Equity Incentive Plan

Our 2000 Equity Incentive Plan (2000 Plan) provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock units as the principal equity incentive awards, including certain performance-based awards that are earned based on achieving performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Each restricted stock unit represents the contingent right to receive one share of our common stock.

The fair value of restricted stock units granted in 2018, 2017 and 2016 was based on the fair market value of our stock on the date of grant. The weighted average fair value per share of restricted stock units granted in 2018, 2017 and 2016 was $76.17, $51.27 and $37.25, respectively. In 2018 and 2017, the weighted average fair value per share of restricted stock was increased by $4.35 and $2.27, respectively, by the additional shares earned for the 2016 TSR grant upon measurement on the vest date in 2017.

Beginning in the first quarter of 2018, we account for forfeitures as they occur, rather than estimate expected forfeitures.

The following table shows total stock-based compensation expense recorded from our stock-based awards as reflected in our Consolidated Statements of Operations:



	Year ended September 30,
	2018		2017		2016
	(in thousands)
Cost of license subscription revenue	$	1,801	$	1,379	$	805
Cost of support revenue	2,645		5,116		4,593
Cost of professional services revenue	7,079		6,116		5,393
Sales and marketing	24,893		15,373		14,659
Research and development	13,488		13,968		10,174
General and administrative	33,033		34,756		30,372
Total stock-based compensation expense	$	82,939	$	76,708	$	65,996

Stock-based compensation expense in 2018, 2017 and 2016 includes $4.3 million, $3.2 million, and $0.4 million respectively, related to our employee stock purchase plan (ESPP). The stock-based compensation expense in 2016 included $10 million of expense related to modifications of certain performance-based RSUs previously granted under our long-term incentive programs. The Compensation Committee of our Board of Directors amended these equity awards due to the impact of changes in our business model and strategy and foreign currency on our financial results.

As of September 30, 2018, total unrecognized compensation cost related to unvested restricted stock units expected to vest was approximately $144.5 million and the weighted average remaining recognition period for unvested awards was 28 months.

As of September 30, 2018, 2.3 million shares of common stock were available for grant under the 2000 Plan and 3.3 million shares of common stock were reserved for issuance upon the exercise of stock options and vesting of restricted stock units granted and outstanding.

Our ESPP, initiated in the fourth quarter of 2016, allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to any other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period.



	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value as of September 30, 2018
Restricted stock unit activity for the year ended September 30, 2018	(in thousands except grant date fair value data)
Balance of nonvested outstanding restricted stock units October 1, 2017	3,487		$	45.57
Granted (1)	2,190		$	76.17
Vested	(1,829	)	$	43.91
Forfeited or not earned	(564	)	$	51.32
Balance of nonvested outstanding restricted stock units September 30, 2018	3,284		$	65.93	$	348,638

(1) Restricted stock granted includes approximately 184,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2018.

(1) Substantially all the performance-based RSUs were granted to our executive officers. Approximately 189,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period. RSUs not earned for a period may be earned in the third period. An additional 250,000 shares are eligible to vest based upon a 2018 performance measure. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2018, November 15, 2019 and November 15, 2020, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. An additional 500,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period in fiscal years 2021, 2022 and 2023. RSUs not earned for a period may be earned in the third period.

(2) The service-based RSUs were granted to employees, our executive officers and our directors. All service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

Until July 2005, we generally granted stock options. For those options, the option exercise price was typically the fair market value at the date of grant, and they generally vested over four years and expired ten years from the date of grant. There were no options outstanding and exercisable at September 30, 2018, 2017 and 2016.



	Year ended September 30,
	2018		2017		2016
Value of stock option and stock-based award activity	(in thousands)
Total intrinsic value of stock options exercised	$	—	$	—	$	88
Total fair value of restricted stock unit awards vested	$	127,525	$	78,573	$	63,655

In 2018, shares issued upon vesting of restricted stock units were net of 0.7 million shares retained by us to cover employee tax withholdings of $45.4 million. In 2017, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $26.7 million. In 2016, shares issued upon vesting of restricted stock and restricted stock units were net of 0.6 million shares retained by us to cover employee tax withholdings of $20.9 million.

Restricted Stock Units

Restricted stock unit grants

Performance-based RSUs (1)

Service-based RSUs (2)

(Number of Units in thousands)

Year ended September 30, 2018