SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

The fair value of options, restricted stock units, deferred stock units, performance-based restricted stock units, and employee stock purchase rights awarded during the three and nine months ended September 30, 2024, totaled $1.2 million and $71.4 million, respectively, as compared to $1.5 million and $62.1 million for the three and nine months ended September 30, 2023, respectively. The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards outstanding as of September 30, 2024, was $81.0 million, which will be recognized over a weighted average period of approximately 1.5 years. During the three and nine months ended September 30, 2024, we recognized share-based compensation expenses of $15.9 million and $46.0 million, respectively, as compared to $15.2 million and $44.5 million for the three and nine months ended September 30, 2023, respectively.

During the first quarter of 2024, we granted approximately $11.5 million of performance-based restricted stock units that are contingent upon our performance against pre-established financial performance metrics over a period beginning on January 1, 2024, and ending on December 31, 2026. Earned shares will vest on the later of the third anniversary of the grant date or the date of certification of our performance under the terms of the performance-based restricted stock units grant.

We determine the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term, or risk-free interest rate may necessitate distinct valuation assumptions at each grant date. As such, we may use different assumptions for options granted throughout the year. Option awards are granted with an exercise price equal to or greater than the closing market price of our common stock at the date of grant. We have never paid any cash dividends on our common stock, and we have no intention to pay such a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

The weighted averages of the valuation assumptions used to determine the fair value of each option award on the date of grant and the weighted average estimated fair values were as follows:


	For the Nine Months Ended September 30,
	2024			2023

Expected stock price volatility	32		%	32		%
Expected term, in years	7.0			6.7
Risk-free interest rate	4.3		%	3.7		%
Weighted average fair value of options granted	$	239.49		$	201.48