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Stockholders' Equity | 12 Months Ended
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Jul. 31, 2023
Equity [Abstract] |
Shareholders' Equity | Stockholders’ Equity General The Company has authorized the issuance of 1.6 billion shares of common stock, with a par value of $0.0001, of which 957,344,162 shares were issued and outstanding at July 31, 2023. As of July 31, 2023 and 2022, the Company had reserved 52,648,002 and 57,512,480 shares of common stock, respectively, for the issuance of options, restricted stock or restricted stock units granted under the Company’s stock option plans and 3,953,154 and 4,401,832 shares of common stock, respectively, for the issuance of shares under the Copart, Inc. Employee Stock Purchase Plan (“ESPP”). The Company has authorized the issuance of five million shares of preferred stock, with a par value of $0.0001, none of which were issued or outstanding at July 31, 2023 or 2022, which have the rights and preferences as the Company’s Board of Directors shall determine, from time to time. Stock Repurchases On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. For fiscal 2023, 2022 and 2021, the Company did not repurchase any shares of its common stock under the program. As of July 31, 2023, the total number of shares repurchased under the program was 458,196,792, and subject to applicable limitations under Delaware law, 325,803,208 shares were available for repurchase under the program. In fiscal 2021, certain employees exercised stock options through a cashless exercise. In fiscal 2022 and 2023, no employee exercised stock options through a cashless exercise. A portion of the options exercised were net settled in satisfaction of the exercise price. The Company remitted $0.0 million, $0.0 million and $3.8 million during the years ended July 31, 2023, 2022 and 2021, respectively, to the proper taxing authorities in satisfaction of the employees’ statutory withholding requirements. The exercised stock options, utilizing a cashless exercise, are summarized in the following table:
Period |  | Options Exercised |  | Weighted Average Exercise Price |  | Shares Net Settled for Exercise |  | Shares Withheld for Taxes (1) |  | Net Shares to Employees |  | Weighted Average Share Price for Withholding |  | Employee Stock-Based Tax Withholding (in 000s)
FY 2021—Q4 |  | 360,000 |  |  | 4.43 |  |  | 49,464 |  |  | 117,396 |  |  | 193,140 |  |  | 32.25 |  |  | 3,786 |
FY 2022 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
FY 2023 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
(1)Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against the Company’s stock repurchase program. Employee Stock Purchase Plan The ESPP provides for the purchase of up to an aggregate of 40 million shares of common stock of the Company by employees pursuant to the terms of the ESPP. The Company’s ESPP was adopted by the Board of Directors and approved by the stockholders in 1994. The ESPP was amended and restated in 2003 and again approved by the stockholders. In 2014, a new ESPP was approved by the Board of Directors and approved by the stockholders. Under the ESPP, employees of the Company who elect to participate have the right to purchase common stock at a 15% discount from the lower of the market value of the common stock at the beginning or the end of each six month offering period. The ESPP permits an enrolled employee to make contributions to purchase shares of common stock by having withheld from their salary an amount up to 10% of their compensation (which amount may be increased from time to time by the Company but may not exceed 15% of compensation). No employee may purchase more than $25,000 worth of common stock (calculated at the time the purchase right is granted) in any calendar year. The Compensation Committee of the Board of Directors administers the ESPP. The number of shares of common stock issued pursuant to the ESPP during the years ended July 31, 2023, 2022 and 2021 was 448,714; 375,020; and 437,516; respectively. As of July 31, 2023, there were 36,367,142 shares of common stock issued pursuant to the ESPP and 3,953,154 shares remain available for purchase under the ESPP. Stock Options In December 2007, the Company adopted the Copart, Inc. 2007 Equity Incentive Plan (Plan), presently covering an aggregate of 144 million shares of the Company’s common stock. The Plan provides for the grant of incentive stock options, restricted stock, restricted stock units and other equity-based awards to employees and non-qualified stock options, restricted stock, restricted stock units and other equity-based awards to employees, officers, directors and consultants at prices not less than 100% of the fair market value for incentive and non-qualified stock options, as determined by the Board of Directors at the grant date. Incentive and non-qualified stock options may have terms of up to ten years and vest over periods determined by the Board of Directors. Options generally vest ratably over a five year period. The Plan replaced the Company’s 2001 Stock Option Plan. As of July 31, 2023, 24,993,212 shares were available for grant under the Plan and the number of options that were in-the-money was 23,995,892 at July 31, 2023. The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, and restricted unit awards:
|  | Year Ended July 31,
(In thousands) |  | 2023 |  | 2022 |  | 2021
General and administrative |  | $ | 32,747 |  |  | $ | 33,838 |  |  | $ | 35,633 |
Yard operations |  | 6,926 |  |  | 5,127 |  |  | 5,289 |
Total stock-based compensation |  | $ | 39,673 |  |  | $ | 38,965 |  |  | $ | 40,922 |
There were no material compensation costs capitalized as part of the cost of an asset as of July 31, 2023 and 2022. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award. The fair value of each option, without a market-based condition was estimated on the measurement date using the Black-Scholes Merton (“BSM”) option-pricing model. For options that included a market-based condition either the Monte Carlo simulation model or a lattice model was used. The Black-Scholes Merton option-pricing model utilized the following assumptions:
|  | July 31, |
|  | 2023 |  | 2022 |  | 2021
Expected life (in years) |  | 5.0 |  | — |  | 6.3 |  |  | 5.1 |  | — |  | 6.8 |  |  | 5.2 |  | — |  | 6.3 |
Risk-free interest rate |  | 3.67 |  | % | — |  | 3.88 |  | % |  | 0.82 |  | % | — |  | 2.70 |  | % |  | 0.42 |  | % | — |  | 1.23 |  | %
Estimated volatility |  | 29.6 |  | % | — |  | 32.0 |  | % |  | 27.9 |  | % | — |  | 30.0 |  | % |  | 26.3 |  | % | — |  | 28.7 |  | %
Expected dividends |  | — |  | % |  | — |  | % |  | — |  | %
Weighted average fair value at measurement date |  | $ | 12.10 |  |  |  | $ | 10.59 |  |  |  | $ | 7.61 |  |
Expected life—The Company’s expected life represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards. Risk-free interest rate—The Company bases the risk-free interest rate used in the BSM option-pricing model on the implied yield currently available on U.S. Treasury zero-coupon issues with the same or substantially equivalent expected life. Estimated volatility—The Company uses the trading history of its common stock in determining an estimated volatility factor when using the BSM option-pricing model to determine the fair value of options granted. Expected dividend—The Company does not expect to declared dividends. Therefore, the Company uses a zero value for the expected dividend value factor when using the BSM option-pricing model to determine the fair value of options granted. Net cash proceeds from the exercise of stock options were $49.7 million, $28.1 million and $39.0 million for the years ended July 31, 2023, 2022 and 2021, respectively. A summary of the status of the Company’s unvested stock options awards and its activity during the year ended July 31, 2023 was as follows:
(In thousands, except per share amounts) |  | Shares |  | Weighted Average Grant- date Fair Value
Unvested shares at July 31, 2022 |  | 9,576 |  |  | $ | 7.43 |
Grants of non-vested shares |  | 887 |  |  | 12.94 |
Vested |  | (3,617) |  |  | 6.78 |
Forfeitures or expirations |  | (1,076) |  |  | 7.22 |
Unvested shares at July 31, 2023 |  | 5,770 |  |  | $ | 8.72 |
The following is a summary of activity for the Company’s stock options for the year ended July 31, 2023:
(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, 2022 |  | 22,788 |  |  | $ | 14.66 |  |  | 5.50 |  | $ | 398,331 |
Grants of options |  | 588 |  |  | 32.75 |  |  |  |  |
Exercises |  | (4,474) |  |  | 11.10 |  |  |  |  |
Forfeitures or expirations |  | (1,077) |  |  | 25.80 |  |  |  |  |
Outstanding as of July 31, 2023 |  | 17,825 |  |  | $ | 15.47 |  |  | 4.67 |  | $ | 512,045 |
Exercisable as of July 31, 2023 |  | 15,033 |  |  | $ | 13.53 |  |  | 4.14 |  | $ | 460,993 |
Vested and expected to vest as of July 31, 2023 |  | 17,728 |  |  | $ | 15.41 |  |  | 4.66 |  | $ | 510,333 |
The Company grants option awards to certain executives that contain service and market conditions. The options will become exercisable over five years, subject to continued service by the executive, with 20% vesting on the first anniversary of the grant date 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 a market condition requiring the trading price of Copart, Inc. common stock on the NASDAQ Global Select Market to be greater than or equal 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 exercise price of the options is equivalent to the closing price of the Company’s common stock on the grant date. The fair value of the awards is determined at the grant date using either the Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71% to 3.57%, estimated volatility ranging from 25.2% to 29.3%, and no expected dividends. The total estimated compensation expense to be recognized by the Company over the five-year service period for these options is $48.4 million and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $12.2 million, $9.8 million and $13.1 million in compensation expense related to these awards for the year ended July 31, 2023, 2022 and 2021, respectively. The following is a summary of activity for the Company’s stock option awards subject to market conditions for the year ended July 31, 2023:
(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, 2022 |  | 5,620 |  |  | $ | 23.91 |  |  | 8.33 |  | $ | 45,590 |
Grants of options |  | 300 |  |  | 32.85 |  |  |  |  |
Exercises |  | — |  |  | — |  |  |  |  |
Forfeitures or expirations |  | — |  |  | — |  |  |  |  |
Outstanding as of July 31, 2023 |  | 5,920 |  |  | $ | 24.37 |  |  | 7.43 |  | $ | 117,389 |
Exercisable as of July 31, 2023 |  | 2,941 |  |  | $ | 22.65 |  |  | 7.11 |  | $ | 63,356 |
Vested and expected to vest as of July 31, 2023 |  | 5,901 |  |  | $ | 24.36 |  |  | 7.43 |  | $ | 117,059 |
The aggregate intrinsic value in the tables above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the year ended July 31, 2023 and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options on July 31, 2023. The aggregate intrinsic value of options exercised was $131.1 million, $30.5 million and $143.3 million in the years ended July 31, 2023, 2022 and 2021, respectively, and represents the difference between the exercise price of the option and the estimated fair value of the Company’s common stock on the dates exercised. As of July 31, 2023, the total compensation cost related to non-vested stock-based awards granted to employees under the Company’s stock option plans but not yet recognized was $33.3 million. This cost will be amortized on a straight-line basis over a weighted average remaining term of 2.65 years. The fair value of options vested for the years ended July 31, 2023, 2022 and 2021 was $24.5 million, $29.0 million and $19.0 million, respectively. The following table summarizes stock options outstanding and exercisable as of July 31, 2023:
(In thousands, except per share amounts) |  | Options Outstanding |  | Options Exercisable
Range of Exercise Prices |  | Number |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  | Number |  | Weighted Average Exercise Price
$4.37 | — | $4.56 |  | 2,597 |  |  | 1.66 |  | $ | 4.47 |  |  | 2,597 |  |  | $ | 4.47 |
$4.65 | — | $8.70 |  | 3,014 |  |  | 3.32 |  | 6.98 |  |  | 3,014 |  |  | 6.98 |
$9.08 | — | $21.26 |  | 10,821 |  |  | 5.62 |  | 15.91 |  |  | 8,636 |  |  | 15.04 |
$22.15 | — | $36.41 |  | 7,313 |  |  | 7.13 |  | 29.42 |  |  | 3,727 |  |  | 28.85 |
Outstanding as of July 31, 2023 |  | 23,745 |  |  | 5.36 |  | $ | 17.69 |  |  | 17,974 |  |  | $ | 15.02 |
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 for the year ended July 31, 2023:
(In thousands, except per share data) |  | Restricted Shares |  | Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2022 |  | 708 |  |  | $ | 30.14 |
Grants |  | 539 |  |  | 32.52 |
Vested |  | (384) |  |  | 30.63 |
Forfeitures or expirations |  | (63) |  |  | 26.89 |
Outstanding as of July 31, 2023 |  | 800 |  |  | $ | 31.77 |

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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