11. Stock-Based Compensation

For the three-month periods ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of approximately $2,268,000 and $1,531,000, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan,” and together with the 2001 Plan, the “Plans”).

The following table presents stock-based compensation expense included in the Company’s consolidated statements of comprehensive income (in thousands):


	Three Months Ended March 31,
	2018		2017
Cost of product revenue	$	266	$	141
Research and development		170		132
Selling, general and administrative		1,832		1,258

Total	$	2,268	$	1,531

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Employee grants under the Plans generally vest over a three- to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors under the Plans generally vest over one year. In the first quarter of 2018, to create a longer term retention incentive, the Company’s Compensation Committee granted long term incentive compensation awards to its chief executive officer consisting of both stock options and restricted stock units that are subject to time-based vesting over nine years. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At March 31, 2018, options to purchase 1,109,353 shares and 703,076 restricted stock units were outstanding under the Plans. At March 31, 2018, 254,907 shares were available for future grant under the 2012 Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value restricted stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service based vesting over the employee’s requisite service period on a straight-line basis. In the third quarter of 2017, the Company issued performance stock units to certain individuals related to the Spectrum Acquisition which are tied to the achievement of certain revenue and gross margin metrics and the passage of time. The Company recognizes expense on performance based awards over the vesting period based on the probability that the performance metrics will be achieved. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

Information regarding option activity for the three-month period ended March 31, 2018 under the Plans is summarized below:


	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2017		734,940		$	20.80
Granted		398,532			33.85
Exercised		(14,531	)		23.70
Forfeited/cancelled		(9,588	)		29.71

Options outstanding at March 31, 2018		1,109,353		$	25.34		7.51	$	12,176

Options exercisable at March 31, 2018		499,504		$	17.73		5.50	$	9,300

Vested and expected to vest at March 31, 2018 (1)		1,057,255		$	24.96		7.40	$	12,015

⁽¹⁾

Represents the number of vested options as of March 31, 2018 plus the number of unvested options expected to vest as of March 31, 2018 based on the unvested outstanding options at March 31, 2018 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on March 31, 2018 of $36.18 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on March 31, 2018.

The weighted average grant date fair value of options granted during the three-month periods ended March 31, 2018 and 2017 was $18.27 and $16.46, respectively. The total fair value of stock options that vested during the three-month periods ended March 31, 2018 and 2017 was approximately $1,339,000 and $1,195,000, respectively.

Information regarding restricted stock unit and performance stock unit activity for the three-month period ended March 31, 2018 under the Plans is summarized below:


	Units Outstanding			Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted and performance stock units outstanding at December 31, 2017		505,235
Granted		319,701
Exercised		(90,691	)
Forfeited/cancelled		(31,169	)

Restricted stock units outstanding at March 31, 2018		703,076			4.06	$	25,437

Vested and expected to vest at March 31, 2018 (1)		639,530			3.75	$	23,138

⁽¹⁾

Represents the number of vested restricted stock units as of March 31, 2018 plus the number of unvested restricted stock units expected to vest as of March 31, 2018 based on the unvested outstanding restricted stock units at March 31, 2018 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on March 31, 2018 of $36.18 per share) that would have been received by the restricted stock unit holders had all restricted stock units vested on March 31, 2018. The aggregate intrinsic value of restricted stock units vested during the three-month periods ended March 31, 2018 and 2017 was approximately $3,224,000 and $2,064,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the three-month periods ended March 31, 2018 and 2017 was $33.80 and $32.18, respectively. The total grant date fair value of restricted stock units that vested during the three-month periods ended March 31, 2018 and 2017 was approximately $2,619,000 and $1,616,000, respectively.

As of March 31, 2018, there was $30,762,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 4.66 years.