Employee Benefits and Share-Based Compensation

Stock based plans

For a detailed explanation of the Company's stock plans and subsequent changes, please refer to Note 11, Employee Benefits and Stock-Based Compensation, of its Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017.

Share-based compensation expense

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



	Three months ended
	March 31, 2017		March 31, 2016
	(In thousands)
Cost of product and service revenues	$	982	$	549
Research and development	897		641
Selling, general and administrative	3,632		2,701
Total share-based compensation expense	$	5,511	$	3,891

The following weighted average assumptions are used to value stock options and Employee Stock Purchase Plan ("ESPP") shares issued pursuant to the Company's equity incentive plans for the three months ended March 31, 2017 and 2016:



	Three months ended
	March 31, 2017		March 31, 2016
Stock Option Plans
Expected life, years	4.67		4.92
Expected volatility, %	31.1	%	32.6	%
Risk free interest rate, %	1.89	%	1.40	%
Estimated forfeiture rate %	7.7	%	8.6	%
Dividend yield, %	—	%	—	%



	Three months ended
	March 31, 2017		March 31, 2016
Employee Stock Purchase Plan
Expected life, years	0.5-2.0		0.5-2.0
Expected volatility, %	25.8-32.8%		25.8-34.8%
Risk free interest rate, %	0.52-1.31%		0.26-0.79%
Dividend yield, %	—	%	—	%

Stock options activity

The following table summarizes the share option activity under the Company’s equity incentive plans during the three months ended March 31, 2017:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Stock Options
Outstanding at December 31, 2016	3,214		$	26.06	7.3	$	26,331
Granted	363		36.67
Exercised	(188	)	22.86
Expired	(1	)	32.59
Forfeited	(38	)	31.72
Outstanding at March 31, 2017	3,350		$	27.33	7.4	$	44,631
Exercisable at March 31, 2017	1,493		$	20.88	5.5	$	29,519
Vested and expected to vest at March 31, 2017 and thereafter	3,168		$	26.96	7.3	$	43,388

The weighted-average fair value per share of options granted during the three months ended March 31, 2017 and 2016 was $10.86 and $8.51, respectively. The intrinsic value of options exercised during the three months ended March 31, 2017 and 2016 was $2.9 million and $0.7 million, respectively.

As of March 31, 2017, total unrecognized compensation cost related to unvested stock options was $15.4 million, which is expected to be recognized over a weighted-average vesting period of 3.0 years.

Restricted stock activity

The following table summarizes the restricted stock activity under the Company’s equity incentive plans during the three months ended March 31, 2017:



	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, 2016	505		$	31.42	1.6	$	17,135
Granted	74		36.57
Vested	(43	)	28.12
Forfeited	(9	)	31.97
Outstanding and unvested at March 31, 2017	527		$	32.39	1.5	$	21,418

The weighted-average grant date fair value per share of RSUs granted during the three months ended March 31, 2017 and March 31, 2016 was $36.57 and $27.77, respectively.

As of March 31, 2017, total unrecognized compensation expense related to RSUs was $14.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.7 years.



	Number of Shares	Weighted-Average Grant Date Fair Value
	(In thousands, except per share data)
Restricted Stock Awards ("RSAs")
Outstanding at December 31, 2016	30	$	31.57
Granted	—
Vested	—
Forfeited	—
Outstanding and unvested at March 31, 2017	30	$	31.57

As of March 31, 2017, total unrecognized compensation cost related to RSAs was $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.16 years.

Performance-based restricted stock unit activity

The following table summarizes the performance-based restricted stock activity under the Company’s equity incentive plans during the three months ended March 31, 2017:



	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, 2016	184		$	24.89
Granted	126		32.37
Vested	(31	)	24.66
Forfeited	—		—
Outstanding and unvested at March 31, 2017	279		$	28.29

The weighted-average grant date fair value per share of PSUs granted during the three months ended March 31, 2017 and 2016 was $32.37 and $24.66, respectively. As of March 31, 2017, total unrecognized compensation cost related to PSUs was $4.3 million, which is expected to be recognized over the remaining weighted-average period of 1.6 years.

Employee Stock Purchase Plan activity

For the three months ending March 31, 2017 and 2016, purchases under the ESPP were approximately 259,000 and 198,000 shares at weighted average prices of $25.51 and $22.74, respectively. As of March 31, 2017, the unrecognized compensation cost related to the shares to be purchased under the ESPP was approximately $2.9 million and is expected to be recognized over a weighted-average period of 1.1 years.

Summary of shares reserved for future issuance under equity incentive plans

The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of March 31, 2017



	Number of Shares
	(In thousands)
Share options outstanding	3,350
Non-vested restricted share awards	836
Shares authorized for future issuance	2,411
ESPP shares available for future issuance	2,572
Total shares reserved for future issuance	9,169

Stock Repurchase Program

On August 2, 2016, the Company's Board of Directors (the "Board") authorized a stock repurchase program providing for the repurchase of up to $50.0 million of the Company’s common stock (the “2016 Repurchase Program”). The 2016 Repurchase Program is in addition to the stock repurchase program approved by the Board on November 4, 2014 (the “2014 Repurchase Program”). As of March 31, 2017, the maximum dollar value of shares that may yet be purchased under the two repurchase programs was $54.9 million. The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and the Company may terminate or suspend the repurchase program at any time.

During the three and three months period ended March 31, 2017 and 2016, the Company did not repurchase any of its outstanding common stock.