In April 2026, the Company’s shareholders approved an amended and restated 2010 Incentive Award Plan to provide for an increase in the number of shares of common stock reserved for issuance thereunder from 120,350,000 to 125,350,000. As of June 30, 2026, approximately 23.2 million shares were reserved for future issuance under the Company’s stock plans, and a maximum of approximately 10.1 million of these shares can be awarded as restricted stock units (“RSUs”).


	Shares	Weighted-Average Grant-Date Fair Value
Unvested balance as of December 31, 2025	4.7	$	412.46
RSUs granted	1.8	$	503.95
RSUs vested	(1.7)	$	368.32
RSUs forfeited	(0.2)	$	438.66
Unvested balance as of June 30, 2026	4.6	$	463.67



	Stock Options Outstanding	Weighted-Average Exercise Price Per Share
Outstanding balance as of December 31, 2025	5.4	$	208.18

Options granted	—	$	—
Options exercised	(0.7)	$	157.77
Options forfeited or expired	—	$	255.71
Outstanding balance as of June 30, 2026	4.7	$	214.99

The Company grants performance stock units (“PSUs”) to officers and other key employees subject to three-year cliff vesting and pre-established, quantitative goals. Whether any PSUs vest, and the amount that do vest, is tied to completion of service over three years and the achievement of three equally-weighted, quantitative goals that directly align with or help drive the Company’s strategy and long-term total shareholder return.

For the six months ended June 30, 2026, the Company had four types of PSU awards: the 2023 PSU awards, the 2024 PSU awards, the 2025 PSU awards, and the 2026 PSU awards. The 2023 PSU grant metrics were focused on relative total shareholder return (“TSR”), da Vinci and Ion procedure growth in 2024 compared to 2022, and da Vinci and Ion procedure growth in 2025 compared to 2022. The 2023 PSU awards vested in the first quarter of 2026. The 2024 PSU grant metrics are focused on relative TSR, da Vinci and Ion procedure growth in 2025 compared to 2023, and da Vinci and Ion procedure growth in 2026 compared to 2023. The 2025 PSU grant metrics are focused on relative adjusted operating margin as compared to selected peers, da Vinci and Ion procedure growth in 2026 compared to 2024, and da Vinci and Ion procedure growth in 2027 compared to 2024. The 2026 PSU grant metrics are focused on relative adjusted operating margin as compared to selected peers, total procedure growth in 2027 compared to 2025, and total procedure growth in 2028 compared to 2025.

The TSR metric used in the 2023 and 2024 PSU awards is considered a market condition, and the expense is determined at the grant date. The procedure growth and relative adjusted operating margin metrics are considered performance conditions, and the expense is recorded based on the forecasted performance, which is reassessed each reporting period based on the probability of achieving the performance conditions. The number of shares earned at the end of the three-year period will vary, based on actual performance, from 0% to 125% of the target number of PSUs granted. PSUs are subject to forfeiture if employment terminates prior to the vesting date. PSUs are not considered issued or outstanding shares of the Company.

The Company calculates the fair value for each component of the PSUs individually. The fair value for the component with the TSR metric was determined using Monte Carlo simulation. The fair value per share for the components with the procedure growth metrics is equal to the closing stock price on the grant date.


	Shares	Weighted-Average Grant Date Fair Value Per Share
Unvested balance as of December 31, 2025	0.3	$	374.67
Granted	0.1	$	506.88
Vested	(0.2)	$	244.55
Performance change	—	$	282.55
Forfeited	—	$	468.10
Unvested balance as of June 30, 2026	0.2	$	483.90

Under the Company’s Employee Stock Purchase Plan (the “ESPP”), employees purchased approximately 0.2 million shares for $83.2 million and approximately 0.2 million shares for $75.5 million during the six months ended June 30, 2026, and 2025, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025



Cost of revenue – product	$	28.8	$	30.3	$	58.1	$	60.5
Cost of revenue – service	9.2		8.6		18.5		16.8
Total cost of revenue	38.0		38.9		76.6		77.3
Selling, general, and administrative	88.1		86.3		180.8		168.6
Research and development	86.7		74.7		168.7		143.7
Share-based compensation expense before income taxes	212.8		199.9		426.1		389.6
Income tax benefit	43.0		39.3		85.7		76.3
Share-based compensation expense after income taxes	$	169.8	$	160.6	$	340.4	$	313.3

Share-based compensation expense capitalized to the Condensed Consolidated Balance Sheets during the three months ended June 30, 2026, and 2025 was $32.9 million and $31.3 million, respectively. Share-based compensation expense capitalized to our Condensed Consolidated Balance Sheets during the six months ended June 30, 2026, and 2025 was $67.8 million and $59.8 million, respectively.


	Three Months Ended June 30,		Six Months Ended June 30,
	2026	2025	2026	2025







ESPP
Risk-free interest rate	—%	—%	3.5%	4.2%
Expected term (in years)	0.0	0.0	1.2	1.2
Expected volatility	—%	—%	34%	30%
Fair value at grant date	$—	$—	$148.30	$170.50