For the three and nine months ended September 30, 2020, share-based compensation expense totaled $5.3 million and $16.0 million, respectively (2019 — $5.5 million and $16.9 million, respectively) and is reflected in the following accounts in the Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Cost and expenses applicable to revenues	$	130	$	448	$	530	$	1,268
Selling, general and administrative expenses		5,151		4,983		15,325		15,371
Research and development		29		96		114		277
	$	5,310	$	5,527	$	15,969	$	16,916

For the three and nine months ended September 30, 2020, there was a decrease in share-based compensation expenses allocated to Costs and Expenses Applicable to Revenues and Research and Development, when compared to same period in 2019, due to the lower level of production during the COVID-19 global pandemic.

The following table summarizes the Company’s share-based compensation expense by each award type:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Stock Options	$	433	$	2,145	$	1,449	$	6,228
Restricted Share Units		3,430		2,933		10,866		9,175
Performance Stock Units		483		—		1,229		—
IMAX China Stock Options		600		86		701		230
IMAX China Long Term Incentive Plan Restricted Share Units		332		363		1,645		1,283
IMAX China Long Term Incentive Plan Performance Stock Units		32		—		79		—
	$	5,310	$	5,527	$	15,969	$	16,916

Included in the above table is an expense of $nil and $0.1 million in the three and nine months ended September 30, 2020, respectively (2019 — less than $0.1 million and less than $0.1 million, respectively) related to restricted share units granted to a certain advisor of the Company.

In the third quarter of 2020, IMAX China modified the terms of certain fully vested stock options to extend their contractual life by two years and recorded an associated expense of $0.6 million.

The following table summarizes the activity under the Company’s Stock Option Plan (“SOP”) and IMAX Amended and Restated Long Term Incentive Plan (as amended, “IMAX LTIP”) for the nine months ended September 30, 2020 and 2019:

	Number of Shares							Weighted Average Exercise Price Per Share
	2020			2019			2020			2019
Stock options outstanding, beginning of period		5,732,209			5,465,046		$		26.82	$	27.63
Granted		—			1,016,882				—		20.66
Exercised		—			(86,337	)			—		20.15
Forfeited		(23,633	)		(329,346	)			22.35		23.60
Expired		(772,665	)		(299,134	)			27.03		25.82
Cancelled		(18,483	)		(26,281	)			27.97		31.08
Stock options outstanding, end of period		4,917,428			5,740,830				26.80		26.82
Stock options exercisable, end of period		4,315,484			4,511,208				27.32		27.76

Stock options are no longer granted under the Company’s previously approved SOP.

The following table summarizes the activity in respect of RSUs issued under the IMAX LTIP for the nine months ended September 30, 2020 and 2019:

	Number of Awards						Weighted Average Grant Date Fair Value Per Share
	2020			2019				2020			2019
RSUs outstanding, beginning of period		1,065,347			1,033,871		$		23.17	$		25.70
Granted		1,050,385			649,389				15.35			22.33
Vested and settled		(386,451	)		(367,020	)			21.59			26.66
Forfeited		(54,933	)		(206,593	)			19.70			23.77
RSUs outstanding, end of period		1,674,348			1,109,647				18.75			23.77

In the first quarter of 2020, the Company expanded its share-based compensation program to include performance stock units (“PSUs”). The Company grants two types of PSU awards, one which vests based on a combination of employee service and the achievement of certain EBITDA-based targets and one which vests based on a combination of employee service and the achievement of certain stock-price targets. These awards vest over a three-year performance period. The grant date fair value of PSUs with EBITDA-based targets is equal to the closing price on date of grant or the average closing price of the Company’s common stock for five days prior to the date of grant. The grant date fair value of PSUs with stock-price targets is determined on the grant date using a Monte Carlo simulation, which is a valuation model that takes into account the likelihood of achieving the stock-price targets embedded in the award (“Monte Carlo Model”). The compensation expense attributable to each type of PSU is recognized on a straight-line basis over the requisite service period.

The fair value determined by the Monte Carlo Model is affected by the Company’s stock price, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, market conditions as of the grant date, the Company’s expected stock price volatility over the term of the awards, and other relevant data. The compensation expense is fixed on the date of grant based on the dollar value granted.

The amount and timing of compensation expense recognized for PSUs with EBITDA-based targets is dependent upon management's assessment of the likelihood and timing of achieving these targets. If, as a result of management’s assessment, it is projected that a greater number of PSUs will vest than previously anticipated, a life-to-date adjustment to increase compensation expense is recorded in the period such determination is made. Conversely, if, as a result of management’s assessment, it is projected that a lower number of PSUs will vest than previously anticipated, a life-to-date adjustment to decrease compensation expense is recorded in the period such determination is made. The Company will complete an assessment of the likelihood of achieving these targets in the fourth quarter of 2020 in connection with its annual budget process for 2021. As a result, no adjustment to compensation expense has been recognized in the three and nine months ended September 30, 2020, respectively, related to the PSUs granted in 2020.

Compensation expense is not adjusted for estimated forfeitures, but is instead adjusted based upon the actual forfeiture of the award.

The following table summarizes the activity in respect of PSUs issued under the IMAX LTIP for the nine months ended September 30:

	Number of Awards					Weighted Average Grant Date Fair Value Per Share
	2020			2019			2020			2019
Granted		370,265			—	$		15.66	$		—
Forfeited		(2,526	)		—			14.84			—
PSUs outstanding, end of period		367,739			—			15.67			—

In 2017, the Company’s Board of Directors approved a new $200.0 million common stock share repurchase program which would have expired on June 30, 2020. In June 2020, the Board of Directors approved a 12-month extension of this program which will now expire on June 30, 2021. The repurchases may be made either in the open market or through private transactions, subject to market conditions, applicable legal requirements and other relevant factors. The Company has no obligation to repurchase shares and the share repurchase program may be suspended or discontinued by the Company at any time. There were no common stock repurchases during the three months ended September 30, 2020. During the nine months ended September 30, 2020, the Company repurchased 2,484,123 shares of its common stock at an average price of $14.72 per share, excluding commissions. During the three and nine months ended September 30, 2019, the Company repurchased 46,615 and 134,384 common shares, respectively at an average price of $20.35 and $19.76 per share, respectively excluding commissions.

The total number of shares purchased during the three and nine months ended September 30, 2020 does not include nil and 200,000 common shares (2019 — 45,000 and 445,000 common shares, respectively) purchased in the administration of employee share-based compensation plans, at an average price of $nil and $15.43 per share (2019 — $21.52 and $22.83 per share, respectively).

As at September 30, 2020, the IMAX LTIP trustee held 17,578 shares (December 31, 2019 — 187,020 shares) purchased for $0.3 million (December 31, 2019 — $4.0 million) in the open market to be issued upon the settlement of RSUs and certain stock options. The shares held with the trustee are recorded at cost and are reported as a reduction against capital stock on the Condensed Consolidated Balance Sheets.

In 2019, IMAX China announced that its shareholders granted its Board of Directors a general mandate authorizing the Board, subject to applicable laws, to repurchase shares of IMAX China in an amount not to exceed 10% of the total number of issued shares as at June 6, 2019 (35,605,560 shares). The share repurchase program expired on the date of the 2020 Annual General Meeting of IMAX China on June 11, 2020. During the 2020 Annual General Meeting, shareholders approved the repurchase of shares of IMAX China not to exceed 10% of the total number of issued shares as of June 11, 2020 (34,848,398 shares). This program will be valid until the 2021 Annual General Meeting of IMAX China. The repurchases may be made in the open market or through other means permitted by applicable laws. IMAX China has no obligation to repurchase its shares and the share repurchase program may be suspended or discontinued by IMAX China at any time. During the three and nine months ended September 30, 2020, IMAX China repurchased nil and 906,400 shares of its common stock, respectively, at an average price of HKD nil and HKD 13.13 per share, respectively (U.S. $nil and U.S. $1.69, respectively). During the three and nine months ended September 30, 2019, IMAX China repurchased 1,025,800 and 8,051,500 of its common shares, respectively, at an average price of HKD 17.90 and HKD 18.63 per share, respectively (U.S. $2.29 and U.S. $2.38, respectively).

The following table reconciles the denominator of the basic and diluted weighted average share computations:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Weighted average number of common shares (000's):
Issued and outstanding, beginning of period		58,857		61,331			61,176			61,434
Weighted average number of shares repurchased, net of shares issued during the period		2		(27	)		(1,816	)		(97	)
Weighted average number of shares used in computing basic income per share		58,859		61,304			59,360			61,337
Assumed exercise of stock options, RSUs and PSUs, net of shares assumed repurchased, if dilutive		—		175			—			172
Weighted average number of shares used in computing diluted income per share		58,859		61,479			59,360			61,509

For the three and nine months ended September 30, 2020, the calculation of diluted weighted average shares outstanding excludes 6,959,515 and 6,959,515 shares, respectively (2019 — 5,289,172 and 5,902,208 shares, respectively) of common shares issuable upon the vesting of RSUs and PSUs and the exercise of stock options as the effect would be anti-dilutive.