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 Board of Director stock compensation plans, pursuant to which common stock, stock options and restricted stock units have been issued to its directors.

Stock Incentive Plan

Stock option compensation expense was $8.9 million for the first quarter of 2019 and was $4.9 million for the first quarter of 2018. Employee stock option grants are charged to expense evenly over the three year vesting period except for stock options that were granted in 2019 to Teledyne’s President and Chief Executive Officer and Teledyne’s Executive Chairman which were expensed immediately. For 2019, the Company currently expects approximately $26.6 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.

The following assumptions were used in the valuation of stock options granted in 2019:



	2019
Expected volatility	26.7%
Risk-free interest rate range	2.47% to 2.70%
Expected life in years	6.6
Expected dividend yield	—

Based on the assumptions used in the valuation of stock options, the grant date weighted average fair value of stock options granted in 2019 was $72.00 per share.

Stock option transactions for the first quarter of 2019 are summarized as follows:



	2019
	First Quarter
	Shares		Weighted Average Exercise Price
Beginning balance	2,064,740		$	104.66
Granted	390,789		$	217.58
Exercised	(120,783	)	$	84.76
Canceled	(17,223	)	$	171.49
Ending balance	2,317,523		$	124.24
Options exercisable at end of period	1,549,179		$	79.52

Performance Share Plan and Restricted Stock Award Program

Under the 2015 to 2017 Performance Share Plan, in the first quarter of 2019 the Company issued 8,586 shares of Teledyne common stock and in the first quarter of 2018, the Company issued 6,481 shares of Teledyne common stock. A total of 15,578 shares remain to be issued in 2020, subject to the terms of the plan.

In the first quarter of 2018, the performance cycle for the three-year period ending December 31, 2020, was set. Under the plan, the maximum number of shares that could be issued in three equal installments in 2021, 2022 and 2023, is 58,729.

The following table shows the restricted stock activity for the first three months of 2019:



	Shares		Weighted average fair value per share
Balance, December 30, 2018	74,220		$	108.05
Granted	17,522		$	200.00
Vested	(35,330	)	$	72.91
Balance, March 31, 2019	56,412		$	158.62