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Stock-Based Benefit Plans | 12 Months Ended
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Oct. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Benefit Plans | Stock-Based Benefit Plans We grant stock options, restricted stock, and various types of restricted stock units to our employees and our non-employee directors under our stock incentive plans. Restricted stock unit awards may be based on performance conditions, market conditions or service over a requisite time period (time-based). On March 12, 2019, shareholders approved the Toll Brothers, Inc. 2019 Omnibus Incentive Plan (the “Omnibus Plan”), which succeeded the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) and the Toll Brothers, Inc. Stock Incentive Plan for Non-Executive Directors (2016) with respect to equity awards granted after its adoption, and no additional equity awards may be granted under such prior plans. As a result, the Omnibus Plan is the sole plan out of which new equity awards may be granted to employees (including executive officers), directors and other eligible participants under the plan. The Omnibus Plan provides for the granting of incentive stock options (solely to employees) and nonqualified stock options with a term of up to 10 years at a price not less than the market price of the stock at the date of grant. The Omnibus Plan also provides for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance-based. Stock options and restricted stock units granted under the Omnibus Plan generally vest over a four-year period for employees and a two-year period for non-employee directors. Shares issued upon the exercise of a stock option or settlement of restricted stock units are either from shares held in treasury or newly issued shares. At October 31, 2021, 2020, and 2019, we had 5.7 million; 6.7 million; and 7.7 million shares, respectively, available for grant under the plans. The following table provides information regarding the amount of total stock-based compensation expense recognized by us for fiscal year 2021, 2020, and 2019 (amounts in thousands):
| 2021 |  | 2020 |  | 2019
Total stock-based compensation expense recognized | $ | 23,187 |  |  | $ | 24,326 |  |  | $ | 26,180 |
Income tax benefit recognized | $ | 5,910 |  |  | $ | 6,227 |  |  | $ | 6,749 |
At October 31, 2021, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $14.7 million and the weighted-average period over which we expect to recognize such compensation costs was approximately 2.4 years. Stock Options: The fair value of each option award is estimated on the date of grant using a lattice-based option valuation model that uses ranges of assumptions noted in the following table. Expected volatilities were based on a combination of implied volatilities from traded options on our stock, historical volatility of our stock, and other factors. The expected lives of options granted were derived from the historical exercise patterns and anticipated future patterns and represent the period of time that options granted are expected to be outstanding. The ranges set forth below result from certain groups of employees exhibiting different behaviors impacting exercisability. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following table summarizes the weighted-average assumptions and fair value used for stock option grants in each of the fiscal years ended October 31, 2021, 2020, and 2019:
| 2021 |  | 2020 |  | 2019
Expected volatility | 43.33% |  | 27.42% - 28.30% |  | 28.61% - 31.34%
Weighted-average volatility | 43.33% |  | 27.42% |  | 30.46%
Risk-free interest rate | 0.49% |  | 1.72% - 1.78% |  | 2.65% - 2.76%
Expected life (years) | 5.75 |  | 4.64 - 5.76 |  | 4.63 - 8.50
Dividends | 0.96% |  | 1.11% |  | 1.36%
Weighted-average fair value per share of options granted | $15.88 |  | $9.68 |  | $10.22
The fair value of stock option grants is recognized evenly over the vesting period of the options or over the period between the grant date and the time the option becomes nonforfeitable by the employee, whichever is shorter. Information regarding the stock compensation expense related to stock options for fiscal 2021, 2020 and 2019 was as follows (amounts in thousands):
| 2021 |  | 2020 |  | 2019
Stock compensation expense recognized - options | $ | 1,812 |  |  | $ | 3,144 |  |  | $ | 5,181 |
The following table summarizes stock option activity for our plans during the fiscal year ended October 31, 2021 (amounts in thousands, except per share amounts):
| 2021
| Number of options |  | Weighted- average exercise price |  | Weighted average remaining contractual life (in years) |  | Aggregate intrinsic value
Balance, November 1, | 3,560 |  |  | $ | 33.03 |  |  |  |  |
Granted | 40 |  |  | $ | 46.02 |  |  |  |  |
Exercised | (585) |  |  | $ | 28.37 |  |  |  |  |
Canceled | (17) |  |  | $ | 35.41 |  |  |  |  |
Balance, October 31, | 2,998 |  |  | $ | 34.10 |  |  | 4.08 years |  | $ | 78,142 |
Options exercisable, at October 31, | 2,674 |  |  | $ | 33.60 |  |  | 3.68 years |  | $ | 71,070 |
Information pertaining to the intrinsic value of options exercised and the fair market value of options that became vested or modified in each of the fiscal years ended October 31, 2021, 2020, and 2019, is provided below (amounts in thousands):
| 2021 |  | 2020 |  | 2019
Intrinsic value of options exercised | $ | 16,328 |  |  | $ | 23,281 |  |  | $ | 16,491 |
Fair market value of options vested | $ | 3,578 |  |  | $ | 5,926 |  |  | $ | 7,723 |
Performance-Based Restricted Stock Units: In fiscal 2021, 2020, and 2019, the Executive Compensation Committee approved awards of performance-based restricted stock units (“Performance-Based RSUs”) relating to shares of our common stock to certain members of our senior management. The number of shares earned for Performance-Based RSUs are based on the attainment of certain operational performance metrics approved by the Executive Compensation Committee in the year of grant. The number of shares underlying the Performance-Based RSUs that may be issued to the recipients ranges from 0% to 150% of the base award depending on actual achievement as compared to the target performance goals. Shares earned based on actual performance vest pro-rata over a four-year period (provided the recipients continue to be employed by us as specified in the award document) or cliff vest at the end of a three-year performance period. The value of the Performance-Based RSUs was determined to be equal to the estimated number of shares of our common stock to be issued multiplied by the closing price of our common stock on the New York Stock Exchange (“NYSE”) on the date the Performance-Based RSU awards were approved by the Executive Compensation Committee (“Valuation Date”), adjusted for post-vesting restrictions applicable to retirement eligible participants. Compensation expense related to these grants is based on the Company’s performance against the related performance criteria, the elapsed portion of the performance period and the grant date fair value of the award. To estimate the fair value of the award, we evaluate the performance goals quarterly and estimate the number of shares underlying the Performance-Based RSUs that are probable of being issued. A summary of the status of our nonvested Performance-Based RSUs as of October 31, 2021, and changes during the year ended October 31, 2021, is presented below (share amounts in thousands):
| 2021 |  | Weighted average grant date fair value
Nonvested at November 1, | 345 |  |  | $ | 35.17 |
Granted/Target | 129 |  |  | $ | 37.00 |
Vested | (145) |  |  | $ | 35.12 |
Forfeited | — |  |  | $ | — |
Nonvested at October 31, | 329 |  |  | $ | 35.87 |
The following table provides information regarding the issuance, valuation assumptions, and amortization of the Performance-Based RSUs issued in fiscal 2021, 2020, and 2019:
| 2021 |  | 2020 |  | 2019
Estimated number of shares underlying Performance-Based RSUs to be issued | 128,894 |  |  | 116,423 |  |  | 158,721 |
Aggregate number of Performance-Based RSUs outstanding at October 31 | 539,592 |  |  | 579,115 |  |  | 645,538 |
Weighted-average fair value per share of Performance-Based RSUs issued | $ | 29.87 |  |  | $ | 32.55 |  |  | $ | 34.86 |
Aggregate grant date fair value of Performance-Based RSUs issued (in thousands) | $ | 5,030 |  |  | $ | 3,790 |  |  | $ | 5,533 |
Performance-Based RSU expense recognized (in thousands) | $ | 5,989 |  |  | $ | 5,986 |  |  | $ | 5,514 |
Fair market value of Performance-Based RSUs vested (in thousands) | $ | 5,084 |  |  | $ | 5,638 |  |  | $ | 6,735 |
Shares earned with respect to Performance-Based RSUs issued in December 2014, 2015, and 2016 were delivered in fiscal 2019, 2020, and 2021, respectively. Time-Based Restricted Stock Units: We issued time-based restricted stock units (“Time-Based RSUs”) to various officers, employees, and non-employee directors on an annual basis. These Time-Based RSUs generally vest in annual installments over a two-year (for non-employee directors) or four-year (for employees) period and are generally settled at the end of such period. The value of the Time-Based RSUs was determined to be equal to the number of shares of our common stock underlying the Time-Based RSUs multiplied by the closing price of our common stock on the NYSE on the date the Time-Based RSUs were awarded, adjusted for post-vesting restrictions applicable to retirement eligible participants. The fair value of Time-Based RSUs is expensed evenly over the shorter of the vesting period or the period between the grant date and the time the award becomes nonforfeitable by the participant. A summary of our Time-Based RSUs nonvested shares as of October 31, 2021, and changes during the year ended October 31, 2021, is presented below (share amounts in thousands):
| 2021 |  | Weighted average grant date fair value
Nonvested at November 1, | 910 |  |  | $ | 36.74 |
Granted | 439 |  |  | $ | 42.85 |
Vested | (382) |  |  | $ | 36.70 |
Forfeited | (56) |  |  | $ | 40.88 |
Nonvested at October 31, | 911 |  |  | $ | 39.45 |
The following table provides additional information on the Time-Based RSUs for fiscal 2021, 2020, and 2019:
| 2021 |  | 2020 |  | 2019
Time-Based RSUs issued: |  |  |  |  |
Number of Time-Based RSUs issued | 386,017 |  |  | 461,280 |  |  | 449,380 |
Weighted-average fair value per share of Time-Based RSUs issued | $ | 33.21 |  |  | $ | 37.43 |  |  | $ | 33.04 |
Aggregate fair value of Time-Based RSUs issued (in thousands) | $ | 12,820 |  |  | $ | 17,267 |  |  | $ | 14,848 |
Time-Based RSU expense recognized (in thousands): | $ | 14,531 |  |  | $ | 12,744 |  |  | $ | 13,627 |
Fair market value of Time-Based RSUs vested (in thousands): | $ | 14,029 |  |  | $ | 11,837 |  |  | $ | 7,936 |
| 2021 |  | 2020 |  | 2019
At October 31: |  |  |  |  |
Aggregate number of Time-Based RSUs outstanding | 1,312,710 |  |  | 1,315,371 |  |  | 1,137,936 |
Cumulative unamortized value of Time-Based RSUs (in thousands) | $ | 12,919 |  |  | $ | 10,972 |  |  | $ | 8,694 |
Employee Stock Purchase Plan (“ESPP”) Our ESPP enables substantially all employees to purchase our common stock at 95% of the market price of the stock on specified offering dates without restriction or at 85% of the market price of the stock on specified offering dates subject to restrictions. The ESPP, which is scheduled to terminate in December 2027, provides that 500,000 shares be reserved for purchase. At October 31, 2021, 321,000 shares were available for issuance. In fiscal 2021, 2020 and 2019, we issued 31,257 shares, 54,235 shares, and 41,744 shares under the ESPP, respectively. The expense is recognized in all fiscal periods was not material.

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