Stock-based Compensation

Stock Incentive Plans

The Company has a stock-based compensation program that provides equity incentives for employees, consultants and directors. This program includes non-statutory stock options and nonvested stock awards (referred to as restricted stock unit awards) granted under two plans: the FLIR Systems, Inc. 2002 Stock Incentive Plan (the “2002 Plan”) and the FLIR Systems, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The Company has discontinued issuing awards out of the 2002 Plan but previously granted awards under the 2002 Plan remain outstanding.

The Company has granted time-based options, time-based restricted stock unit awards, market-based restricted stock unit awards and performance-based restricted stock unit awards. Options generally expire ten years from the grant date. Time-based options and restricted stock unit awards generally vest over a three year period. Market-based restricted stock unit awards may be earned based upon the Company's total shareholder return compared to the total shareholder return of the component company at the 60th percentile level in the S&P 500 Index over a three year period. Performance-based restricted stock unit awards granted during the year ended December 31, 2016 may be earned based upon the Company's return on invested capital over a three year period. Performance-based restricted stock unit awards granted during the year ended December 31, 2017 may be earned based upon the Company's operating margin performance over a three year period. Performance-based restricted stock unit awards granted during the year ended December 31, 2018 may be earned based upon a combination of the Company's revenue and operating performance over a three year period. Certain shares vested under the performance-based restricted stock unit awards and the market-based restricted stock unit awards must be held by the participant for a period of one year from the vest date.

Shares issued as a result of stock option exercises and the distribution of vested restricted stock units are new shares.

Information with respect to stock option activity for 2018 is as follows:



	Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2017	3,212		$	29.66	5.4
Granted	—		—
Exercised	(959	)	29.47
Forfeited	(97	)	31.16
Outstanding at December 31, 2018	2,156		$	29.67	4.7	$	29,903
Exercisable at December 31, 2018	1,970		$	29.28	4.4	$	28,091
Vested and expected to vest at December 31, 2018	2,147		$	29.66	4.7	$	29,812

Information with respect to restricted stock unit activity for 2018 is as follows:



	Shares (in thousands)		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	2,013		$	31.86
Granted	771		52.83
Vested	(812	)	31.17
Forfeited	(221	)	34.47
Outstanding at December 31, 2018	1,751		$	40.77

Included in the restricted stock units outstanding at December 31, 2018 were approximately 216,000 vested restricted stock units that were not distributed.

As of December 31, 2018, there were 7,451,000 shares of common stock reserved for future issuance under the stock incentive plans.


Note 16.	Stock-based Compensation - (Continued)

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”) which allows employees to purchase shares of the Company’s common stock at 85 percent of the fair market value at the lower of either the date of enrollment or the purchase date. The ESPP provides for six-month offerings commencing on May 1 and November 1 of each year with purchases on April 30 and October 31 of each year. Shares purchased under the ESPP must be held by employees for a period of at least 18 months after the date of purchase. The Company reserved 5,000,000 shares of common stock for issuance under the ESPP.

There were 140,000 shares issued at the average purchase price of $39.47 during 2018 and 2,838,000 shares remained available under the ESPP at December 31, 2018 for future issuance. Shares issued for ESPP purchases are new shares.