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Stock Option and Incentive Plan
 12 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Option and Incentive Plan

Note 17 — Stock Option and Incentive Plan

In January 1998, the Company adopted the 1998 Stock Option and Incentive Plan, or Equity Incentive Plan, which provides for the grant of restricted stock awards, stock options and other equity-based awards to employees, officers, directors, and consultants. Since its adoption, the Equity Incentive Plan has been amended on several occasions to, among other things, increase the number of ordinary shares issuable under the Equity Incentive Plan. In January 2017, the maximum number of ordinary shares authorized to be granted under the Equity Incentive Plan was increased from 62,300 to 67,550. Awards granted under the Equity Incentive Plan generally vest over a period of four years and stock options have a term of ten years

The following table summarizes information about options to purchase the Company’s ordinary shares, as well as changes during the fiscal year ended September 30, 2017:

 

     Number of

Share

Options		      Weighted Average

Exercise Price		  

Outstanding as of October 1, 2016

      7,623      $ 44.20  

Granted

      2,062        58.83  

Exercised

      (2,220 )       39.63  

Forfeited

      (508 )       50.60  
  

 

 

     

Outstanding as of September 30, 2017(1)

      6,957      $ 49.52  
  

 

 

     

Exercisable as of September 30, 2017(1)

      2,428      $ 40.33  
  

 

 

     

 

(1) As of September 30, 2017, the weighted average remaining contractual life of outstanding and exercisable options was 7.40 and 5.66 years, respectively.

The following table summarizes information relating to awards of restricted shares, as well as changes during the fiscal year ended September 30, 2017:

 

     Number of

Shares		      Weighted Average

Grant Date Fair

Value		  

Outstanding as of October 1, 2016

      1,473      $ 49.50  

Granted

      641        59.97  

Vested

      (629 )       46.66  

Forfeited

      (89 )       51.69  
  

 

 

     

Outstanding as of September 30, 2017

      1,396      $ 55.45  
  

 

 

     

The total intrinsic value of options exercised during fiscal years 2017, 2016 and 2015 was $47,321, $65,292 and $51,812, respectively.

The value of restricted shares vested during fiscal years 2017, 2016 and 2015 was $36,922, $39,490 and $39,734, respectively.

The aggregate intrinsic value of outstanding and exercisable stock options as of September 30, 2017 was $103,004 and $58,242, respectively.

 

Employee equity-based compensation pre-tax expense for the years ended September 30, 2017, 2016 and 2015 was as follows:

 

     Year Ended September 30,  
     2017      2016      2015  

Cost of revenue

    $ 19,215      $ 18,249      $ 15,621  

Research and development

      3,536        3,742        3,400  

Selling, general and administrative

      21,788        20,709        25,539  
  

 

 

     

 

 

     

 

 

  

Total

    $ 44,539      $ 42,700      $ 44,560  
  

 

 

     

 

 

     

 

 

  

The total income tax benefit recognized in the consolidated statements of income for stock-based compensation (including restricted shares) for fiscal years 2017, 2016 and 2015 was $4,754, $4,503 and $5,490, respectively.

As of September 30, 2017, there was $46,514 of unrecognized compensation expense related to unvested stock options and unvested restricted shares. The Company recognizes compensation costs using the graded vesting attribution method, which results in a weighted average period of approximately one year over which the unrecognized compensation expense is expected to be recognized.

The fair value of options granted was estimated on the date of grant using the Black-Scholes pricing model with the assumptions noted in the following table (all in weighted averages for options granted during the year):

 

     Year Ended September 30,  
     2017     2016     2015  

Risk-free interest rate(1)

      1.63 %      1.40 %      1.26 % 

Expected life of stock options(2)

      4.50       4.50       4.50  

Expected volatility(3)

      16.2 %      18.5 %      15.6 % 

Expected dividend yield(4)

      1.47 %      1.40 %      1.37 % 

Fair value per option

    $ 7.62     $ 7.97     $ 5.97  

 

(1) Risk-free interest rate is based upon U.S. Treasury yield curve appropriate for the term of the Company’s employee stock options.
(2) Expected life of stock options is based upon historical experience.
(3) Expected volatility is based on blended volatility. See Note 2 to the consolidated financial statements.
(4) Expected dividend yield is based on the Company’s history and future expectation of dividend payouts.