EMPLOYEE STOCK BENEFIT PLANS

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the Company’s Consolidated Statements of Income for the periods indicated:



Fiscal Years	2017		2016		2015
(In millions)
Restricted stock units	$	53.3	$	35.9	$	27.9
Stock options	5.7		10.9		16.6
ESPP	5.8		5.8		5.6
Total stock-based compensation expense	$	64.8	$	52.6	$	50.1

Unrecognized Stock-Based Compensation

At the end of fiscal 2017, total unamortized stock-based compensation expense was $111.3 million, with a weighted-average recognition period of 2.6 years.

2002 Stock Plan

Trimble’s 2002 Stock Plan (“2002 Plan”), provides for the granting of incentive and non-statutory stock options and restricted stock units ("RSUs") for up to 74.6 million shares plus any shares currently reserved but unissued to employees, consultants, and directors of Trimble. Grants of RSUs reduce the plan reserves by a 1.69 multiplier. Both incentive and non-statutory stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant. Employee stock options under the 2002 plan generally vest over four years with annual or monthly vesting, and expire seven years from the date of grant. RSUs are converted into shares of Trimble common stock upon vesting on a one-for-one basis, except those with market-based or performance-based vesting conditions, in which case the number of shares may be greater. Time-based RSUs granted to employees generally vest over four years, and those granted to non-employee directors generally vest after one year. Market-based and performance-based RSUs granted to executive officers and other senior employees generally vest after two to three years. Additionally, RSUs granted to certain executive officers may vest earlier upon their retirement meeting age and service conditions. As of the end of fiscal 2017, the number of shares available for grant under the 2002 stock plan was 16.1 million.

Restricted Stock Units

The following table summarizes the Company’s RSU activity during fiscal 2017:



	Restricted Stock Units Outstanding
	Restricted Stock Units		Weighted Average Grant-Date Fair Value
(In millions, except for per share data)
Outstanding at the beginning of year	4.7		$	26.40
Granted (1)	2.0		$	40.19
Shares released, net	(1.4	)	$	28.06
Cancelled and Forfeited	(0.2	)	$	30.58
Outstanding at the end of year	5.1		$	31.71

(1) During fiscal year 2017, the Company granted approximately 1.3 million time-based RSUs, 0.5 million performance-based RSUs and 0.2 million market-based RSUs. As of fiscal year end 2017, the Company has 1.7 million market-based and performance-based RSUs outstanding and none had vested as of fiscal 2017 year end.

The following table summarizes information about restricted stock units outstanding as of fiscal 2017:



	Number Of Shares Underlying Restricted Stock Units (in millions)	Weighted- Average Remaining Vesting Period (in years)	Aggregate Fair Value (in millions)
Expected to vest (1)	4.7	1.40	$	192.9

(1) For those shares expected to vest upon the achievement of specified performance goals, the amount represents of estimated number of shares that expect to vest based on the estimated achievement of such specified performance goals as of the end of fiscal 2017.

The fair value of restricted stock units expected to vest as of fiscal 2017 is calculated based on the fair value of the Company’s common stock as of the end of fiscal 2017.

Fair value of Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units

Time-based RSUs are service-based awards and vest over time based on continued employment. Performance-based RSUs ("PSUs") vest upon the achievement of specified performance goals, as well as continued employment, and the expense recognized is based upon the expected achievement of such goals. The fair value of time-based RSUs and PSUs is measured on the grant date using the fair value of Trimble’s common stock.

Fair Value of Market-Based Restricted Stock Units

RSUs with market-based vesting conditions vest based on the achievement of the Company’s relative total stockholder return ("TSR") of its common stock as compared to the TSR of the constituents of the S&P 500 at the start of the performance period. The fair value of RSUs with market-based vesting conditions is measured on the grant date using a Monte Carlo simulation with the following weighted-average assumptions:



Fiscal Years	2017		2016		2015
Expected life of Market-Based Restricted Stock Units	3.0 years		3.1 years		2.6 years
Expected stock price volatility	31.46	%	33.8	%	30.9	%
Risk free interest rate	1.46	%	0.9	%	0.9	%
Expected dividend yield	—		—		—

The weighted average grant-date fair value per share of RSUs granted during fiscal years 2017, 2016, and 2015 was $40.19, $26.13, and $23.22 per share, respectively. The fair value of all RSUs vested during fiscal years 2017, 2016, and 2015 was $40.4 million, $33.6 million, and $16.3 million, respectively.

Stock options

The Company did not issue stock options during fiscal 2017. During fiscal 2016 and 2015, stock options issued by the Company were de minimis.

The following table summarizes information about stock options outstanding as of fiscal 2017 year end:



	Number Of Shares (in millions)		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at the beginning of year	7.6		$	24.60
Option exercised	(3.2	)	22.52
Cancelled and Forfeited	—		25.97
Outstanding at the end of year	4.4		26.12		2.17	$	63.8
Options exercisable	4.1		$	26.07	2.04	$	60.1

The total intrinsic value of options exercised during fiscal 2017, 2016 and 2015 was $41.1 million, $36.0 million, and $13.9 million, respectively.

Fair Value of Stock Options

The fair value of stock options is measured on the grant date using a binomial valuation model. The weighted average grant-date fair value per share of stock options granted during fiscal years 2016 and 2015 was $6.03, and $7.36, respectively. The fair value of all stock options vested during fiscal years 2017, 2016 and 2015 was $6.5 million, $14.6 million, and $18.3 million, respectively.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an aggregate of 39.0 million shares of Common Stock have been approved for issuance to eligible employees as approved by the stockholders to date. The plan permits eligible employees to purchase Common Stock through payroll deductions at 85% of the lower of the fair market value of the Common Stock at the beginning or at the end of each offering period, which is generally six months. Rights to purchase shares are granted during the first and third quarter of each fiscal year. The Purchase Plan terminates on March 15, 2027. In fiscal 2017, 2016, and 2015, 0.8 million, 1.1 million, and 1.0 million shares were issued, respectively, representing $20.4 million, $19.1 million, and $18.1 million in cash received for the issuance of stock under the Purchase Plan. At the end of fiscal 2017, the number of shares reserved for future purchases by eligible employees was 9.0 million.

Fair Value of Share Purchase Rights

The fair value of the share purchase rights granted under the Purchase Plan are valued using the Black-Scholes option pricing model with the following weighted-average assumptions:



Fiscal Years	2017		2016		2015
Expected life of purchase	0.5 years		0.5 years		0.5 years
Expected stock price volatility (1)	32.1	%	36.9	%	31.3	%
Risk free interest rate	0.70	%	0.41	%	0.08	%
Expected dividend yield	—		—		—

(1) Expected stock price volatility is based on implied volatilities from traded options on the Company’s stock. The Company used implied volatility because it is representative of future stock price trends during the purchase period.