STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and nine months ended September 30, 2020 and 2019 was as follows (in millions):

	Three Months Ended    September 30,				Nine Months Ended    September 30,
	2020		2019		2020		2019
Cost of sales	$	4.3	$	3.6	$	13.6	$	11.5
Selling, general, and administrative expenses	13.8		12.4		43.5		39.4
Research and development expenses	4.9		3.8		14.6		12.0
Total stock-based compensation expense	$	23.0	$	19.8	$	71.7	$	62.9

At September 30, 2020, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $160.1 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 32 months.

During the nine months ended September 30, 2020, the Company granted 1.8 million stock options at a weighted-average exercise price of $72.84, and 0.7 million restricted stock units at a weighted-average grant-date fair value of $73.16. During the nine months ended September 30, 2020, the Company also granted 0.1 million market-based restricted stock units at a weighted-average grant-date fair value of $82.67 and issued an additional 0.1 million shares of common stock related to a previous year's grant of market-based restricted stock units since the payout percentage achieved at the end of the performance period was in excess of the targeted shares. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company's total shareholder return relative to a selected industry peer group over a three-year performance period, and may range from 0% to 175% of the targeted number of shares granted.

Fair Value Disclosures

The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the nine months ended September 30, 2020 and 2019 included a risk-free interest rate of 0.2% and 2.2%, respectively, and an expected volatility rate of 32.7% and 29.4%, respectively.

The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:

Option Awards	Three Months Ended    September 30,						Nine Months Ended    September 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.3		%	1.8		%	0.3		%	2.3		%
Expected dividend yield	None			None			None			None
Expected volatility	33.4		%	29.7		%	34.2		%	29.6		%
Expected term (years)	5.2			5.2			5.1			5.1
Fair value, per option	$	22.24		$	19.36		$	22.19		$	18.10

The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:

ESPP	Three Months Ended    September 30,						Nine Months Ended    September 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.1		%	2.0		%	1.3		%	2.4		%
Expected dividend yield	None			None			None			None
Expected volatility	37.5		%	32.0		%	33.1		%	27.1		%
Expected term (years)	0.7			0.7			0.6			0.6
Fair value, per share	$	21.79		$	19.10		$	16.61		$	16.43