Employee Benefits and Share-Based Compensation

Stock Based plans

For a detailed explanation of our stock plan and subsequent changes please refer to Note 16, Employee Benefits and Stock-Based Compensation, of our Annual Report on Form 10-K for the year ended December 31, 2014.

Share-based compensation expense

The following table sets forth the total share-based compensation expense recognized in our Condensed Consolidated Statements of Operations:



	Three Months Ended				Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(In thousands)
Cost of product and service revenues	$	532	$	264	$	1,049	$	532
Research and development	451		380		885		749
Selling, general and administrative	2,653		2,076		5,367		4,168
Total share-based compensation expense	$	3,636	$	2,720	$	7,301	$	5,449

The following weighted average assumptions are used to value share options and Employee Stock Purchase Plan ("ESPP") shares issued pursuant to our equity incentive plans for the three and six months ended June 30, 2015 and June 30, 2014:



	Three Months Ended				Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(In thousands)
Stock Option Plans
Expected life, years	5.04		4.77		5.04		4.79
Expected volatility, %	29.3	%	35.9	%	32.2	%	35.4	%
Risk free interest rate, %	1.51	%	1.62	%	1.58	%	1.52	%
Estimated forfeiture rate %	2.5	%	2.5	%	2.5	%	2.5	%
Dividend yield, %	—	%	—	%	—	%	—	%



	Three Months Ended				Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(In thousands)
Employee Stock Purchase Plan
Expected life, years	0.5-2.0		0.5-2.0		0.5-2.0		0.5-2.0
Expected volatility, %	28.52%-37.53%		29.56%-39.84%		23.75%-35.67%		29.56%-39.84%
Risk free interest rate, %	0.03%-0.72%		0.03%-0.53%		0.03%-0.72%		0.03%-0.53%
Estimated forfeiture rate %	—	%	—	%	—	%	—	%
Dividend yield, %	—	%	—	%	—	%	—	%

Stock option and restricted stock activity

Stock options activity

The following table summarizes the share option activity under the Company’s equity incentive plans during the six months ended June 30, 2015:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Years	Aggregate Intrinsic Value⁽¹⁾
	(In thousands, except per share data)
Stock Options
Outstanding at December 31, 2014	2,672		$	19.02	6.5
Granted	200		34.10
Exercised	(340	)	15.54
Expired	(2	)	15.57
Forfeited	(67	)	23.30
Outstanding at June 30, 2015	2,463		$	20.60	6.5	$	42,138
Exercisable at June 30, 2015	1,425		$	16.46	4.9	$	30,277
Vested and expected to vest at June 30, 2015	2,435		$	20.50	6.4	$	41,919

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⁽¹⁾	Intrinsic value is calculated as the difference between the market value or closing price of our common stock as of the last trading day of the year as reported by the NASDAQ Global Select Market, and the exercise price of the option.

The weighted-average fair value per share of options granted during the three and six months ended June 30, 2015, was $10.09 and $10.61, respectively and the weighted-average fair value per share of options granted during the three and six months ended June 30, 2014 was $9.00 and $8.29, respectively. The intrinsic value of options exercised during the three and six months ended June 30, 2015 was $4.3 million and $6.7 million, respectively. The intrinsic value of options exercised during the three and six months ended June 30, 2014 was $5.3 million and $7.9 million, respectively.

As of June 30, 2015, total unrecognized compensation cost related to unvested stock options was $8.8 million, which is expected to be recognized over a weighted-average vesting period of 2.7 years.

Restricted stock activity

Restricted stock activity under the Company’s equity incentive plans in the six months ended June 30, 2015 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Restricted Stock Units (RSUs)
Outstanding at December 31, 2014	399		$	24.00	1.5
Granted	65		34.19
Vested	(77	)	21.57
Forfeited	(23	)	22.35
Outstanding and unvested at June 30, 2015	364		$	26.45	1.3	$	13,714
Expected to vest at June 30, 2015	353				1.3	$	13,329

The weighted-average grant date fair value per share of RSUs granted during the six months ended June 30, 2015 was $34.19, respectively. The weighted-average grant date fair value per share of RSUs granted during the six months ended June 30, 2014 was $26.46, respectively.

As of June 30, 2015, total unrecognized compensation expense related to RSUs was $8.4 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.4 years.



	Number of Shares		Weighted-Average Grant Date Fair Value
	(In thousands, except per share data)
Restricted Stock Awards (RSAs)
Outstanding at December 31, 2014	36		$	26.47
Granted	37		36.05
Vested	(41	)	26.47
Forfeited	(1	)	27.65
Outstanding and unvested at June 30, 2015	31		$	35.95

The weighted-average grant date fair value per share of RSAs granted during the six months ended June 30, 2015 was and $36.05.

As of June 30, 2015, total unrecognized compensation cost related to RSAs was $1.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.9 years.

Performance-based restricted stock units activity

Performance-based restricted stock activity under the Company’s equity incentive plans in the six months ended June 30, 2015 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Unit
	(In thousands, except per share data)
Performance-based Restricted Stock Units (PSUs)
Outstanding at December 31, 2014	233		$	17.96
Granted	60		29.56
Vested	(70	)	18.91
Forfeited	(27	)	14.69
Outstanding and unvested at June 30, 2015	196		$	21.63

The weighted-average grant date fair value per share of PSUs granted during the six months ended June 30, 2015 and June 30, 2014 was $29.56 and $16.49, respectively. The total fair value of PSUs that vested during the six months ended June 30, 2015 and June 30, 2014 was $2.6 million and $2.1 million, respectively.

As of June 30, 2015, total unrecognized compensation cost related to PSUs was approximately $2.5 million, which is expected to be recognized over the remaining weighted-average period of 1.4 years.

Employee Stock Purchase Plan (ESPP) activity

The unrecognized compensation cost related to the shares to be purchased under our ESPP was approximately $2.2 million as of June 30, 2015, and is expected to be recognized over a weighted-average period of 0.1 years.

Summary of shares reserved for future issuance under equity incentive plans

We had the following ordinary shares reserved for future issuance under its equity incentive plans as of June 30, 2015:



	Number of Shares
	(In thousands)
Share options outstanding	2,463
Restricted share awards outstanding	559
Shares authorized for future issuance	4,637
ESPP shares available for future issuance	3,393
Total shares reserved for future issuance as of June 30, 2015	11,052