NOTE 6 – Share-Based Compensation

The table below sets forth the line items where share-based compensation expense was recorded for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Cost of goods sold	$	153	$	236	$	311	$	437
Selling, general and administrative		3,993		3,632		7,297		7,336
Research and development		688		693		1,357		1,307
Total share-based compensation expense	$	4,834	$	4,561	$	8,965	$	9,080

The table below sets forth share-based compensation expense by type for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Stock options	$	301	$	420	$	598	$	908
Share grants		4,533		4,141		8,367		8,172
Total share-based compensation expense	$	4,834	$	4,561	$	8,965	$	9,080

Stock Options. There was approximately $6.7 million in cash proceeds received from stock option exercises during the six months ended June 30, 2017.

As of June 30, 2017, total unrecognized share-based compensation expense related to unvested stock options was approximately $0.6 million, before income taxes, and is expected to be recognized over a weighted average period of less than 1 year.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period. We also have share grants that are performance based that vest upon achievement of certain performance criteria. During the six months ended June 30, 2017, the Company modified a previous performance-based award previously granted to our Chief Executive Officer. The effect was to replace a performance-based grant covering 700,000 shares of the Company’s common stock with a performance-based grant covering 62,905 shares of the Company’s common stock and a restricted stock grant covering 62,905 of the Company’s common stock. If certain performance criteria are met, Dr. Lu will receive 200% of the award or 125,810 shares. The incremental expense if Dr. Lu received 200% of the PSU award is approximately $3.3 million. The incremental expense of the restricted stock grant is approximately $1.7 million.

As of June 30, 2017, total unrecognized share-based compensation expense related to share grants was approximately $32.9 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.4 years.