Stock-Based Compensation Plans

3 Months Ended

Apr. 03, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

Teledyne has long-term incentive plans pursuant to which it has granted non-qualified stock options, restricted stock and performance shares to certain employees. The Company also has non-employee director stock compensation plans, pursuant to which non-qualified stock options and common stock, and beginning in 2015 restricted stock units, have been issued to its directors. After 2014, non-employee directors no longer receive non-qualified stock options.

Stock Incentive Plan

The following disclosures are based on stock options granted to Teledyne’s employees and directors. Stock option compensation expense was $3.3 million for the first quarter of 2016 and $3.8 million for the first quarter of 2015. Employee stock option grants are charged to expense evenly over the three year vesting period. Director stock option grants are charged to expense evenly over the one-year vesting period. For 2016, the Company currently expects approximately $11.7 million in stock option compensation expense based on stock options currently outstanding. This amount can be impacted by employee retirements and terminations or stock options granted during the remainder of the year. The Company issues shares of common stock upon the exercise of stock options. No stock options were granted in 2015.

The following assumptions were used in the valuation of stock options granted in 2016:

	2016
Expected volatility	32.7		%
Risk-free interest rate	1.5		%
Expected life in years	7.2
Expected dividend yield	—
Weighted average fair value	$	29.93

Stock option transactions for the first quarter ended April 3, 2016 are summarized as follows:

	2016
	First Quarter
	Shares		Weighted Average Exercise Price
Beginning balance	2,383,870		$	63.74
Granted	518,310		$	78.40
Exercised	(63,968	)	$	40.44
Canceled	(14,706	)	$	79.60
Ending balance	2,823,506		$	66.87
Options exercisable at end of period	1,840,740		$	58.23

Performance Share Plan and Restricted Stock Award Program

For the first of three annual distributions of the 2012 to 2014 Performance Share Plan, 1,944 shares of Teledyne common stock were issued in the first quarter of 2015. In the first quarter of 2016, the Company issued 864 shares and 1,883 shares remain to be issued in 2017. In the first quarter of 2016, the restriction was removed for 39,568 shares of Teledyne common stock related to the 2013 to 2015 Restricted Stock Award Program. In the first quarter 2016, the Company granted 37,104 shares of restricted stock securities to certain employees at a weighted average fair value of $72.91 per share for the 2016 to 2018 program. Also in the second quarter of 2016, the Company issued 10,305 shares of restricted stock units to non-employee directors at a weighted average fair value of $96.00 per share, which vest one year from the grant date.