Our 2000 Equity Incentive Plan (2000 Plan) provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock units (RSUs) as the principal equity incentive awards, including certain performance-based awards that are earned based on achieving performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Each restricted stock unit represents the contingent right to receive one share of our common stock.

In the fourth quarter of 2020, we modified certain performance-based awards for executives by adjusting the performance criteria for the current and future periods, as well as removing certain provisions for catch up of unearned awards. There was not a material impact in 2020 due to the timing of the modifications, but there is expected to be an increase in stock-based compensation in 2021 and 2022.

The fair value of RSUs granted in 2020, 2019 and 2018 was based on the fair market value of our stock on the date of grant for performance- and service-based RSUs and based on Monte Carlo simulation model for total shareholder return (TSR) RSUs. The weighted average fair value per share of restricted stock units granted in 2020, 2019 and 2018 was $77.57, $82.77 and $76.17, respectively.

We account for forfeitures as they occur, rather than estimate expected forfeitures.

The following table shows total stock-based compensation expense recorded from our stock-based awards as reflected in our Consolidated Statements of Operations:

(in thousands)	Year ended September 30,
	2020		2019		2018
Cost of license revenue	$	47	$	509	$	144
Cost of support and cloud services revenue		6,910		5,004		4,302
Cost of professional services revenue		7,012		6,426		7,079
Sales and marketing		37,351		32,026		24,893
Research and development		27,005		22,019		13,488
General and administrative		36,824		20,416		33,033
Total stock-based compensation expense	$	115,149	$	86,400	$	82,939

Stock-based compensation expense in 2020, 2019 and 2018 includes $5.8 million, $6.2 million, and $4.3 million respectively, related to our employee stock purchase plan (ESPP).

As of September 30, 2020, total unrecognized compensation cost related to unvested restricted stock units expected to vest was approximately $213.5 million and the weighted average remaining recognition period for unvested awards was 19 months.

As of September 30, 2020, 5.3 million shares of common stock were available for grant under the 2000 Plan and 3.5 million shares of common stock were reserved for issuance upon the exercise of stock options and vesting of restricted stock units granted and outstanding.

Our ESPP, initiated in the fourth quarter of 2016, allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to any other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period.

Restricted stock unit activity for the year ended September 30, 2020 (in thousands, except grant date fair value data)	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance of outstanding restricted stock units, October 1, 2019		3,232		$	80.52
Granted		2,770		$	77.57
Vested		(1,391	)	$	71.55
Forfeited or not earned		(1,102	)	$	89.09
Balance of outstanding restricted stock units, September 30, 2020		3,509		$	79.13	$	290,227

(in thousands)

Restricted Stock Units

Grant period

Performance-

based RSUs⁽¹⁾

Service-based

RSUs⁽²⁾

Total Shareholder Return RSUs⁽³⁾

Year ended September 30, 2020

501

2,168

101

As of September 30, 2020, weighted average remaining vesting term for outstanding awards is 1.3 years.

The number of TSR RSUs that vest over the three-year period will be determined based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of three measurement periods ending on September 30, 2020, 2021 and 2022, respectively. The RSUs earned for each period will vest on November 15 following each measurement period, up to a maximum of two times the number of TSR RSUs eligible to be earned for the period (up to a maximum aggregate of 202 thousand RSUs). No vesting will occur in a period unless an annual threshold requirement is achieved. If the return to PTC shareholders is negative but still meets or exceeds the peer group indexed return, a maximum of 100% of the TSR RSUs will vest for the measurement period. TSR RSUs not earned in either of the first two measurement periods are eligible to be earned in the third measurement period.

The weighted-average fair value of the TSR RSUs was $106.69 per target RSU on the grant date. The fair value of the TSR RSUs was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The method uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the historical volatility of each entity, and the pairwise correlations of each entity being modeled. The fair value for each simulation is the product of the payout percentage determined by PTC’s TSR rank against the peer group, the projected price of PTC stock, and a discount factor based on the risk-free rate.

The significant assumptions used in the Monte Carlo simulation model were as follows:

(in thousands)	Year ended September 30,
Value of stock option and stock-based award activity	2020		2019		2018
Total fair value of restricted stock unit awards vested	$	103,265	$	131,659	$	127,525

In 2020, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $33.7 million. In 2019, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $44.4 million. In 2018, shares issued upon vesting of restricted stock and restricted stock units were net of 0.7 million shares retained by us to cover employee tax withholdings of $45.4 million.