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Note 10. Share-based Compensation and Other Benefit Plans:

The cost of employee services received in exchange for the award of equity instruments is based on the fair value of the award at the date of grant. Compensation cost is recognized using a straight-line method over the vesting period and is net of estimated forfeitures. Stock option exercises and stock awards are satisfied through the issuance of new shares.

Equity incentive plan: The 2020 Equity Incentive Plan, which replaced the Company’s Second Amended and Restated 2010 Equity Incentive Plan, provides for the granting of incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units and stock appreciation rights. There were 36.2 million shares of common stock authorized for grant under the Plan. The maximum aggregate number of shares of common stock reserved and available for awards under the Plan is 9,936,808 shares. At June 30, 2023, there were 6.6 million shares of common stock available for grant under the 2020 Equity Incentive Plan. The maximum term of incentive options granted under the 2020 Equity Incentive Plan is ten years. The 2020 Equity Incentive Plan replaced the Company’s second A&R 2010 Plan, which had previously amended and restated the Company’s Amended and Restated 2010 Equity Incentive Plan (the A&R 2010 Plan). The 2020 Equity Incentive Plan and Second A&R 2010 Plan (collectively, the Plans) are administered by the Board of Directors and its Executive Compensation Committee, which determine the persons who are to receive awards under the Plans, the number of shares subject to each award and the term and exercise price of each award. The number of shares of common stock subject to outstanding awards as of June 30, 2023 under the 2020 Equity Incentive Plan were 13.9 million.

The fair values of options granted under the Plans were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

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The dividend yield is based on the Company’s historical annual cash dividend divided by the market value of the Company’s common stock. The expected annualized volatility is based on the Company’s historical stock price over a period equivalent to the expected life of the option granted. The risk-free interest rate is based on U.S. Treasury constant maturity interest rates with a term consistent with the expected life of the options granted.

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Stock option activity under the Plans for the three years ended June 30, 2023, consists of the following (shares in thousands):

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The weighted average fair value of options granted during fiscal 2023, 2022, and 2021 was $29.53, $29.78, and $14.94, respectively. The total intrinsic value of options exercised during fiscal 2023, 2022, and 2021 were $90.2 million, $209.3 million, and $145.6 million, respectively. The total fair value of options vested during fiscal 2023, 2022, and 2021 were $46.5 million, $82.3 million, and $70.5 million, respectively.

Restricted common stock activity under the Plans for the three years ended June 30, 2023, consists of the following (units in thousands):

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The total fair value of restricted shares that vested was $3.1 million for fiscal 2023, $2.9 million for fiscal 2022, and $2.8 million for fiscal 2021.

Restricted stock unit activity under the Plans for the three years ended June 30, 2023, consists of the following (units in thousands):

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The total fair value of restricted stock units that vested was $6.4 million for fiscal 2023, $6.5 million for fiscal 2022, and $6.7 million for fiscal 2021. The restricted stock units vest over a three-year period.

Stock-based compensation cost, inclusive of payroll taxes, of $39.3 million, $44.0 million, and $46.4 million was included in selling, general and administrative expense in fiscal 2023, 2022 and 2021, respectively. Additionally, stock-based compensation costs, inclusive of payroll taxes, of $1.0 million, $1.4 million, and $1.6 million was included in cost of goods sold in 2023, 2022, and 2021, respectively. As of June 30, 2023, there was $27.4 million of unrecognized compensation cost related to non-vested stock options, non-vested restricted stock units and non-vested restricted stock which will be expensed in fiscal 2024 through 2026 using a 4.5% forfeiture rate. The weighted average period over which the compensation cost is expected to be recognized is 2.2 years.

Employee stock purchase plan: In fiscal year 2015, the Company established the Bio-Techne Corporation 2014 Employee Stock Purchase Plan (ESPP), which was approved by the Company’s shareholders on October 30, 2014, and which is designed to comply with IRS provisions governing employee stock purchase plans. 800,000 shares were allocated to the ESPP. The Company recorded expense of $0.9 million, $1.0 million, and $0.9 million for the ESPP in fiscal 2023, 2022, and 2021, respectively.

Profit sharing and savings plans: The Company has profit sharing and savings plans for its U.S. employees, which conform to IRS provisions for 401(k) plans. The Company makes matching contributions to the Plan. The Company has recorded an expense for contributions to the plans of $4.9 million, $4.3 million, and $3.4 million for the years ended June 30, 2023, 2022, and 2021, respectively. The Company operates defined contribution pension plans, which consists of primarily our U.K. and China employees. The Company’s contribution to the defined pension contribution plan was $2.4 million, $2.3 million, and $1.6 million for the years ended June 30, 2023, 2022 and 2021, respectively.

Performance incentive programs: In fiscal 2023, under certain employment agreements, a Management Incentive Plan, and a business incentive plan, available to executive officers, certain management personnel, and certain other professional employees, the Company recorded cash bonuses of $10.8 million, granted options for 2,350,980 shares of common stock, issued 10,816 restricted common shares and 107,202 restricted stock units. In fiscal 2022 and fiscal 2021, the Company recorded cash bonuses of $26.5 million and $21.1 million, granted options for 1,390,436 and 3,051,044 shares of common stock, issued 27,584 and 47,212 restricted common stock shares and 110,292 and 123,292 restricted stock units, respectively.