Stock-Based Compensation

The weighted average estimated fair value of option awards granted was $20.05 and $31.26 during the three and nine months ended March 31, 2019, respectively, and $19.21 and $17.04 during the three and nine months ended March 31, 2018, respectively.

We utilized the Black-Scholes option valuation model with the following weighted average assumptions:



	Nine Months Ended March 31,
	2019		2018
Risk-free interest rate	2.8	%	1.7	%
Expected dividend yield	0.0	%	0.0	%
Expected life (in years)	4.6		4.6
Expected volatility factor	26.6	%	28.0	%

The stock-based compensation expense under all equity plans and its classification in the unaudited consolidated statements of operations for the three and nine months ended March 31, 2019 and 2018 are as follows:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2019		2018
	(Dollars in Thousands)
Recorded as expenses:
Cost of maintenance	$	379	$	—	$	916	$	—
Cost of services and other	366		345		1,038		1,119
Selling and marketing	1,228		979		3,687		2,870
Research and development	1,518		1,892		5,451		5,679
General and administrative	2,763		2,137		10,362		7,554
Total stock-based compensation	$	6,254	$	5,353	$	21,454	$	17,222

A summary of stock option and restricted stock unit ("RSU") activity under all equity plans for the nine months ended March 31, 2019 is as follows:



	Stock Options							Restricted Stock Units
	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in 000’s)		Shares		Weighted Average Grant Date Fair Value
Outstanding at June 30, 2018	1,369,442		$	45.93	7.23	$	64,103	621,700		$	53.64
Granted	278,454		113.94					635,959		114.66
Settled (RSUs)	—							(326,903	)	59.94
Exercised	(145,214	)	40.75					—
Cancelled / Forfeited	(83,607	)	67.38					(71,152	)	67.45
Outstanding at March 31, 2019	1,419,075		$	58.54	7.02	$	67,607	859,604		$	95.25
Vested and exercisable at March 31, 2019	876,403		$	46.06	6.06	$	51,599	—
Vested and expected to vest as of March 31, 2019	1,356,714		$	57.71	6.95	$	65,668	807,825		$	96.33

The weighted average grant-date fair value of RSUs granted was $82.18 and $114.66 during the three and nine months ended March 31, 2019, respectively, and $75.41 and $64.18 during the three and nine months ended March 31, 2018, respectively. The total fair value of shares vested from RSU grants was $6.9 million and $31.9 million during the three and nine months ended March 31, 2019, respectively, and $5.7 million and $16.0 million during the three and nine months ended March 31, 2018, respectively.

At March 31, 2019, the total future unrecognized compensation cost related to stock options was $9.9 million and is expected to be recorded over a weighted average period of 2.6 years. At March 31, 2019, the total future unrecognized compensation cost related to RSUs was $30.1 million and is expected to be recorded over a weighted average period of 2.6 years.

The total intrinsic value of options exercised was $2.4 million and $9.2 million during the three and nine months ended March 31, 2019, respectively, and $4.9 million and $7.9 million during the three and nine months ended March 31, 2018, respectively. We received cash proceeds from option exercises of $1.4 million and $5.9 million during the three and nine months ended March 31, 2019, respectively, and $3.9 million and $7.4 million during the three and nine months ended March 31, 2018, respectively. We withheld withholding taxes on vested RSUs of $2.4 million and $12.0 million during the three and nine months ended March 31, 2019, respectively, and $2.0 million and $5.5 million during the three and nine months ended March 31, 2018, respectively.

At March 31, 2019, common stock reserved for future issuance or settlement under equity compensation plans was 9.8 million shares.

During the nine months ended March 31, 2019, we granted performance-based long-term incentive awards (“performance awards”) to certain of our executives, including our named executive officers. The performance period for each performance award is either of the following two-year periods: (i) fiscal year 2019 - fiscal year 2020, or (ii) fiscal year 2020 - fiscal year 2021. Participants receive RSUs on the grant date associated with achievement of all performance targets. The performance targets for the performance awards are based on meeting annual spend growth, defined as an estimate of the annualized value of our portfolio of term license arrangements, as of a specific date, and the performance goals set out in the executive bonus plan for each fiscal year, such as free cash flow. If the performance targets are met during one of the two performance periods and the participant remains actively employed by us, the RSUs convert to time-based vesting wherein fifty percent of the awards immediately vest, and the remaining fifty percent are subject to additional service vesting over a three-year period. In general, if the performance targets are not met, or if the participant is no longer actively employed by us prior to the performance targets being met, the participant forfeits all of the RSUs.

During the nine months ended March 31, 2019, we granted 382,373 RSUs in connection with the performance awards. As of March 31, 2019, all of the RSUs issued in connection with the performance awards are unvested and outstanding.

We record compensation expense for the performance awards based on the fair value of the awards, in an amount proportionate to the service time rendered by the participant, when it is probable that the achievement of the goals will be met. The total fair value of the performance awards granted during the nine months ended March 31, 2019 was estimated using the closing price on the date of grant as well as the estimated probable achievement levels of the performance metrics. If the performance-based conditions are not met, no compensation cost is recognized and any recognized compensation cost is reversed. As of March 31, 2019, we concluded that the performance metrics related to the performance awards were not probable of achievement; therefore, no compensation expense was recognized during the nine months ended March 31, 2019.

On July 26, 2018, our Board of Directors approved the Aspen Technology, Inc. 2018 Employee Stock Purchase Plan (the "ESPP"). The ESPP is intended to be a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, or the IRC. The ESPP was approved at our Annual Meeting of Stockholders on December 7, 2018. The ESPP currently provides for a purchase price equal to 85% of the lower of (a) the fair market value of the common stock on the first trading day of each ESPP offering period and (b) the fair market value of the common stock on the last day of the offering period. Our initial offering period is for January 1, 2019 through June 30, 2019.