 2022, 2021 and 2020, respectively.
As of December 31, 2022, there was $21.5 million in total unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements. The expense is expected to be recognized over a weighted-average period of 1.96.
The following table summarizes total stock-based compensation expense for each of the line items on our consolidated statement of operations:
Years ended December 31,
202220212020
Cost of Sales
Product$889 $566 $356 
Service161 69 346 
Total cost of sales$1,050 $635 $702 
Operating Expenses
Selling, general and administrative$9,656 $8,985 $6,327 
Research and development2,611 1,836 1,285 
Total operating expenses$12,267 $10,821 $7,612 
Total stock-based compensation$13,317 $11,456 $8,314