(12)	Stock-Based Compensation

The Roper Industries, Inc. Amended and Restated 2006 Incentive Plan ("2006 Plan") is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to the Company's employees, officers, directors and consultants. The 2006 Plan replaced the Amended and Restated 2000 Incentive Plan ("2000 Plan"), and no additional grants will be made from the 2000 Plan. The number of shares reserved for issuance under the 2006 Plan is 14,000,000, plus the 17,000 remaining shares that were available to grant under the 2000 Plan at June 28, 2006, plus any shares underlying outstanding awards under the 2000 Plan that terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason subsequent to June 28, 2006. At December 31, 2012, 6,941,775 shares were available to grant.

Under the Roper Industries, Inc., Employee Stock Purchase Plan ("ESPP"), all employees in the U.S. and Canada are eligible to designate up to 10% of eligible earnings to purchase Roper's common stock at a 5% discount to the average closing price of its common stock at the beginning and end of a quarterly offering period. The common stock sold to the employees may be either treasury stock, stock purchased on the open market, or newly issued shares.

Stock based compensation expense for the years ended December 31, 2012, 2011 and 2010 was as follows (in millions):

	2012		2011		2010
Stock based compensation	$	40.8	$	31.7	$	25.2
Tax benefit recognized in net income		14.3		11.1		8.8
Windfall tax benefit, net		30.8		12.7		7.3

Stock Options – Stock options are typically granted at prices not less than 100% of market value of the underlying stock at the date of grant. Stock options typically vest over a period of up to three to five years from the grant date and generally expire seven to ten years after the grant date. The Company recorded $14.8 million, $12.2 million, and $9.0 million of compensation expense relating to outstanding options during 2012, 2011 and 2010, respectively, as a component of corporate and certain segment general and administrative expenses.

The Company estimates the fair value of its option awards using the Black-Scholes option valuation model that uses the assumptions noted in the following table. The stock volatility for each grant is measured using the weighted-average of historical daily price changes of the Company's common stock over the most recent period equal to the expected life of the grant. The expected term of options granted is derived from historical data to estimate option exercises and employee terminations, and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The weighted-average fair value of options granted in 2012, 2011 and 2010 were calculated using the following weighted-average assumptions:

	2012		2011		2010
Weighted-average fair value ($)		30.25		24.45		17.00
Risk-free interest rate (%)		0.77		1.91		2.32
Average expected option life (years)		5.24		5.34		5.38
Expected volatility (%)		36.51		35.27		34.55
Expected dividend yield (%)		0.58		0.60		0.72

The following table summarizes the Company's activities with respect to its stock option plans for the year ended December 31, 2012:

	Number of shares			Weighted-average exercise price per share		Weighted-average contractual term		Aggregate intrinsic value
Outstanding at January 1, 2012		3,822,662		$	50.44

Granted		538,100			95.27
Exercised		(1,389,069	)		40.46
Canceled		(53,498	)		70.01
Outstanding at December 31, 2012		2,918,195			63.15		6.52	$	141,029,378
Exercisable at December 31, 2012		1,616,022		$	51.44		5.18	$	97,030,148

The following table summarizes information for stock options outstanding at December 31, 2012:

		Outstanding options						Exercisable options
Exercise price		Number		Average exercise price		Average remaining life (years)		Number		Average exercise price
$	11.22 - 22.45		6,850	$	21.49		0.6		6,850	$	21.49
	22.46 - 33.67		177,412		23.57		1.2		177,412		23.57
	33.68 - 44.89		205,022		41.86		5.9		205,022		41.86
	44.90 - 56.12		1,306,472		53.55		5.4		1,023,369		53.78
	56.13 - 67.34		26,167		63.96		6.9		15,167		64.45
	67.35 - 78.56		601,581		72.85		8.2		149,577		73.18
	78.57 - 89.78		68,091		84.22		8.2		38,625		84.21
	89.79 - 101.01		474,100		94.25		9.1		-		-
	101.02 - 112.23		52,500		104.85		9.7		-		-
$	11.22 - 112.23		2,918,195	$	63.15		6.5		1,616,022	$	51.44

At December 31, 2012, there was $19.1 million of total unrecognized compensation expense related to nonvested options granted under the Company's share-based payment plans. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total intrinsic value of options exercised in 2012, 2011 and 2010 was $86.0 million, $41.2 million and $27.5 million, respectively. Cash received from option exercises under all plans in 2012 and 2011 was $56.1 million and $28.2 million, respectively.

Restricted Stock Grants - During 2012 and 2011, the Company granted 374,307 and 352,330 shares, respectively, of restricted stock to certain employee and director participants under the 2006 Plan. Restricted stock grants generally vest over a period of 1 to 3 years. The weighted-average fair value of the shares granted in 2012 was $95.78 per share. The Company recorded $25.9 million, $19.5 million and $16.2 million of compensation expense related to outstanding shares of restricted stock held by employees and directors during 2012, 2011 and 2010, respectively. A summary of the Company's nonvested shares activity for 2012 is as follows:

	Number of shares			Weighted-average fair value
Nonvested at January 1, 2012		753,811		$	61.15
Granted		374,307			95.78
Vested		(551,051	)		64.59
Forfeited		(5,162	)		70.56
Nonvested at December 31, 2012		571,905		$	80.96

At December 31, 2012, there was $31.6 million of total unrecognized compensation expense related to nonvested awards granted to both employees and directors under the Company's share-based payment plans. That cost is expected to be recognized over a weighted-average period of 2.0 years. There were 551,051 and 264,848 shares that vested during 2012 and 2011, respectively. Unrecognized compensation expense related to nonvested shares of restricted stock grants is recorded as a reduction to additional paid-in capital in stockholder's equity at December 31, 2012.

Employee Stock Purchase Plan - During 2012, 2011 and 2010, participants of the ESPP purchased 22,863, 27,756 and 29,439 shares, respectively, of Roper's common stock for total consideration of $2.2 million, $2.1 million, and $1.7 million, respectively. All of these shares were purchased from Roper's treasury shares. The Company had no compensation expense relating to the stock purchase plan during 2012, 2011 and 2010.