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Employee Benefit Plans

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Note 11. Employee Benefit Plans

Equity Incentive Plans

The Company has stock-based compensation plans pursuant to which it has granted stock options, restricted stock units (“RSUs”), and performance share awards (“PSAs”). The Company also maintains its 2008 Employee Stock Purchase Plan (the “ESPP”) for all eligible employees. As of September 30, 2019, 16.2 million and 6.3 million shares were available for future issuance under the Company's 2015 Equity Incentive Plan (the "2015 Plan") and the ESPP, respectively. In connection with past acquisitions, the Company also assumed or substituted stock options, RSUs, restricted stock unit awards ("RSAs"), and PSAs.

On April 1, 2019, the Company completed the acquisition of Mist. In connection with the acquisition, the Company assumed stock options, RSUs and RSAs, including those that had been granted under the Mist Systems, Inc. 2014 Equity Incentive Plan (the "Mist Plan"), and converted the awards into Juniper Networks' stock options, RSUs and RSAs, respectively, based on an exchange ratio set forth in the acquisition agreement between Juniper Networks and Mist. The Company assumed an aggregate of 1.9 million shares of stock options, RSUs and RSAs in connection with the acquisition of Mist. No additional awards can be granted under the Mist Plan.

Stock Option Activities

The following table summarizes the Company’s stock option activity and related information as of and for the nine months ended September 30, 2019 (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, 2018	0.1		$	20.66
Assumed upon the acquisition of Mist	1.1		5.05
Exercised	(0.1	)	16.45
Expired/Canceled	(0.1	)	6.55
Balance as of September 30, 2019	1.0		$	4.95	8.2	$	19.6

As of September 30, 2019:
Vested and expected-to-vest options	1.0		$	4.95	8.2	$	19.6
Exercisable options	0.2		$	4.09	7.7	$	3.5

Restricted Stock Unit and Performance Share Award Activities

The Company’s RSU and PSA activity and related information as of and for the nine months ended September 30, 2019 were as follows (in millions, except per share amounts and years):



	Outstanding RSUs, RSAs and PSAs⁽⁴⁾
	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, 2018	17.4		$	25.32
RSUs granted ⁽¹⁾⁽³⁾	7.3		25.36
RSUs assumed upon the acquisition of Mist	0.1		25.81
RSAs assumed upon the acquisition of Mist	0.7		27.20
PSAs granted⁽²⁾⁽³⁾	1.5		25.06
RSUs vested	(4.7	)	25.93
RSAs vested	(0.1	)	23.10
PSAs vested	(0.5	)	26.77
RSUs canceled	(2.0	)	26.03
PSAs canceled	(0.9	)	23.64
Balance as of September 30, 2019	18.8		$	25.20	1.2	$	465.9

________________________________

⁽¹⁾

Includes service-based and market-based RSUs. The number of shares subject to market-based condition 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 market-based conditions that would be issued if market criteria are achieved at target is 0.2 million shares. Depending on achievement of such market criteria, the range of shares that could be issued under these awards is zero to 0.4 million shares.

⁽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 are achieved at target is 0.4 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is zero to 0.7 million shares.

⁽³⁾

The grant date fair value of RSUs and PSAs was 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. During the nine months ended September 30, 2019, the Company declared a quarterly cash dividend of $0.19 per share of common stock on January 29, 2019, April 25, 2019 and July 25, 2019.


⁽⁴⁾	1.5 million shares of PSAs were modified during the nine months ended September 30, 2019, which relate to PSAs granted in 2018 and PSAs assumed by the Company in connection with acquisitions consummated in 2016. Compensation cost resulting from the modifications totaled $30.2 million to be recognized over the remaining terms of the modified awards.

Employee Stock Purchase Plan

The following table summarizes employee stock purchases through the ESPP (in millions, except per share amounts):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Shares purchased	1.2		1.2		2.4		2.5
Average exercise price per share	$	22.03	$	22.39	$	22.04	$	22.31

The ESPP provides 24 month offering periods with four 6-month purchase periods. A new 24-month offering period will commence every six months thereafter. The purchase price for the Company’s common stock under the ESPP is 85% of the lower of the fair market value of the shares at (1) the beginning of the applicable offering period or (2) the end of each 6-month purchase period during such offering period. The ESPP will continue in effect until February 25, 2028, unless terminated earlier under the provisions of the ESPP.

Share-Based Compensation Expense

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues - Product	$	0.8	$	1.5	$	4.3	$	5.1
Cost of revenues - Service	4.1		4.5		13.0		14.2
Research and development	29.6		28.1		68.0		101.8
Sales and marketing	15.5		12.9		40.0		40.4
General and administrative	7.5		6.2		21.8		18.7
Total	$	57.5	$	53.2	$	147.1	$	180.2

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Stock options	$	2.3	$	0.1	$	5.6	$	0.3
RSUs, RSAs, and PSAs	50.9		48.2		127.7		165.8
ESPP	4.3		4.9		13.8		14.1
Total	$	57.5	$	53.2	$	147.1	$	180.2

As of September 30, 2019, the total unrecognized compensation cost related to unvested share-based awards was $330.2 million to be recognized over a weighted-average period of 1.7 years.