
Common stock and treasury stock activity:	Common Stock	Treasury Stock












Balance, January 1, 2017	37,697,865	2,587,103

Issued	—	(429,471)
Balance, December 31, 2017	37,697,865	2,157,632
Issued	—	(547,064)
Balance, December 30, 2018	37,697,865	1,610,568
Issued	—	(460,669)
Balance, December 29, 2019	37,697,865	1,149,899

In January 2016, the Company’s Board of Directors authorized a stock repurchase program authorizing the Company to repurchase up to 3,000,000 shares of its common stock. The number of shares repurchased will depend on a variety of factors, such as share price, levels of cash and borrowing capacity available, alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions. Future repurchases, if any, are expected to be funded with cash on hand and borrowings under the Company’s credit facility. No repurchases were made in 2019, 2018 or 2017. Up to approximately three million shares may be repurchased under the stock repurchase program.

Authorized preferred stock may be issued with designations, powers and preferences designated by the Board of Directors. There were no shares of preferred stock issued or outstanding in 2019, 2018 or 2017.

Teledyne has long-term incentive plans which provide its Board of Directors the flexibility to grant restricted stock, restricted stock units, performance shares, non-qualified stock options, incentive stock options and stock appreciation rights to officers and employees of Teledyne. Employee stock options become exercisable in one-third increments on the first, second and third anniversary of the grant and have a maximum 10-year life.

Stock option compensation expense is recorded on a straight line basis over the appropriate vesting period, generally three years except for stock options that were granted after 2018 to Teledyne’s President and Chief Executive Officer and Teledyne’s Executive Chairman, which were expensed immediately. The Company recorded $26.1 million, $19.8 million, and $14.2 million for stock option expense, for 2019, 2018 and 2017, respectively. The Company issues shares of common stock upon the exercise of stock options. On January 21, 2020, the Company granted 245,985 stock options to its employees at an exercise price of $383.33 per share.

The total pretax intrinsic value of options exercised during 2019 and 2018 (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) was $82.5 million and $69.6 million, respectively. At December 29, 2019, the intrinsic value of stock options outstanding was $431.5 million and the intrinsic value of stock options exercisable was $315.2 million. During 2019 and 2018, the amount of cash received from the exercise of stock options was $34.6 million and $37.2 million, respectively.

At December 29, 2019, there was $25.6 million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted-average period of 1.3 years.

The fair value of stock options is determined by using a lattice-based option pricing model. The Company uses a combination of its historical stock price volatility and the volatility of exchange traded options, if any, on the Company stock to compute the expected volatility for purposes of valuing stock options granted. The period used for the historical stock price corresponded to the expected term of the options. The period used for the exchange traded options, if any, included the longest-dated options publicly available, generally three months. The expected dividend yield is based on Teledyne’s practice of not paying dividends. The risk-free rate of return is based on the yield of U.S. Treasury Strips with terms equal to the expected life of the options as of the grant date. The expected life in years is based on historical actual stock option exercise experience.


Stock option valuation assumptions:	2019		2018		2017
Expected dividend yield	—		—		—
Expected volatility	26.7	%	31.0	%	32.3	%
Risk-free interest rate	2.47% to 2.70%		1.99% to 2.58%		1.0 % to 2.5%
Expected life in years	6.6		6.8		7.2

Based on the assumptions used in the valuation of stock options, the grant date weighted average fair value of stock options granted in 2019, 2018 and 2017 was $72.00, $71.89 and $48.45, respectively.



	2019				2018					2017
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Beginning balance	2,064,740	$	104.66	2,285,703	$	83.73	2,175,442	$	70.44
Granted	390,789	$	217.58	376,065	$	192.28	543,880	$	123.40
Exercised	(429,654)	$	80.31	(516,927)	$	71.95	(390,835)	$	63.96
Canceled or expired	(37,299)	$	181.62	(80,101)	$	129.85	(42,784)	$	92.79
Ending balance	1,988,576	$	130.67	2,064,740	$	104.66	2,285,703	$	83.73
Options exercisable at end of period	1,242,205	$	94.04	1,257,766	$	78.26	1,443,241	$	70.35


	Stock Options Outstanding							Stock Options Exercisable
Range of Exercise Prices	Shares	Weighted Average Exercise Price		Remaining life in years	Shares	Weighted Average Exercise Price
$20.70-$49.99	120,459	$	44.70	1.2	120,459	$	44.70
$50.00-$99.99	786,518	$	80.73	4.5	786,518	$	80.73
$100.00-$149.99	386,443	$	123.40	7.2	239,913	$	123.39
$150.00-$199.99	314,364	$	192.00	8.2	94,214	$	191.97
$200.00-$237.01	380,792	$	217.69	9.1	1,101	$	228.84



	1,988,576	$	130.67	6.3	1,242,205	$	94.04

Teledyne’s Performance Share Plan (“PSP”) provides grants of performance share units, which key officers and executives may earn if Teledyne meets specified performance objectives over a three-year period. Awards are payable in cash and to the extent available, shares of Teledyne common stock. Awards are generally paid to the participants in three annual installments after the end of the performance cycle so long as they remain employed by Teledyne (with an exception for retirement). Participants in the PSP program can elect to receive a cash payment in lieu of awarded shares to pay income taxes due with respect to an installment payment. The cash payment in lieu of awarded shares is based on the then current market value of Teledyne stock.

In February 2015, the performance cycle for the three-year period ending December 31, 2017, was set. Under the plan, and based on actual performance, the Company issued 6,481 shares in 2018, 8,586 shares in 2019 and 7,673 shares in February 2020.

In February 2018, the performance cycle for the three-year period ending December 31, 2020, was set. Under the plan, and based on actual performance, the maximum number of shares that could be issued in three equal installments in 2021, 2022 and 2023, is 59,427.

The estimated expense for each plan year was based on the expected cash payout and the expected shares to be issued, valued at the share price at the inception of the performance cycle, except for the shares that can be issued based on a market comparison. The estimated expense for these shares was calculated using a lattice-based simulation which takes into consideration several factors including volatility, risk free interest rates and correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index (for the 2018 performance cycle, the comparator is the Russell 1000). No adjustment to the calculated expense for the shares issued based on a market based comparison will be made regardless of the actual performance. The Company recorded $7.5 million, $5.1 million and $4.6 million in compensation expense related to the PSP program for fiscal years 2019, 2018 and 2017, respectively.

Under Teledyne’s restricted stock award program key officers and executives receive a grant of stock equal to a specified percentage of the participant’s annual base salary at the date of grant. The restricted stock is subject to transfer and forfeiture restrictions during an applicable “restricted period”. The restrictions have both time-based and performance-based components. The restricted period expires (and the restrictions lapse) on the third anniversary of the date of grant, subject to the achievement of stated performance objectives over a specified three-year performance period. If employment is terminated (other than by death, retirement or disability) during the restricted period, the stock grant is forfeited.

The estimated expense for restricted stock awards to employees is based on a lattice-based simulation which takes into consideration several factors including volatility, risk free interest rates and the correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index (for awards granted after 2017 the comparator is the Russell 1000). No adjustment to the estimated expense will be made regardless of actual performance. The Company recorded $3.0 million, $2.7 million and $2.7 million in compensation expense related to restricted stock awards to employees, for fiscal years 2019, 2018 and 2017, respectively. At December 29, 2019, there was $3.3 million of total estimated unrecognized compensation cost related to non-vested awards which is expected to be recognized over a weighted-average period of approximately 1.5 years.


Restricted Stock:	Shares	Weighted average fair value per share
Balance, January 1, 2017	97,044	$	83.68
Granted	24,232	$	114.74
Issued	(30,704)	$	87.98
Forfeited/Canceled	(2,136)	$	82.58
Balance, December 31, 2017	88,436	$	90.72
Granted	16,733	$	176.64
Issued	(28,855)	$	92.74
Forfeited/Canceled	(2,094)	$	135.48
Balance, December 30, 2018	74,220	$	108.05
Granted	17,522	$	200.00
Issued	(35,330)	$	72.91

Balance, December 29, 2019	56,412	$	158.62

In December 2016, Teledyne granted 16,045 restricted stock units with a grant date fair value of $2.0 million to Teledyne’s then Chief Executive Officer, which vest in equal annual installments over three years. The calculated expense for restricted stock units is based on the market price of a share of Teledyne common stock at the grant date, which is recognized over the vesting period and was $0.6 million in 2019, $0.7 million in 2018 and $0.7 million in 2017. In both December 2019 and December 2018, we issued 2,697 shares under the plan and 2,651 shares were withheld to pay income taxes. In December 2017, we issued 2,389 shares under the plan and 2,960 shares were withheld to pay income taxes.

Non-employee directors each receive restricted stock units valued at $110,000 (or valued at $55,000 for a person who becomes a director for the first time after the date of the Annual Meeting). The restricted stock units generally vest one year following the date of grant and are settled in shares of common stock on the date of vesting unless a director has elected to defer settlement of the award until his or her separation from Board service. The annual expense related to non-employee director’s restricted stock units was approximately $1.0 million for each of 2019, 2018 and 2017.


Directors Restricted Stock:	Shares	Weighted average fair value per share








Balance, January 1, 2017	11,307	$	97.16
Granted	7,371	$	134.26
Issued	(10,305)	$	96.00

Balance, December 31, 2017	8,373	$	131.25
Granted	5,112	$	193.39
Issued	(5,733)	$	134.26
Balance, December 30, 2018	7,752	$	170.00
Granted	4,155	$	251.23
Issued	(2,840)	$	193.39
Balance, December 29, 2019	9,067	$	199.90