Employee Benefit Plans

Equity Incentive Plans

The Company’s equity incentive plans include the 2015 Equity Incentive Plan (the “2015 Plan”), the 2006 Equity Incentive Plan (the “2006 Plan”), the Amended and Restated 1996 Stock Plan (the “1996 Plan”) and the 2008 Employee Stock Purchase Plan (the “ESPP”). Under these plans, the Company has granted stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and performance share awards (“PSAs”). In addition, in connection with certain past acquisitions, the Company has assumed stock options, RSUs, RSAs, and PSAs under the stock plans of the acquired companies and exchanged the assumed awards for the Company's stock options, RSUs, RSAs, and PSAs, respectively.

The 2015 Plan was adopted and approved by the Company's stockholders in May 2015 and had an initial authorized share reserve of 38.0 million shares of common stock plus the addition of any shares subject to outstanding awards under the 2006 Plan and the 1996 Plan that were outstanding as of May 19, 2015, and that subsequently expire or otherwise terminate, up to a maximum of an additional 29.0 million shares. As of June 30, 2016, an aggregate of 20.4 million shares were subject to outstanding equity awards under the 2015 Plan and the 2006 Plan, and no shares were subject to outstanding equity awards under the 1996 Plan. As of June 30, 2016, 22.9 million shares were available for future issuance under the 2015 Plan and no shares were available for future issuance under the 2006 Plan or the 1996 Plan.

The ESPP was adopted and approved by the Company's stockholders in May 2008. To date, the Company's stockholders have approved a share reserve of 26.0 million shares of the Company's common stock for issuance under this plan, which includes an additional 7.0 million shares approved by the Company's stockholders in May 2015. The ESPP permits eligible employees to acquire shares of the Company’s common stock at a 15% discount to the offering price (as determined in the ESPP) through periodic payroll deductions of up to 10% of base compensation, subject to individual purchase limits of 6,000 shares in any twelve-month period or $25,000 worth of stock, determined at the fair market value of the shares at the time the stock purchase option is granted, in one calendar year. As of June 30, 2016, approximately 19.7 million shares have been issued and 6.3 million shares remain available for future issuance under the ESPP.

On April 1, 2016, the Company completed the acquisition of BTI Systems Inc. In connection with the acquisition, the Company assumed RSUs and PSAs that had been granted under the BTI Systems Inc. Amended and Restated 2012 Stock Option Plan and Long-Term Incentive Plan (the "BTI Plan") and converted the awards for Juniper Networks' RSUs and PSAs, respectively, based on an exchange ratio set forth in the acquisition agreement between Juniper and BTI. The Company assumed an aggregate of 0.4 million shares of RSUs and PSAs in connection with the acquisition of BTI Systems Inc. No additional awards can be granted under the BTI Plan. As of June 30, 2016, stock options, RSUs, RSAs, and PSAs representing approximately 1.2 million shares of common stock were outstanding under all awards assumed through the Company's acquisitions.

Stock Option Activities

The following table summarizes the Company’s stock option activity and related information as of and for the six months ended June 30, 2016 (in millions, except for per share amounts and years):



	Outstanding Options
	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance as of December 31, 2015	3.6		$	27.52
Exercised	(0.4	)	14.10
Expired	(0.2	)	33.80
Balance as of June 30, 2016	3.0		$	28.98	1.8	$	7.3

As of June 30, 2016:
Vested and expected-to-vest options	3.0		$	28.99	1.8	$	7.2
Exercisable options	3.0		$	29.37	1.7	$	6.4

The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $22.49 per share as of June 30, 2016, and the exercise price of the applicable options multiplied by the number of related options. The pre-tax intrinsic value of options exercised, representing the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option, was $0.4 million and $4.3 million for the three and six months ended June 30, 2016, respectively.

Restricted Stock Unit, Restricted Stock Award, and Performance Share Award Activities

The following table summarizes the Company’s RSU, RSA, and PSA activity and related information as of and for the six months ended June 30, 2016 (in millions, except per share amounts and years):



	Outstanding RSUs, RSAs, and PSAs
	Number of Shares		Weighted Average Grant-Date Fair Value per Share		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance as of December 31, 2015	18.6		$	22.71
RSUs granted ⁽¹⁾⁽³⁾	6.9		24.68
RSUs assumed	0.2		24.76
PSAs granted⁽²⁾⁽³⁾	0.7		23.62
PSAs assumed	0.2		25.09
RSUs vested	(5.5	)	22.37
RSAs vested	(0.8	)	20.76
PSAs vested	(0.6	)	21.61
RSUs canceled	(0.7	)	23.15
PSAs canceled	(0.4	)	21.81
Balance as of June 30, 2016	18.6		$	23.73	1.4	$	419.3

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⁽¹⁾	Includes service-based and market-based RSUs granted under the 2015 Plan according to its terms.

⁽²⁾

The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 0.5 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 0.7 million shares.

⁽³⁾

The grant date fair value of RSUs and PSAs were reduced by the present value of dividends expected to be paid on the underlying shares of common stock during the requisite and derived service period as these awards are not entitled to receive dividends until vested. On April 28, 2016, the Company declared a cash dividend of $0.10 per share of common stock, or $38.1 million in the aggregate, to stockholders of record on June 1, 2016, which was paid on June 22, 2016.

Employee Stock Purchase Plan

The ESPP is implemented in a series of offering periods, each currently six months in duration, or such other period as determined by the Board. Employees purchased 1.3 million and 1.4 million shares of common stock through the ESPP at an average exercise price of $20.06 and $19.32 per share for the six months ended June 30, 2016 and June 30, 2015, respectively. No stock purchases under the ESPP were made during the three months ended June 30, 2016 and June 30, 2015.

Valuation Assumptions

There were no market-based RSUs granted or stock purchases under the ESPP during the three months ended June 30, 2016 and June 30, 2015. The weighted-average assumptions used and the resulting estimates of fair value for ESPP and market-based RSUs during the six months ended June 30, 2016 and June 30, 2015 were as follows:



	Six Months Ended June 30,
	2016	2015
ESPP ⁽¹⁾:
Volatility	35%	30%
Risk-free interest rate	0.5%	0.1%
Expected life (years)	0.5	0.5
Dividend yield	1.7%	1.9%
Weighted-average fair value per share	$5.95	$5.23

Market-based RSUs ⁽²⁾:
Volatility	36%	34%
Risk-free interest rate	1.2%	1.4%
Dividend yield	1.7%	1.8%
Weighted-average fair value per share	$14.71	$14.97

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⁽¹⁾	The Black-Scholes-Merton option-pricing model is utilized to estimate the fair value of shares issuable under the ESPP.

⁽²⁾

The fair value of market-based RSUs utilizes a Monte Carlo valuation methodology. The Company amortizes the fair value of these awards over the derived service period adjusted for estimated forfeitures for each separately vesting tranche of the award. Provided that the derived service is rendered, the total fair value of the market-based RSUs at the date of grant is recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria.

Share-Based Compensation Expense

Share-based compensation expense associated with stock options, RSUs, RSAs, PSAs, and ESPP was recorded in the following cost and expense categories in the Condensed Consolidated Statements of Operations (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Cost of revenues - Product	$	1.5	$	1.5	$	3.4	$	3.2
Cost of revenues - Service	4.3		3.8		7.8		7.2
Research and development	29.5		32.5		61.8		63.2
Sales and marketing	13.8		13.4		23.2		19.2
General and administrative	6.5		7.7		11.2		12.1
Total	$	55.6	$	58.9	$	107.4	$	104.9

The following table summarizes share-based compensation expense by award type (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Stock options	$	1.1	$	1.5	$	2.3	$	3.7
RSUs, RSAs, and PSAs	50.4		53.3		97.2		93.9
ESPP	4.1		4.1		7.9		7.3
Total	$	55.6	$	58.9	$	107.4	$	104.9

The following table presents unrecognized compensation cost, adjusted for estimated forfeitures, recognized over a weighted-average period related to unvested stock options, RSUs, RSAs, and PSAs as of June 30, 2016 (in millions, except years):



	Unrecognized Compensation Cost		Weighted Average Period (In Years)
Stock options	$	0.3	0.3
RSUs, RSAs, and PSAs	$	252.0	1.9