. EMPLOYEE STOCK OPTION AND RETIREMENT PLANS

Stock Option Awards

The FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the “Long Term Incentive Plan” or “LTIP”) provides for the grant of share-based awards, including stock options and restricted stock awards to employees of FactSet. The expiration date of the Long Term Incentive Plan is

December 19, 2027.

Stock options granted under the LTIP expire

not

more than

ten

years from the date of grant and the majority vest ratably over a period of

five

years. Options become vested and exercisable provided the employee continues employment with the Company through the applicable vesting date and remain exercisable until expiration or cancellation. Options are

not

transferable or assignable other than by will or the laws of descent and distribution. During the grantee’s lifetime, the options

may

be exercised only by the grantee.

tock Option Activity

During the

first

six

months of fiscal

2019,

FactSet granted

460,713

stock options with a weighted average exercise price of

$221.74

to existing employees of the Company.

A summary of stock option activity for the

six

months ended

February 28, 2019

is as follows:

(in thousands, except per share data)	Number of Stock Options Outstanding			Weighted Average Exercise Price Per Share
Balance at August 31, 2018		3,143		$	153.05
Granted – non-performance-based		455			221.93
Exercised		(117	)		132.81
Forfeited		(24	)		169.47
Balance at November 30, 2018		3,457		$	162.68
Granted – non-performance-based		6			207.84
Granted – non-employee Directors’ grant		21			207.88
Exercised		(207	)		136.30
Forfeited		(61	)		152.19
Balance at February 28, 2019		3,216		$	164.42

The total number of in-the-money options exercisable as of

February 28, 2019

was

1.2

million with a weighted average exercise price of

$138.41.

The aggregate intrinsic value of in-the-money stock options exercisable at

February 28, 2019

and

August 31, 2018

was

$116.5

million and

$105.3

million, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price as of

February 28, 2019

$235.17,

and the exercise price, multiplied by the number of options exercisable as of that date.

The total pre-tax intrinsic value of stock options exercised during the

three

months ended

February 28, 2019

and

2018

was

$15.5

million and

$17.2

million, respectively. The total pre-tax intrinsic value of stock options exercised during the

six

months ended

February 28, 2019

and

2018

was

$26.3

million and

$35.2

million, respectively.

Performance-based

Equity Awards

Performance-based equity awards, whether in the form of stock options or restricted stock, require management to make assumptions regarding the likelihood of achieving Company performance targets. The number of performance-based awards that vest will be predicated on the Company achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained by FactSet, a percentage of the performance-based awards will vest to the grantees. However, there is

current guarantee that such awards will vest in whole or in part.

The following summarizes the material performance-based award outstanding as of

February 28, 2019.

June 2017

Performance-based Option Grant Review

In connection with the acquisition of BISAM, FactSet granted

206,417

performance-based stock options in

June 2017.

These performance-based options will vest

40%

on the

second

anniversary date of the grant and

20%

on each subsequent anniversary date if certain BISAM revenue and operating income targets are achieved by

March 31, 2019.

The option holders must also remain employed by FactSet for the options to be eligible to vest. As of

February 28, 2019,

FactSet does

not

believe these growth targets are probable of being achieved, and as such,

stock-based compensation expense is expected to be recognized in connection with these performance-based options. A change in the actual financial performance levels achieved by BISAM in future fiscal years could result in the following changes to the current estimate of the vesting percentage and related expense:

Vesting Percentage (in thousands)	Cumulative Catch-up Adjustment*		Remaining Expense to be Recognized
0% (current expectation)	$	—	$	—
80%	$	2,369	$	4,738
90%	$	2,665	$	5,331
100%	$	2,961	$	5,923

* Amounts represent the cumulative catch-up adjustment to be recorded if there

were

a change in the vesting percentage as of

February 28

201

Restricted Stock Awards

The Company’s Option Plan permits the issuance of restricted stock awards in the form of either restricted shares or restricted stock units. Restricted stock awards are subject to continued employment over a specified period.

Restricted Stock Awards Activity

During the

first

six

months of fiscal

2019,

FactSet granted

41,153

restricted stock awards to employees of the Company at a weighted average grant date fair value of

$212.66.

These restricted stock awards vest over a weighted average period of

5.0

years from grant date.

As of

February 28, 2019,

a total of

106,558

restricted stock awards were unvested and outstanding, which results in unamortized stock-based compensation of

$16.1

million to be recognized as stock-based compensation expense over the remaining weighted average vesting period of

3.6

years.

A summary of restricted stock award activity is as follows:

(in thousands, except per award data)	Number Outstanding			Weighted Average Grant Date Fair Value Per Award

Balance at August 31, 2018		143			$	139.34
Granted		41			$	212.66
Forfeited		(1	)		$	200.18
Vested		(52	) (1)		$	113.44
Balance at November 30, 2018		131			$	172.48
Granted		—			$	—
Forfeited		(1	)		$	184.64
Vested		(23	) (2)		$	136.58
Balance at February 28, 2019		107			$	187.62

(

)

The

majority of the vested

restricted stock

awards

relate

the final vesting of

awards

grant

November 1, 2013

which cliff vested

after

three

years o

November 1, 2016

and

after

five

years on

November 1, 2018.

(

)

The majority of the vested restricted stock awards related to the final vesting of awards granted on

February 9, 2015,

which vested

100%

on the

four

year anniversary date of the grant.

As of

February 28, 2019,

and

August 31, 2018,

the aggregate fair value of unvested restricted stock was

$25.1

million and

$32.8

million, respectively. Aggregate fair value of unvested restricted stock represents the Company’s closing stock prices of

$235.17

and

$229.39

February 28, 2019

and

August 31, 2018,

respectively, multiplied by the number of unvested restricted stock as of that date.

The total pre-tax fair value of restricted stock that vested during the

three

months ended

February 28, 2019

and

2018

was

$5.1

million and

$0.7

million, respectively. The total pre-tax fair value of restricted stock that vested during the

six

months ended

February 28, 2019

and

2018

was

$16.7

million and

$2.7

million, respectively.

Share-based Awards Available for Grant

A summary of share-based awards available for grant is as follows:

(in thousands)	Share-based Awards Available for Grant under the Employee Stock Option Plan			Share-based Awards Available for Grant under the Non-Employee Stock Option Plan
Balance at August 31, 2018		6,298			282
Granted – non-performance-based options		(455	)		—
Restricted stock awards granted (1)		(103	)		—
Share-based awards canceled/forfeited (2)		25			—
Balance at November 30, 2018		5,765			282
Granted – non-performance-based options		(6	)		(21	)
Share-based awards canceled/forfeited (2)		65			3
Balance at February 28, 2019		5,824			264

(

)

Each restricted stock award granted is equivalent to

2.5

shares granted under the Company’s Option Plan.

(

)

Under the Company’s Option Plan, for each restricted stock award canceled/forfeited, an equivalent of

2.5

shares is added back to the available share-based awards balance.

Employee Stock Purchase Plan

Shares of FactSet common stock

may

be purchased by eligible employees under the Amended and Restated FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the “ESPP”) in

three

-month intervals. The purchase price is equal to

85%

of the lesser of the fair market value of the Company’s common stock on the

first

day or the last day of each

three

-month offering period. Employee purchases

may

not

exceed

10%

of their gross compensation and a

$25,000

contribution limit during an offering period.

During the

three

months ended

February 28, 2019,

employees purchased

12,624

shares at a price of

$199.36

compared to

14,805

shares at a price of

$171.23

for the

three

months ended

February 28, 2018.

During the

six

months ended

February 28, 2019,

employees purchased

25,719

shares at a price of

$198.33

as compared to

34,394

shares at a price of

$150.25

for the

six

months ended

February 28, 2018.

February 28, 2019,

the ESPP had

243,223

shares reserved for future issuance.

Employee Benefit Plans

FactSet sponsors benefit plans for the majority of its domestic and foreign employees. The Company contributed

$2.6

million in employer matching contributions for its U.S. defined contribution plan for both the

three

months ended

February 28, 2019

and

2018.

During the

six

months ended

February 28, 2019

and

2018,

the Company contributed

$5.2

million and

$5.5

million in employer matching contributions for its U.S. defined contribution plan, respectively. Contributions to foreign benefit plans were

not

material to FactSet on either an individual or aggregate basis for any of the periods presented.