STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We have three stock plans: our Amended and Restated 2003 Stock Plan, our 2008 Stock Plan, and our 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan is the only remaining active stock plan.  The purpose of these stock plans was, and the 2012 Plan is, to provide incentive to employees, directors, and consultants of Globus.  The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, but generally not more than ten years from the grant date. Option grants to employees generally vest in varying installments over a four-year period.

The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. Under the 2012 Plan, the aggregate number of shares of Class A Common stock that may be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3% of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to 10,769,230 shares. The shares of Class A Common stock covered by the 2012 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

As of December 31, 2017, pursuant to the 2012 Plan, there were 14,889,882 shares of Class A Common stock reserved and 5,572,142 shares of Class A Common stock available for future grants.

The weighted average grant date per share fair values of the options awarded to employees were as follows:

	Year Ended
	December 31, 2017		December 31, 2016		December 31, 2015
Weighted average grant date per share fair value	$	9.12	$	7.62	$	8.63

The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions:

	Year Ended
	December 31, 2017			December 31, 2016			December 31, 2015
Risk-free interest rate	1.74%	-	2.20%	1.03%	-	2.01%	1.39%	-	2.11%
Expected term (years)	5.8	-	6.4	5.8	-	6.5	5.1	-	9.9
Expected volatility	26.0%	-	29.0%	28.0%	-	29.0%	29.0%	-	38.0%
Expected dividend yield	—%			—%			—%

Stock option activity during the year ended December 31, 2017 is summarized as follows:

	Option Shares (thousands)		Weighted average exercise price		Weighted average remaining contractual life (years)	Aggregate intrinsic value (thousands)
Outstanding at January 1, 2017	7,741		$	21.08
Granted	2,545		28.52
Exercised	(728	)	16.17
Forfeited	(517	)	24.12
Outstanding at December 31, 2017	9,041		$	23.40	7.4	$	160,047
Exercisable at December 31, 2017	4,326		20.07		6.1	90,981
Expected to vest at December 31, 2017	4,714		$	26.45	8.6	$	69,066

We use the Black Scholes pricing model to determine the fair value of our stock options (see “Note 1. Background and Summary of Significant Accounting Policies, (q) Stock-Based Compensation” above).

Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows:

	Year Ended
(In thousands)	December 31, 2017		December 31, 2016		December 31, 2015
Intrinsic value of stock options exercised	$	12,217	$	8,824	$	9,984
Stock-based compensation expense	$	14,686	$	11,382	$	9,639
Net stock-based compensation capitalized into inventory	196		270		221
Total stock-based compensation cost	$	14,882	$	11,652	$	9,860

As of December 31, 2017, there was $33.5 million of unrecognized compensation expense related to unvested employee stock options that vest over a weighted average period of three years.