EMPLOYEE STOCK BENEFIT PLANS

The Company’s stock benefit plans include the employee stock purchase plan and stock plans adopted in 2002, 1993, 1992, 1990, as well as one stock plan assumed through an acquisition in 2007. Other than the employee stock purchase plan and the 2002 and 1992 stock plans described below, the other plans have no shares available for future grant.

Plans

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an aggregate of 39.1 million shares of Common Stock have been approved for issuance to eligible employees as approved by the stockholders to date. The plan permits eligible employees to purchase Common Stock through payroll deductions at 85% of the lower of the fair market value of the Common Stock at the beginning or at the end of each offering period, which is generally six months. Rights to purchase shares are granted during the first and third quarter of each fiscal year. The Purchase Plan terminates on September 30, 2018. In fiscal 2016, 2015 and 2014, 1.1 million, 1.0 million, and 0.7 million shares were issued, respectively, representing $19.1 million, $18.1 million and $16.4 million in cash received for the issuance of stock under the Purchase Plan. At the end of fiscal 2016, the number of shares reserved for future purchases by eligible employees was 9.8 million.

2002 Stock Plan

Trimble’s 2002 Stock Plan (“2002 Plan”), provides for the granting of incentive and non-statutory stock options and restricted stock units ("RSUs") for up to 62.6 million shares plus any shares currently reserved but unissued to employees, consultants, and directors of Trimble. Both incentive and non-statutory stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant. Employee stock options under the 2002 plan generally vest over four years with biennial, annual, or monthly vesting, and expire seven years from the date of grant. RSUs are converted into shares of Trimble common stock upon vesting on a one-for-one basis, except those with market-based or performance-based vesting conditions, in which the number of shares that may be greater. RSUs granted to employees generally vest over four years. RSUs granted to non-employee directors generally vest after one year. Grants of RSUs reduce the plan reserves by the number of shares to be issued multiplied by 1.69 and any forfeitures of these awards due to their not vesting would increase the plan reserve by the same measure.

1992 Employee Stock Bonus Plan

At the end of fiscal 2016, there were no options outstanding to purchase shares under the 1992 Employee Stock Bonus Plan (“Bonus Plan”) and 1,606 shares were available for future grant under the Bonus Plan.

Stock Option and Restricted Stock Unit Activity

The following table summarizes the Company’s stock option and restricted stock unit activity during fiscal 2016:



	Stock Options Outstanding				Restricted Stock Units Outstanding
	Options		Weighted average exercise price		Restricted Stock Units		Weighted Average Grant-Date Fair Value
(In millions, except for per share data)
Outstanding at the beginning of year	11.6		$	22.15	4.3		$	26.98
Granted	—		$	19.28	2.1		$	26.13
Option exercised	(3.7	)	$	16.47	—		$	—
Shares released, net	—		$	—	(1.2	)	$	27.86
Cancelled and Forfeited	(0.3	)	$	27.05	(0.5	)	$	26.43
Outstanding at the end of year	7.6		$	24.60	4.7		$	26.40

During fiscal year 2016, the Company granted 0.7 million market-based and performance-based restricted stock units. As of fiscal year end 2016, the Company has 1.1 million market-based and performance-based restricted stock units outstanding and none had vested as of fiscal 2016 year end.

As of the end of fiscal 2016, the number of shares available for grant under the 2002 stock plan was 7.7 million.

The following table summarizes information about stock options outstanding as of fiscal 2016 year end:



	Number Of Shares (in millions)	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Vested and expected to vest	7.6	$	24.59	2.70	$	44.8
Options exercisable	6.6	$	24.15	2.47	$	41.3

The intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the end of fiscal 2016. The total intrinsic value of options exercised during fiscal 2016, 2015 and 2014 was $36.0 million, $13.9 million, and $61.3 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.

The following table summarizes information about restricted stock units outstanding as of fiscal 2016:



	Number Of Shares Underlying Restricted Stock Units (in millions)	Weighted- Average Remaining Vesting Period (in years)	Aggregate Fair Value (in millions)
Vested and expected to vest	5.5	1.64	$	164.7

The fair value of restricted stock units vested and expected to vest as of fiscal 2016 is calculated based on the fair value of the Company’s common stock as of the end of fiscal 2016.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense included in the Consolidated Statements of Income.



Fiscal Years	2016		2015		2014
(In millions)
Cost of sales	$	3.8	$	3.9	$	3.2
Research and development	9.1		8.7		6.8
Sales and marketing	8.3		9.1		7.6
General and administrative	31.4		28.4		25.8
Total operating expenses	48.8		46.2		40.2
Total stock-based compensation expense	$	52.6	$	50.1	$	43.4

Fair Value of Share Purchase Rights

The fair value of the share purchase rights granted under the Purchase Plan are valued using the Black-Scholes option pricing model with the following weighted-average assumptions:



Fiscal Years	2016		2015		2014
Expected life of purchase	0.5 years		0.5 years		0.5 years
Expected stock price volatility	36.9	%	31.3	%	30.5	%
Risk free interest rate	0.41	%	0.08	%	0.07	%
Expected dividend yield	—		—		—

Expected Life of Purchase—The Company’s expected life of the purchase is based on the term of the offering period of the purchase plan.

Expected Stock Price Volatility—The Company’s computation of expected volatility is based on implied volatilities from traded options on the Company’s stock. The Company used implied volatility because it is representative of future stock price trends during the purchase period.

Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the purchase period.

Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

The weighted average grant-date fair value per share of stock purchase rights granted under the Employee Stock Purchase Plan during fiscal years 2016, 2015 and 2014 was $6.51, $5.24 and $8.32 per share, respectively.

Fair value of Stock Options

The fair value of stock compensation is valued as of the grant date using a binomial valuation model. The binomial model takes into account variables such as volatility, dividend yield rate, and risk free interest rate. In addition, the binomial model incorporates actual option-pricing behavior and changes in volatility over the option’s contractual term. For options granted during fiscal 2016, 2015 and 2014, the following weighted-average assumptions were used:



Fiscal Years	2016		2015		2014
Expected life of options	4.0 years		3.9 years		4.0 years
Expected stock price volatility	38	%	36	%	35	%
Risk free interest rate	1.49	%	1.26	%	1.29	%
Expected dividend yield	—		—		—

Expected Life of Options—The Company’s expected life represents the period that the Company’s stock options are expected to be outstanding and was determined based on historical experience of similar stock options with consideration for the contractual terms of the stock options, vesting schedules and expectations of future employee behavior.

Expected Stock Price Volatility—The Company’s computation of expected volatility is based on a combination of implied volatilities from traded options on the Company’s stock and historical volatility, commensurate with the expected life of the stock options.

Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the option.

Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

The weighted average grant-date fair value per share of stock options granted during fiscal years 2016, 2015 and 2014 was $6.03, $7.36, and $9.07, respectively. The fair value of all stock options vested during fiscal years 2016, 2015 and 2014 was $14.6 million, $18.3 million and $20.5 million, respectively.

Fair value of Restricted Stock Units and Performance-Based Restricted Stock Units

The fair value of RSUs and PSUs are valued as of the grant date using the fair value of Trimble’s common stock. RSUs are service-based awards and vest over time based on continued employment. PSUs vest upon the achievement of specified performance goals, as well as continued employment, and the expense recognized is based upon the expected achievement of such goals. The weighted average grant-date fair value per share of RSUs granted during fiscal years 2016, 2015 and 2014 was $26.13, $23.22, and $30.18 per share, respectively. The fair value of all restricted stock units vested during fiscal years 2016, 2015 and 2014 was $33.6 million, $16.3 million and $3.9 million, respectively.

Fair Value of Market-Based Restricted Stock Units

Restricted stock units with market-based vesting conditions vest based on the achievement of the Company’s relative total stockholder return (TSR) of its common stock as compared to the TSR of the constituents of the S&P 500 at the start of the performance period. The fair value of restricted stock units with market-based vesting conditions is valued as of the grant date using a Monte Carlo simulation, using the following weighted-average assumptions:



Fiscal Years	2016		2015
Expected life of Market-Based Restricted Stock Units	3.1 years		2.6 years
Expected stock price volatility	33.8	%	30.9	%
Risk free interest rate	0.9	%	0.9	%
Expected dividend yield	—		—

The weighted average grant-date fair value of the restricted stock units with market-based vesting conditions granted during fiscal 2016 and 2015 was $27.09 and $31.60 per share, respectively.

Unrecognized Stock-Based Compensation

At the end of fiscal 2016, total unamortized stock-based compensation expense was $88.9 million, with a weighted-average recognition period of 2.4 years.