Equity Incentive Plan

12 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Abstract]

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 2019, 2018 and 2017 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 2019, 2018 and 2017 was $82.77, $76.17 and $51.27, respectively. In 2019, 2018 and 2017, the weighted average fair value per share of restricted stock was increased by $4.62, $4.35 and $2.27, respectively, by the additional shares earned for the 2016 and 2017 total shareholder return (TSR) grants upon measurement on the vest date in 2018.

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:



(in thousands)	Year ended September 30,
	2019		2018		2017
Cost of license revenue	$	509	$	144	$	(148	)
Cost of support and cloud services revenue	5,004		4,302		6,643
Cost of professional services revenue	6,426		7,079		6,116
Sales and marketing	32,026		24,893		15,373
Research and development	22,019		13,488		13,968
General and administrative	20,416		33,033		34,756
Total stock-based compensation expense	$	86,400	$	82,939	$	76,708

Stock-based compensation expense in 2019, 2018 and 2017 includes $6.2 million, $4.3 million, and $3.2 million respectively, related to our employee stock purchase plan (ESPP).

As of September 30, 2019, total unrecognized compensation cost related to unvested restricted stock units expected to vest was approximately $159.2 million and the weighted average remaining recognition period for unvested awards was 22 months.

As of September 30, 2019, 6.9 million shares of common stock were available for grant under the 2000 Plan and 3.2 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.



Restricted stock unit activity for the year ended September 30, 2019 (in thousands except grant date fair value data)	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value as of September 30, 2019
Balance of outstanding restricted stock units October 1, 2018	3,284		$	65.93
Granted (1)	1,836		$	82.77
Vested	(1,494	)	$	55.11
Forfeited or not earned	(394	)	$	66.20
Balance of outstanding restricted stock units September 30, 2019	3,232		$	80.52	$	220,358

(1) Restricted stock granted includes approximately 141,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2019.

(1) Substantially all the performance-based RSUs were granted to our executive officers. Approximately 160,000 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. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2019, 2020 and 2021, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. An additional 213,000 performance-based RSUs are eligible to be earned based upon a 2019 performance measure, which RSUs will be forfeited to the extent the performance measure is not achieved. These RSUs would have vest, to the extent earned, in three substantially equal installments on November 15, 2019, 2020 and 2021. These RSUs were not earned and were forfeited.

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



(in thousands)	Year ended September 30,
Value of stock option and stock-based award activity	2019		2018		2017
Total fair value of restricted stock unit awards vested	$	131,659	$	127,525	$	78,573

In 2019, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $44.4 million. 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 and restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $26.7 million.

(Number of Units in thousands)

Restricted Stock Units

Restricted stock unit grants

Performance-based RSUs ⁽¹⁾

Service-based RSUs ⁽²⁾

Year ended September 30, 2019