Stock Based Compensation

9 Months Ended

Sep. 30, 2016

Stock Based Compensation [Abstract]

Stock-Based Compensation

5. Stock Based Compensation

The Roper Technologies, Inc. 2016 Incentive Plan ("2016 Plan") is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper's employees, officers and directors.  The 2016 Plan was approved by shareholders at the Annual Meeting of Shareholders on May 27, 2016. The 2016 Plan replaces the Roper Technologies, Inc. Amended and Restated 2006 Incentive Plan ("2006 Plan"), and no additional grants will be made from the 2006 Plan.

Roper's stock purchase plan allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper's common stock at a 5% discount to the average closing price of the stock at the beginning and end of a quarterly offering period. Common stock sold to employees may be either treasury stock, stock purchased on the open market, or newly issued shares.

The following table provides information regarding the Company's stock-based compensation expense (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Stock based compensation		$	21,388		$	17,597		$	60,480		$	47,035
Tax effect recognized in net income			7,486			6,159			21,168			16,462
Windfall tax benefit/(shortfall), net			-			2,132			-			10,887

Windfall tax benefits are no longer calculated due to the adoption of the ASU related to stock compensation (see Note 2), as all tax benefits are recognized in net income.

Stock Options - In the nine months ended September 30, 2016, 633,000 options were granted with a weighted average fair value of $34.45 per option. During the same period in 2015, 585,155 options were granted with a weighted average fair value of $33.69 per option. All options were issued at grant date fair value, which is defined by both the 2016 Plan and the 2006 Plan as the closing price of Roper's common stock on the date of grant.

Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:

	Nine months ended September 30,
	2016		2015
Risk-free interest rate (%)		1.38		1.52
Expected option life (years)		5.20		5.10
Expected volatility (%)		21.63		22.23
Expected dividend yield (%)		0.70		0.62

Cash received from option exercises for the nine months ended September 30, 2016 and 2015 was $15.9 million and $21.3 million, respectively.

Restricted Stock Awards - During the nine months ended September 30, 2016, 395,980 restricted stock awards were granted with a weighted average grant date fair value of $169.03 per restricted share. During the same period in 2015, 349,035 restricted stock awards were granted with a weighted average grant date fair value of $152.80 per restricted share. All grants were issued at grant date fair value.

During the nine months ended September 30, 2016, 62,534 restricted awards vested with a weighted average grant date fair value of $135.68 per restricted share, and a weighted average vest date fair value of $172.61 per restricted share.

Employee Stock Purchase Plan - During the nine months ended September 30, 2016 and 2015, participants in the employee stock purchase plan purchased 15,076 and 13,437 shares, respectively, of Roper's common stock for total consideration of $2.58 million and $2.12 million, respectively. All shares were purchased from Roper's treasury shares.