11. STOCK-BASED COMPENSATION

Equity Incentive Plan

The Company’s 2023 Equity Incentive Plan (“2023 Plan”) provides for the grant of up to an aggregate of 1,000,000 shares of restricted stock, restricted share units, stock options, stock appreciation rights, dividend or dividend equivalent rights, stock awards and other awards valued in whole or in part by reference to or otherwise based on the Company’s common stock, to officers, employees and directors of the Company. The 2023 Plan replaced the prior 2019 Equity Incentive Plan and was approved by the Company’s shareholders at the 2023 Annual Meeting.

Restricted Stock Units

The Company grants restricted stock units (“RSUs”) to employees in connection with a long-term incentive plan. Awards with time-based vesting requirements primarily vest ratably over a three-year period. Awards with performance-based vesting requirements cliff vest after a three-year performance cycle and only after the achievement of certain performance criteria over that cycle. The number of shares ultimately issued for the performance-based units may vary from 0% to 200% of their target amount based on the achievement of defined performance targets. Compensation expense recognized for RSUs granted to employees totaled $4.4 and $4.0, respectively, for the six months ended July 1, 2023 and July 2, 2022.

The Helios Technologies, Inc. Non-Employee Director Compensation Policy compensates Non-Employee Directors for their board service with cash awards and equity-based compensation through grants of RSUs, issued pursuant to the 2019 Plan or 2023 Plan, which vest over a one-year period. Directors were granted 8,867 and 7,580 RSUs during the six months ended July 1, 2023 and July 2, 2022, respectively. The Company recognized director stock compensation expense on the RSUs of $0.7 and $0.1 for the six months ended July 1, 2023 and July 2, 2022, respectively.

Included in the nonvested balance at July 1, 2023 is 141,731 nonvested performance-based RSUs.

The Company had $13.9 of total unrecognized compensation cost related to the RSU awards as of July 1, 2023. That cost is expected to be recognized over a weighted average period of 2.0 years.

Stock Options

The Company has granted stock options with market-based exercise conditions to its officers. As of July 1, 2023, there were 78,500 unvested options and no vested unexercised options. The exercise price per share is $50.60, which is equal to the market price of Helios stock on the grant date. The options vest after achievement of defined stock prices and after the required service periods, which range from one to two years. These options have a 10-year expiration. The grant date fair value of the options was estimated using a Monte Carlo simulation.

The Company has also granted stock options with only time-based vesting conditions to its officers. As of July 1, 2023, there were 4,999 unvested options and 19,234 vested unexercised options. The exercise prices per share, which range from $35.04 to $55.03, are equal to the market price of Helios stock on the respective grant dates. The options vest ratably over a three-year period and have a 10-year expiration. The grant date fair value of the options was estimated using a Black Scholes valuation model.

At July 1, 2023, the Company had $0.7 of unrecognized compensation cost related to the options, which is expected to be recognized over a weighted average period of 0.4 years. The Company recognized expense on the stock options of $1.1 and $0.1 for the six months ended July 1, 2023 and July 2, 2022, respectively.

Employee Stock Purchase Plans

The Company maintains an Employee Stock Purchase Plan (“ESPP”) in which U.S. employees are eligible to participate. Employees who choose to participate are granted an opportunity to purchase common stock at 85 percent of market value on the first or last day of the quarterly purchase period, whichever is lower. Employees in the United Kingdom (“UK”), under a separate plan, are granted an opportunity to purchase the Company’s common stock at market value, on the first or last day of the quarterly purchase period, whichever is lower, with the Company issuing one additional free share of common stock for each six shares purchased by the employee under the plan. Employees purchased 20,771 shares at a weighted average price of $50.47, and 17,076 shares at a weighted average price of $62.05, under the ESPP and UK plans during the six months ended July 1, 2023 and July 2, 2022, respectively. The Company recognized $0.3 and $0.2 of compensation expense during the six months ended July 1, 2023 and July 2, 2022, respectively.