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Stock-Based Compensation Expense
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Expense Stock-Based Compensation Expense
Stock Plans
The Company’s stock-based awards that result in compensation expense consist of stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs"). In May 2023, the shareholders of the Company approved the Cognex Corporation 2023 Stock Option and Incentive Plan (the “2023 Plan”). The 2023 Plan permits awards of stock options (both incentive and non-qualified options), stock appreciation rights, RSUs, and PRSUs. Up to 8,100,000 shares of common stock (subject to adjustment in the event of stock splits and other similar events) may be issued pursuant to awards granted under the 2023 Plan. In connection with the approval of the 2023 Plan, no further awards will be made under the Cognex Corporation 2001 General Stock Option Plan, as amended and restated (the “2001 Plan”), and the Cognex Corporation 2007 Stock Option and Incentive Plan, as amended and restated (the “2007 Plan”). With the approval of the 2023 Plan, the 10,610,800 shares of common stock subject to awards granted under the 2001 Plan and the 2007 Plan that were outstanding as of May 3, 2023 may become eligible for issuance under the 2023 Plan if such awards are forfeited, cancelled or otherwise terminated (other than by exercise) (the “Carryover Shares”). As of June 30, 2024, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 777,455 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,877,455.
As of June 30, 2024, the Company had 5,958,000 shares available for grant under its stock plans. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date. RSUs generally vest upon three or four years of continuous employment or incrementally over such three or four-year periods. PRSUs generally vest upon three years of continuous employment and achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Participants are not entitled to dividends on stock options, RSUs, or PRSUs.
Stock Options
The following table summarizes the Company’s stock option activity for the six-month period ended June 30, 2024:
Shares
(in thousands)		Weighted-
Average
Exercise
Price		Weighted-
Average
Remaining
Contractual
Term (in years)		Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of December 31, 2023
9,008 $50.87 
Granted1,620 39.74 
Exercised(112)23.52 
Forfeited or expired(397)56.39 
Outstanding as of June 30, 2024
10,119 $49.17 6.10$35,881 
Exercisable as of June 30, 2024
5,880 $49.22 4.31$22,854 
Options vested or expected to vest as of June 30, 2024 (1)9,413 $49.36 5.89$33,342 
 (1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.

The total cash received as a result of stock option exercises for the three-month and six-month periods ended June 30, 2024 was $1,516,000 and $2,637,000, respectively, and for the three-month and six-month periods ended July 2, 2023 was $6,141,000 and $10,118,000, respectively. In connection with these exercises, the tax expense realized by the Company for the three-month and six-month periods ended June 30, 2024 was $2,043,000 and $2,072,000, respectively, and for the three-month and six-month periods ended July 2, 2023 was $2,426,000 and $3,893,000, respectively.

The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:
 Three-months EndedSix-months Ended
 June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Risk-free rate4.5 %3.5 %4.3 %3.9 %
Expected dividend yield0.67 %0.56 %0.75 %0.59 %
Expected volatility39 %39 %39 %39 %
Expected term (in years)4.75.94.74.9
Risk-free rate
The risk-free rate was based upon a treasury instrument whose term was consistent with the contractual term of the option.
Expected dividend yield
The current dividend yield was calculated by annualizing the cash dividend declared by the Company’s Board of Directors and dividing that result by the closing stock price on the grant date. 
Expected volatility
The expected volatility was based upon a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock.
Expected term
The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time.
The weighted-average grant-date fair values of stock options granted during the three-month and six-month periods ended June 30, 2024 were $18.46 and $14.89, respectively, and during the three-month and six-month periods ended July 2, 2023 were $20.09 and $17.86, respectively.
The total intrinsic values of stock options exercised for the three-month and six-month periods ended June 30, 2024 were $994,000 and $2,049,000, respectively, and for the three-month and six-month periods ended July 2, 2023 were $2,123,000 and $5,562,000, respectively. The total fair values of stock options vested for the three-month and six-month periods ended June 30, 2024 were $698,000 and $26,209,000, respectively, and for the three-month and six-month periods ended July 2, 2023 were $892,000 and $32,073,000, respectively.
Restricted Stock Units (RSUs)
The following table summarizes the Company's RSUs activity for the six-month period ended June 30, 2024:
Shares
(in thousands)		Weighted-Average
Grant Date Fair Value
Nonvested as of December 31, 2023
1,429 $54.22 
Granted797 39.03 
Vested(375)65.58 
Forfeited or expired(55)49.86 
Nonvested as of June 30, 2024
1,796 $45.23 
The fair value of RSUs is determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends. The weighted-average grant-date fair values of RSUs granted during the three-month and six-month periods ended June 30, 2024 were $43.97 and $39.03, respectively, and during the three-month and six-month periods ended July 2, 2023 were $52.53 and $46.86, respectively. There were 36,000 and 375,000 RSUs that vested during the three-month and six-month periods ended June 30, 2024, respectively, and 29,000 and 482,000 that vested during the three-month and six-month periods ended July 2, 2023, respectively.
Tax obligations for vested RSUs are settled by withholding a portion of the shares prior to distribution to the shareholder. The total cash used by the Company to fund the tax payments for the three-month and six-month periods ended June 30, 2024 was $526,000 and $4,507,000, respectively, and for the three-month and six-month periods ended July 2, 2023 was $432,000 and $7,464,000, respectively. In connection with these vested RSUs, the tax expense realized by the Company for the three-month and six-month periods ended June 30, 2024 was $2,074,000 and $6,867,000, respectively, and for the three-month and six-month periods ended July 2, 2023 was $150,000 and $3,476,000, respectively.
Performance Restricted Stock Units (PRSUs)
The following table summarizes the Company's PRSUs activity for the six-month period ended June 30, 2024:
Shares
(in thousands)		Weighted-Average
Grant Date Fair Value
Nonvested as of December 31, 2023
79 $52.23 
Granted55 39.05 
Vested— — 
Forfeited or expired— — 
Nonvested as of June 30, 2024
134 $46.82 
The fair value of PRSUs is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the service and market conditions stipulated in the award grant. There were 0 and 55,000 PRSUs granted during the three-month and six-month periods ended June 30, 2024, respectively, and 0 and 46,000 granted during the three-month and six-month periods ended July 2, 2023, respectively. No PRSUs vested during the three-month and six-month periods ended June 30, 2024 and July 2, 2023.
Stock-Based Compensation Expense
The Company stratifies its employee population into three groups: one consisting of the CEO, one consisting of senior management, and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 0% to all stock-based awards for the CEO, 9% to all stock-based awards for senior management, and a rate of 13% for all other employees. Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover. This resulted in a decrease to compensation expense of $1,832,000 in 2024 and $234,000 in 2023.
As of June 30, 2024, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $75,507,000, which is expected to be recognized over a weighted-average period of 1.9 years.
The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended June 30, 2024 were $12,964,000 and $2,027,000, respectively, and for the six-month period ended June 30, 2024 were $26,266,000 and $3,772,000, respectively. The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended July 2, 2023 were $12,574,000 and $1,892,000, respectively, and for the six-month period ended July 2, 2023 were $29,153,000 and $4,200,000, respectively. No compensation expense was capitalized as of June 30, 2024 or December 31, 2023.
The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):
 Three-months EndedSix-months Ended
 June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Cost of revenue$413 $441 $1,018 $1,062 
Research, development, and engineering3,540 3,308 7,929 9,198 
Selling, general, and administrative9,011 8,825 17,319 18,893 
$12,964 $12,574 $26,266 $29,153