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Stock-based Compensation | 6 Months Ended
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Jan. 31, 2022
Share-based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation The Company recognizes compensation expense for stock option awards, without a market condition, on a straight-line basis over the requisite service period of the award. The following is a summary of activity for the Company’s stock options for the six months ended January 31, 2022:
(In thousands, except per share and term data) |  | Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (In years) |  | Aggregate Intrinsic Value
Outstanding as of July 31, 2021 |  | 7,557 |  |  | $ | 56.19 |  |  | 6.53 |  | $ | 686,269 |
Grants of options |  | 145 |  |  | 145.21 |  |  |  |  |
Exercises |  | (392) |  |  | 30.87 |  |  |  |  |
Forfeitures or expirations |  | (107) |  |  | 55.14 |  |  |  |  |
Outstanding as of January 31, 2022 |  | 7,203 |  |  | $ | 59.38 |  |  | 6.08 |  | $ | 505,604 |
Exercisable as of January 31, 2022 |  | 4,545 |  |  | $ | 43.84 |  |  | 4.97 |  | $ | 388,501 |
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. The number of options that were in-the-money was 7,052,304 at January 31, 2022. In June 2020, the Compensation Committee of the Company’s Board of Directors approved the grant to A. Jayson Adair, the Company’s Chief Executive Officer, of nonqualified stock options to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $85.04 per share, which equaled the closing price of the Company’s common stock on June 12, 2020, the effective date of grant. The option will become exercisable over five years, subject to continued service by Mr. Adair, with 20% vesting on June 12, 2021, and the balance vesting monthly over the subsequent four years. Separate and apart from the time-based vesting schedule, the options are also subject to market based vesting, such that no options will be exercisable unless and until the average closing price in trading of Copart, Inc., common stock on the NASDAQ Global Select Market is greater than or equal to $106.30 per share (which is an amount equivalent to 125% of the exercise price of the options) for a period of 20 consecutive trading days. The market based vesting condition was satisfied in the first quarter of fiscal 2021. The time-based vesting conditions of the option held by Mr. Adair will become fully vested, assuming continued service by Mr. Adair on June 12, 2025. The fair value of each option at the date of grant using the Monte Carlo simulation model was $25.47, with an expected life of 7.64 years, a risk-free interest rate of 0.71%, estimated volatility of 25.2%, and no expected dividends. The total estimated compensation expense to be recognized by the Company over the five year estimated service period for these options is $25.5 million and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $3.3 million in compensation expense for this grant in the six months ended January 31, 2022. Subsequently, on November 17, 2021, the Compensation Committee amended the stock option award to Mr. Adair to implement a new market-based vesting condition with respect to 500,000 of the unvested stock options. Following the amendment, and subject to the existing time-based vesting schedule, no portion of these 500,000 stock options will be exercisable unless the price in trading of Copart, Inc. common stock on the NASDAQ Global Select Market is greater than or equal to $106.30 per share (which is an amount equivalent to 125% of the exercise price of the options), determined both (i) at the time of any exercise, and (ii) based on the closing price on each of the twenty consecutive trading days preceding the date of any exercise. The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, and restricted unit awards:
|  | Three Months Ended January 31, |  | Six Months Ended January 31,
(In thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
General and administrative |  | $ | 8,247 |  |  | $ | 7,051 |  |  | $ | 16,718 |  |  | $ | 14,433 |
Yard operations |  | 1,415 |  |  | 1,814 |  |  | 2,396 |  |  | 3,345 |
Total stock-based compensation |  | $ | 9,662 |  |  | $ | 8,865 |  |  | $ | 19,114 |  |  | $ | 17,778 |
The Company’s restricted stock awards (“RSA”) and restricted stock unit awards (“RSU”) have generally been issued with vesting periods ranging from two years to five years and vest solely on service conditions. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award. The following is a summary of activity for the Company’s RSA’s and RSU’s for the six months ended January 31, 2022:
(In thousands, except per share data) |  | Restricted Shares |  | Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2021 |  | 102 |  |  | $ | 90.46 |
Grants |  | 66 |  |  | 143.24 |
Vested |  | (13) |  |  | 66.16 |
Forfeitures or expirations |  | (7) |  |  | 115.40 |
Outstanding as of January 31, 2022 |  | 148 |  |  | $ | 115.24 |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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