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Stock-Based Compensation | 9 Months Ended
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Jul. 30, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation |
12 | Stock-Based Compensation
Compensation costs related to stock-based compensation awards were as follows:
|  | Three Months Ended |  | Nine Months Ended
(Dollars in thousands) |  | July 30, 2021 |  | July 31, 2020 |  | July 30, 2021 |  | July 31, 2020
Stock option awards |  | $ | 2,614 |  |  | $ | 2,483 |  |  | $ | 7,271 |  |  | $ | 6,577 |
Performance share awards |  | 2,184 |  |  | 1,665 |  |  | 5,205 |  |  | 327 |
Restricted stock unit awards |  | 1,033 |  |  | 807 |  |  | 3,029 |  |  | 2,725 |
Unrestricted common stock awards |  | — |  |  | — |  |  | 671 |  |  | 693 |
Total compensation cost for stock-based compensation awards |  | $ | 5,831 |  |  | $ | 4,955 |  |  | $ | 16,176 |  |  | $ | 10,322 |
Stock Option Awards Under The Toro Company Amended and Restated 2010 Equity and Incentive Plan, as amended and restated (the "2010 plan"), stock options are granted with an exercise price equal to the closing price of the company’s common stock on the date of grant, as reported by the New York Stock Exchange. Options are generally granted to executive officers, other employees, and non-employee members of the company’s Board of Directors ("Board") on an annual basis in the first quarter of the company’s fiscal year. Compensation cost equal to the grant date fair value is generally recognized for these awards over the vesting period. Compensation cost recognized for other employees not considered executive officers and non-employee Board members is net of estimated forfeitures, which are determined at the time of grant based on historical forfeiture experience. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation method with the assumptions noted in the table below. The expected life is a significant assumption as it determines the period for which the risk-free interest rate, stock price volatility, and dividend yield must be applied. The expected life is the average length of time in which executive officers, other employees, and non-employee Board members are expected to exercise their stock options, which is primarily based on historical exercise experience. The company groups executive officers and non-employee Board members for valuation purposes based on similar historical exercise behavior. Expected stock price volatility is based on the daily movement of the company’s common stock over the most recent historical period equivalent to the expected life of the option. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant. The expected dividend yield is estimated over the expected life based on the company’s historical cash dividends paid, expected future cash dividends and dividend yield, and expected changes in the company’s stock price. The table below illustrates the weighted-average valuation assumptions for options granted in the first nine months of the following fiscal periods:
|  | Fiscal 2021 |  | Fiscal 2020
Expected life of option in years |  | 6.21 |  | 6.31
Expected stock price volatility |  | 23.26% |  | 19.53%
Risk-free interest rate |  | 0.55% |  | 1.73%
Expected dividend yield |  | 0.86% |  | 0.99%
Per share weighted-average fair value at date of grant |  | $19.39 |  | $15.23
Performance Share Awards Under the 2010 plan, the company grants performance share awards to executive officers and other employees under which they are entitled to receive shares of the company’s common stock contingent on the achievement of performance goals of the company, which are generally measured over a three-year period. The number of shares of common stock a participant receives can be increased (up to 200 percent of target levels) or reduced (down to zero) based on the level of achievement of performance goals and will vest at the end of a three-year period. Performance share awards are generally granted on an annual basis in the first quarter of the company’s fiscal year. Compensation cost is recognized for these awards on a straight-line basis over the vesting period based on the per share fair value, which is equal to the closing price of the company's common stock on the date of grant, and the probability of achieving each performance goal. The per share weighted-average fair value of performance share awards granted during the first quarter of fiscal 2021 and 2020 was $90.59 and $77.33, respectively. No performance share awards were granted during the second or third quarter of fiscal 2021 and 2020. Restricted Stock Unit Awards Under the 2010 plan, restricted stock unit awards are generally granted to certain employees that are not executive officers. Occasionally, restricted stock unit awards may be granted, including to executive officers, in connection with hiring, mid-year promotions, leadership transition, or retention. Compensation cost equal to the grant date fair value, net of estimated forfeitures, is recognized for these awards over the vesting period. The grant date fair value is equal to the closing price of the company's common stock on the date of grant multiplied by the number of shares subject to the restricted stock unit awards and estimated forfeitures are determined on the grant date based on historical forfeiture experience. The per share weighted-average fair value of restricted stock unit awards granted during the first nine months of fiscal 2021 and 2020 was $97.84 and $74.43, respectively. Unrestricted Common Stock Awards During the first quarter of fiscal 2021 and 2020, 8,070 and 8,920 shares, respectively, of fully vested unrestricted common stock awards were granted to certain Board members as a component of their compensation for their service on the Board and were recorded within selling, general and administrative expense in the Condensed Consolidated Statements of Earnings. No shares of fully vested unrestricted common stock awards were granted during the second or third quarter of fiscal 2021 and 2020.

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