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Stock Plans | 12 Months Ended
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Oct. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock Plans | Stock Plans 2020 Long-Term Incentive Plan for Non-Employee Directors (2020 Directors' Plan) In March 2020, we received stockholder approval of the 2020 Directors' Plan. The 2020 Directors' Plan authorizes either the Company's Board of Directors or a designated committee thereof composed of two or more Non-Employee Directors to grant to Non-Employee Directors equity awards for up to 50,000 shares of common stock, subject to adjustment for future stock splits, stock dividends, expirations, forfeitures and similar events. The 2020 Directors' Plan provides for annual equity award grants to Non-Employee Directors on April 1 st of each fiscal year which subsequently vest on the first anniversary of the date of grant. If a Non-Employee Director is appointed or elected after April 1, then they will receive a grant on the date of such appointment or election that is proportionally adjusted to reflect the number of months of actual service on the board during the first fiscal year of their election or appointment. The 2020 Directors' Plan also allows the Board of Directors to make discretionary grants to Non-Employee Directors. Under the 2020 Directors' Plan, awards are made in the form of RSUs unless otherwise approved by the Board of Directors. RSUs entitle the recipient to receive shares of common stock, without any payment in cash or property. Legal ownership of the shares is not transferred until the unit vests and issued RSUs have no dividend or voting rights prior to vesting. Awards are made with a total target grant date value of $270,000, or $283,500 in the case of the Lead Director and $297,000 in the case of the Chairman of the Board. Awards may also be made in the form of stock options or restricted stock. In the event of such awards, grants of stock options will have an exercise price equal to 100% of fair market value on the date of grant and expire no more than 10 years after the grant date. Awards of restricted stock provide the right to receive shares, subject to such purchase price requirements, restrictions on sale or transfer, or other conditions as approved by the Board of Directors. Restricted shares retain dividend and voting rights. As of October 31, 2021, 37,853 shares remain available under the 2020 Directors' Plan for future grants. 2007 Long-Term Incentive Plan (2007 Plan) In March 2007, we received stockholder approval of the 2007 Plan. The 2007 Plan was subsequently amended and restated, and granted stockholder approval in March 2009, March 2011, and March 2016. The Third Amended and Restated 2007 Plan is designed to increase our stockholder value by attracting, retaining and motivating key employees and consultants who directly influence our profitability. The Third Amended and Restated 2007 Plan authorizes either our Board of Directors, or a designated committee thereof composed of two or more Non-Employee Directors, to grant to eligible individuals during the period ending December 31, 2026, up to 6,930,000 shares in the form of specified equity awards including stock options, restricted stock units and performance share awards, subject to adjustment for future stock splits, stock dividends, expirations, forfeitures and similar events. During fiscal 2021, we granted stock options, restricted stock units, and performance share awards to employees under the Third Amended and Restated 2007 Plan. All stock options are granted at 100% of fair market value on the date of grant and expire no more than 10 years after the grant date. RSUs are nontransferable awards entitling the recipient to receive shares of common stock, without any payment in cash or property, in one or more installments at a future date or dates as determined by the Board of Directors or its authorized committee. For RSUs, legal ownership of the shares is not transferred to the employee until the unit vests, which is generally over a specified time period and RSUs have no dividend or voting rights prior to vesting. Performance share awards are nontransferable awards entitling the recipient to receive a variable number of shares of common stock, without any payment in cash or property, in one or more installments at a future date or dates as determined by the Board of Directors or its authorized committee. Legal ownership of the shares is not transferred to the recipient until the award vests, and the number of shares distributed is dependent upon the achievement of certain performance targets over a specified period of time. As of October 31, 2021, 908,753 shares remained available under the Third Amended and Restated 2007 Plan for future grants. The amount of available shares includes shares which may be distributed under performance share awards. Share-Based Compensation Compensation expense and the related tax benefit recognized in our Consolidated Statements of Income for share-based awards, including the Employee Stock Purchase Plan, were as follows:
October 31, |  |  |
(In millions) | 2021 |  | 2020 |  | 2019
Selling, general and administrative expense | $ | 38.4 |  |  | $ | 32.2 |  |  | $ | 28.7 |
Cost of sales | 3.9 |  |  | 4.0 |  |  | 4.7 |
Research and development expense | 2.4 |  |  | 2.4 |  |  | 2.9 |
Total compensation expense | $ | 44.7 |  |  | $ | 38.6 |  |  | $ | 36.3 |
Related income tax benefit | $ | 5.6 |  |  | $ | 4.8 |  |  | $ | 5.1 |
Stock Options The fair value of each stock option award granted is estimated on the date of grant using the Black-Scholes option valuation model and assumptions noted in the following table. The expected life of the awards is based on the observed and expected time to post-vesting forfeiture and/or exercise. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. In determining the expected volatility, management considers implied volatility from publicly-traded options on our common stock at the date of grant, historical volatility and other factors. The risk-free interest rate is based on the continuous rates provided by the United States Treasury with a term equal to the expected life of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.
Years Ended October 31, | 2021 |  | 2020 |  | 2019
Expected life | 4.0 years |  | 4.4 years |  | 4.4 years
Expected volatility | 30.3 | % |  | 24.5 | % |  | 22.0 | %
Risk-free interest rate | 0.3 | % |  | 1.6 | % |  | 2.9 | %
Dividend yield | 0.02 | % |  | 0.02 | % |  | 0.02 | %
The activity and status of our stock option plans are summarized below:
| Number of Shares |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value
Outstanding at October 31, 2020 | 1,103,507 |  |  | $ | 213.53 |  |  |  |  |
Granted | 109,440 |  |  | $ | 345.74 |  |  |  |  |
Exercised | (235,478) |  |  | $ | 142.31 |  |  |  |  |
Forfeited or expired | (4,777) |  |  | $ | 327.62 |  |  |  |  |
Outstanding at October 31, 2021 | 972,692 |  |  | $ | 245.09 |  |  | 6.22 |  |
Vested and expected to vest at October 31, 2021 | 939,788 |  |  | $ | 243.15 |  |  | 6.16 |  | $ | 163,310,445 |
Vested and exercisable at October 31, 2021 | 470,748 |  |  | $ | 207.13 |  |  | 4.99 |  | $ | 98,757,454 |
The weighted-average fair value of each option granted during fiscal 2021, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 Plan was $84.10. No options were granted under the 2020 Directors' Plan in fiscal 2021. The total intrinsic value of options exercised during the fiscal year ended October 31, 2021 was $64.7 million. The weighted-average fair value of each option granted during fiscal 2020 and 2019, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 Plan was $70.45 and $60.71, respectively. The total intrinsic value of options exercised during fiscal 2020 and 2019 was $22.6 million and $40.1 million, respectively. Stock options outstanding under our current plans have been granted at prices which are either equal to or above the market value of the common stock on the date of grant. Options granted under the 2007 Plan generally vest over a range of three to five years based on service conditions and expire no later than ten years after the grant date. Options granted under the 2020 Directors' Plan generally vest in one year and expire no later than ten years after the grant date. We generally recognize compensation expense ratably over the vesting period. However, Directors' options grants would have been expensed on the date of grant as the 2020 Directors' Plan did not contain a substantive future requisite service period. As of October 31, 2021, there was $21.0 million of total unrecognized compensation cost related to nonvested options, which is expected to be recognized over a remaining weighted-average vesting period of 2.7 years. Restricted Stock Units RSUs granted under the 2007 Plan generally vest over three to five years. RSUs granted under the 2020 Directors' Plan vest in one year. The fair value of RSUs is estimated on the date of grant based on the market price of our common stock. We recognize compensation expense ratably over the vesting period. As of October 31, 2021, there was $63.1 million of total unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a remaining weighted-average vesting period of 2.8 years. The status of our non-vested RSUs is summarized below:
| Number of Shares |  | Weighted- Average Grant Date Fair Value Per Share
Non-vested RSUs at October 31, 2020 | 368,620 |  |  | $ | 247.09 |
Granted | 114,111 |  |  | $ | 352.92 |
Vested and issued | (137,119) |  |  | $ | 222.42 |
Forfeited or expired | (28,277) |  |  | $ | 269.62 |
Non-vested RSUs at October 31, 2021 | 317,335 |  |  | $ | 293.80 |
Performance Units Performance units may be granted to selected key employees with vesting contingent upon meeting future reported earnings per share goals over a defined performance cycle, usually three years. Performance units, if earned, may be paid in cash or shares of common stock. We granted performance unit awards on December 8, 2020 under the 2007 Plan. The performance shares actually earned will range from zero to 200% of the target number of performance shares for performance periods ending in fiscal 2021 through fiscal 2024. Subject to limited exceptions set forth in the performance share plan, any shares earned will be distributed in the subsequent fiscal year after the performance period. The fair value of performance unit awards is estimated on the date of grant based on the current market price of our common stock and the estimate of probability of award achievement. This estimate is reviewed each fiscal quarter and adjustments are recorded if it is determined that the estimate of probability of award achievement has changed. We recognize compensation expense ratably over the vesting period. As of October 31, 2021, there was $10.2 million of total unrecognized compensation cost related to non-vested performance units, which is expected to be recognized over a remaining weighted-average vesting period of 2.3 years. Employee Stock Purchase Plan On March 18, 2019, the Company received stockholder approval for the Employee Stock Purchase Plan (ESPP). The first offering period began on November 4, 2019 and offerings are generally made on a quarterly basis. The purpose of the ESPP is to provide eligible employees of the Company with the opportunity to acquire shares of common stock at 85% of the market price on the last business day of each offering period by means of accumulated payroll deductions. Payroll deductions will be limited to maximum of 15% of the employee’s eligible compensation, not to exceed $21.3 thousand in any one calendar year. The ESPP initially authorized the issuance of 1,000,000 shares of common stock. These shares will be made available from shares of common stock reacquired by the Company as Treasury Stock. During fiscal 2021 and 2020, we issued 17,575 and 11,641 shares to our employees under the ESPP, respectively. At October 31, 2021, the number of shares remaining available for future issuance under the ESPP was 970,784 shares. Total ESPP share-based compensation recognized during fiscal 2021 and 2020 was $1.0 million and $0.7 million, respectively.

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