Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company allocates stock-based compensation expense amongst cost of sales, research and development and other engineering expense, selling expense, or general and administrative expense based on the job functions performed by the employees to whom the stock-based compensation is awarded. Stock-based compensation capitalized in inventory was immaterial for all periods presented. The Company recognized stock-based compensation expense related to its equity plans for employees of $6.5 million and $4.7 million for the three months ended June 30, 2023 and 2022, respectively, and $11.2 million and $9.5 million for the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, the Company granted 277,793 restricted stock units (RSUs) and performance stock units (PSUs) to the Company's employees, including officers at an estimated weighted average fair value of $99.66 per share based on the closing price (adjusted for the present value of dividends) of the Company's common stock on the grant date. The RSUs and PSUs granted to the Company's employees may be time-based or time and performance-based. Certain of the PSUs are granted to officers and key employees, where the number of performance-based awards to be issued is based on the achievement of certain Company performance criteria established in the award agreement over a cumulative three year period, after which time these awards cliff vest. In addition, these same officers and key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time-based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year vesting-term of the award.

The Company’s nine non-employee directors are entitled to receive an aggregate of approximately $1.1 million in equity compensation annually. The number of shares ultimately granted are based on the average closing share price for the Company over the 60 day period prior to approval of the award in the second quarter of each year. In April 2023 and June 2023, the Company granted 9,776 shares of the Company's common stock to the non-employee directors, based on the average closing price of $122.50 per share and recognized $1.2 million of expense.

As of June 30, 2023, the Company's aggregate unamortized stock compensation expense was approximately $29.2 million which is expected to be recognized in expense over a weighted-average period of 2.5 years.