Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

The Roper Technologies, Inc. 2016 Incentive Plan (“2016 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 Roper’s employees, officers and directors. At December 31, 2019, 4.544 shares were available to grant under the 2016 Plan.

Under the Roper Technologies, 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. 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, 2019, 2018 and 2017 was as follows:



	2019		2018		2017
Stock based compensation	$	104.5	$	133.8	$	83.1
Tax benefit recognized in net earnings	22.0		28.1		29.1

During 2019, in connection with the sale of Gatan we recognized $9.6 associated with accelerated vestings, which was recognized within “Gain on disposal of businesses” within the Consolidated Statements of Earnings. In 2018, this expense included $29.4 associated with accelerated vesting due to the passing of our former executive chairman.

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 3 to 5 years from the grant date and expire 10 years after the grant date. The Company recorded $32.0, $23.2, and $18.3 of compensation expense relating to outstanding options during 2019, 2018 and 2017, respectively, as a component of general and administrative expenses at Corporate.

The Company estimates the fair value of its option awards using the Black-Scholes option valuation model. 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 forfeitures, 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 2019, 2018 and 2017 were calculated using the following weighted-average assumptions:



	2019	2018	2017
Weighted-average fair value ($)	68.05	57.75	40.87
Risk-free interest rate (%)	2.37	2.65	2.03
Average expected option life (years)	5.42	5.32	5.26
Expected volatility (%)	19.22	18.05	18.74
Expected dividend yield (%)	0.58	0.59	0.67

The following table summarizes the Company’s activities with respect to its share-based compensation plans for the years ended December 31, 2019 and 2018:



	Number of shares		Weighted-average exercise price per share		Weighted-average contractual term	Aggregate intrinsic value
Outstanding at December 31, 2017	3.196		$	140.68
Granted	0.723		279.10
Exercised	(0.650	)	90.43
Canceled	(0.064	)	211.57
Outstanding at December 31, 2018	3.205		180.69		6.58	$	284.0
Granted	0.764		320.65
Exercised	(0.527	)	122.94
Canceled	(0.093	)	273.64
Outstanding at December 31, 2019	3.349		219.14		6.66	$	452.8
Exercisable at December 31, 2019	1.611		$	150.31	4.74	$	328.6

The following table summarizes information for stock options outstanding at December 31, 2019:



	Outstanding options				Exercisable options
Exercise price	Number	Average exercise price		Average remaining life (years)	Number	Average exercise price
$51.11 - $125.17	0.370	$	95.34	2.0	0.370	$	95.34
$125.18 - $154.16	0.371	137.31		4.1	0.371	137.31
$154.17 - $170.58	0.269	164.82		5.2	0.269	164.82
$170.59 - $183.97	0.393	173.20		6.4	0.362	172.75
$183.98 - $212.18	0.439	202.41		7.1	0.198	199.20
$212.19 - $279.31	0.357	261.80		8.3	0.039	233.39
$279.32 - $279.44	0.460	279.39		8.2	0.002	279.39
$279.45 - $327.91	0.597	321.33		9.1	—	—
$327.92 - $366.76	0.093	351.80		9.5	—	—
$51.11 - $366.76	3.349	$	219.14	6.7	1.611	$	150.31

At December 31, 2019, there was $59.9 of total unrecognized compensation expense related to nonvested options granted under the Company’s share-based compensation plans. That cost is expected to be recognized over a weighted-average period of 2.1 years. The total intrinsic value of options exercised in 2019, 2018 and 2017 was $109.4, $124.6 and $90.6, respectively. Cash received from option exercises under all plans in 2019 and 2018 was $64.9 and $58.8, respectively.

Restricted Stock Grants - During 2019 and 2018, the Company granted 0.321 and 0.410 shares, respectively, of restricted stock to certain employee and director participants under its share-based compensation plans. Restricted stock grants generally vest over a period of 1 to 4 years. The Company recorded $72.5, $109.7 and $63.0 of compensation expense related to outstanding shares of restricted stock held by employees and directors during 2019, 2018 and 2017, respectively. In 2018, this expense included $29.4 associated with accelerated vesting due to the passing of our former executive chairman. A summary of the Company’s nonvested shares activity for 2019 and 2018 is as follows:



	Number of shares		Weighted-average grant date fair value
Nonvested at December 31, 2017	0.859		$	187.01
Granted	0.410		278.29
Vested	(0.492	)	204.24
Forfeited	(0.038	)	191.51
Nonvested at December 31, 2018	0.739		$	225.93
Granted	0.321		318.75
Vested	(0.290	)	209.05
Forfeited	(0.061	)	225.23
Nonvested at December 31, 2019	0.709		$	275.00

At December 31, 2019, there was $77.9 of total unrecognized compensation expense related to nonvested awards granted to both employees and directors under the Company’s share-based compensation plans. That cost is expected to be recognized over a weighted-average period of 1.8 years. 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, 2019.

Employee Stock Purchase Plan - During 2019, 2018 and 2017, participants of the ESPP purchased 0.021, 0.020 and 0.020 shares, respectively, of Roper’s common stock for total consideration of $6.8, $5.4, and $4.2, respectively. All of these shares were purchased from Roper’s treasury shares.