NOTE 6 – Share-Based Compensation

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Cost of goods sold	$	152	$	172	$	462	$	609
Selling, general and administrative		4,050		2,901		11,348		10,237
Research and development		760		684		2,117		1,991
Total share-based compensation expense	$	4,962	$	3,757	$	13,927	$	12,837

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Stock options	$	168	$	304	$	767	$	1,212
Share grants		4,794		3,453		13,160		11,625
Total share-based compensation expense	$	4,962	$	3,757	$	13,927	$	12,837

Stock Options. Approximately $6.9 million in cash proceeds was received from stock option exercises during the nine months ended September 30, 2017.

As of September 30, 2017, total unrecognized share-based compensation expense related to unvested stock options was approximately $0.4 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 nine months ended September 30, 2017, the Company modified a 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 for the performance-based grant, Dr. Lu will receive 200% of that award or 125,810 shares. The incremental expense if Dr. Lu received 200% of the performance-based grant award is approximately $3.3 million. The incremental expense of the restricted stock grant is approximately $1.7 million.

As of September 30, 2017, total unrecognized share-based compensation expense related to share grants was approximately $36.9 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.6 years.